Grocers now find it’s their turn in the hot seat of business disruption.
Consumer preference is shifting in large measure to organic, fresh products and ready-made meals. In the U.S., grocery brands from Europe are taking on established domestic chains. Pressure is building against prices. Saving energy has become a mandate for the local store image as well as for the ledger sheet. And, as with all retail, technology – namely online shopping – threatens to change the face of “going grocery shopping” for millions of consumers.
Competing in this environment isn’t for the faint of heart. Already, grocers are in a constant struggle to lower operational costs and increase per-square-foot sales with a product mix renowned for its low margins.
Fortunately, a number of technologies also exist to place the odds squarely in the physical grocer’s favor. Conveniently enough, grocers can find multiple solutions to many of these challenges simply by looking up to one primary asset – their store lighting.
Technologies on Your Side
LED lighting has, by now, been widely recognized for its ability to save energy – as much as 50% to 80%, or more compared to conventional lighting. Grocers who were early adopters of LED lighting for aisles, refrigerated and freezer spaces, office areas and parking lots have long since moved from single, test-market stores to deploying LED lighting strategies enterprise-wide in relatively rapid and well-received transitions.
Grocers who have yet to implement these changes can look forward to significantly reducing their own operating (and maintenance) costs, and even increasing customer satisfaction by introducing bright, crisp LED lighting that is uniquely better suited to grocery store spaces than is traditional lighting.
But that’s not even the half of it.
LED lighting can also allow physical grocers the opportunity to take advantage of a new technology called indoor-positioning system, or IPS, which is similar to GPS (Global Positioning System) in the outside environment. This new, two-way communication of location-specific information allows grocers to engage and influence shoppers in real time while maximizing their own operational efficiencies.
IPS in Action
Connecting to the mobile devices of shoppers who have opted-in, IPS can facilitate a number of in-store functions for grocery store managers, employees and shoppers alike – functions that simply can’t be imitated in any other shopping platform.
With “just-in-time” assistance, store employees can find and follow up with customers who have asked for assistance as the customer continues to move about the store and shop.
IPS can be used to provide product or store information to all employees, or to share information between store employees as a way to increase service levels.
Working from a desktop or mobile device, a store manager can optimize employee coverage patterns to maximize service effectiveness at any given time.
IPS allows store employees to interact with customers through a number of channels beyond the checkout counter, from home through the app, where they typically decide to buy, to the store aisles, where buying behavior can be optimized through in-store, location-based couponing.
Using IPS technology, grocers can execute alternative sales strategies, such as “buy online/pick up in store” (or BOPIS).
IPS technology can provide superior data about in-store consumer behavior, such as the number of store visitors at any given time, how long shoppers dwell in a particular department or aisle, the number of departments shopped per store visit, the length of time a shopper spends at any given stand or end case, the number of customers assisted within a given time frame, sales figures tied to customers’ in-app purchases, and even real-time inventory counts.
The Attractive Economics of LED-based IPS
The promises of IPS technology laid out above are game-changing and compelling by themselves. But in a low-margin business like grocery, perhaps the most attractive aspect about LED-based IPS is the economic advantages.
- Lowering the Upfront Cost: First, the LED luminaires, in which IPS technology may be embedded, deliver significant energy savings and can qualify for government tax incentives and utility rebates, which can reduce the upfront cost of the entire system, providing an attractive payback that grocers can’t ignore.
- Minimizing the Operating Cost: Unlike lone, battery-powered beacons, LED-based IPS has no batteries to change. Just imagine, every light in your grocery store becoming a beacon with minimal maintenance to operate.
- Maximizing the Potential Data Revenue: The data from IPS technology can provide real-time, valuable business intelligence about shoppers’ behavior and preferences, beyond simple sales data. Grocers can use this data to enhance the customer insights information they already sell to brands that merchandise in their stores, growing their merchandising revenue.
Not Yet Convinced?
Take a look, again, at today’s challenges in the grocery business.
As a lighting source, LED luminaires enabled with IPS technology can deliver quality lighting that helps to create an inviting shopping experience. These LED luminaires can provide substantial energy savings and, with their long-life, minimize maintenance costs.
As a location-based technology, LED-based IPS allows customers to shop the way they like to shop – via mobile interaction. This emerging technology can therefore help grocers create a better customer experience that can drive brand preference, helping them maintain their market share. At the same time, grocers can use this lighting infrastructure to shrink their costs, freeing up valuable capital to continue battling competitors and addressing other consumer needs.
LED-based luminaires operating as part of a sensory network provide a unique opportunity to engage with consumers where they exist and in ways that no other shopping platform – with online being the least of them – can imitate.
No one technology will meet all the needs of the grocery sector. But few technologies have singularly addressed so many challenges faced by grocers and other retailers as those tied to LED lighting. Whether it’s an all-at-once, one-time installation or a lighting retrofit, a long-term investment behind an upgrade to LED lighting is a remarkably sound one.