Food retailing is a low-margin business and as such, hasn’t had the funding to be on the cutting-edge of technology the way that say, the defense industry, has. While the margins haven’t changed, the sheer volume of the market – over $1trillion spent on food and groceries in the U.S. in 2018 – has attracted a number of tech companies with ideas for upgrading the shopping experience in stores and online.
While a lot of attention has been given to online options, my faithful readers will remember that I counseled against the hype. I told grocery executives not to worry about AmazonFresh, Amazon’s acquisition of Whole Foods, or even AmazonGo. Many didn’t listen and rushed to jump on the Instacart bandwagon. I recently predicted in another article that many will fall off in 2019.
There’s no doubt online shopping is here to stay. However, in 2018 97% of groceries were bought in brick-and-mortar stores. Food retailers will be the last category of the retailer to be seriously challenged by online options. Why? Inspect and Select. People want to see what they’re going to eat; they’re not going to trust a low-paid picker to pick the freshest lettuce for them.
Furthermore, while some harried shoppers just want to rush in and rush out, there is a sizable contingent – perhaps as high as 70% – of grocery shoppers that want to be inspired by what they find in the store. These shoppers see what produce is in season this week, what meat looks the tastiest, what wine is on sale and plans their meals as go through the store.
In order to compete, grocery retailers must have an online option as well as provide an invigorating experience in the store. To achieve the latter, retailers are turning to technology.
Recently, I wrote about Caper, a Brooklyn-based start-up that is working on a cart-based point-of-sale system that aims to rival AmazonGo. However, Caper is not the only company trying to create an alternative to Amazon Go. Apricot is a startup that created a cart-based system for frictionless shopping.
Like AmazonGo and Caper, Apricot provides shoppers with a throw-it-in-the-cart and pay-on-the-cart checkout experience. However, Apricot’s proprietary system also collects in-store shopper behavior data and crunches it instantaneously to provide customer-relevant content on a dynamic platform. This point is key: In addition to eliminating the check-out process, Apricot is reinventing the shopping cart to help retailers create a better in-store experience.
The Apricot team, led by CEO Allegra McNeally and CTO Shahzad Kirmani, have deep domain experience creating cutting-edge machine vision sensor systems.
“Apricart’s intelligent shopping cart is a breakthrough in understanding the retail grocery market,” says Lenny Murphy, a serial entrepreneur and widely-respected thought leader in the Insights Industry. “Apricot provides data about the grocery shopping experience not previously obtainable in a trillion dollar plus industry,” Murphy continues. “Grocery retailers and consumer packaged goods companies alike depend on understanding the customer journey, and Apricot provides unprecedented intelligence, including in-the-moment unique path-to-purchase data; insights using predictive analytics; a platform to influence shopper behavior at the point of decision, and immediate feedback on promotions.”.
Leveraging a platform contained within the grocery cart to help customers become aware of sales and other relevant information related to shopping, is proving effective. That on-cart, the direct-line-of-sight platform is likely to be very effective. “When people see signs with numbers—8 for $10!” or “Limit: 5 per customer”—they buy 30% to 100% more than they otherwise might have,” writes Adam Bluestein.
Technology, especially online shopping analytics, allows retail shoppers to demand more personal and pleasant guest experiences. Traditional brick and mortar retailers must innovate to remain relevant. Macro trends toward cashier-free checkouts and customized shopping experiences put Apricot at the forefront of the revolution taking place inside grocery stores.
Using a fusion of patent-pending sensor technology and proprietary Machine Vision, Machine Learning, and Artificial Intelligence algorithms, Apricot has created a revolutionary shopping cart that looks like an ordinary cart. Apricot has intentionally designed the unobtrusive camera system to scan goods and collect path-the-purchase (P2P) shopper behavior data discreetly. The amount of shopper data collected is anonymous unless shoppers choose to identify themselves for greater benefits.
Apricot’s embedded machine vision system sees what goes in and out of the cart, and records the path of the cart through the store geographically and through time. This generates an amazingly rich data set of shoppers’ behaviors, without identifying shoppers’ personal information and without disrupting shoppers’ actions. On a screen, the system offers a platform to influence shopper behavior at the moment of decision, as a customer stands in front of the product.
An interesting feature of Apricot is the ability of the cart to personalize the shopping experience for the customer. For example, customers can scan recipes and identify the exact location for each ingredient. The cart can alert to complementary products and sales. For instance, if a shopper puts in bagels into the cart, a coupon for cream cheese could appear, along with brunch recipes or photos of a lush brunch featuring deluxe bagels with cream cheese, lox, thinly-sliced onions and a sparkly glass of juice to complete the meal.
Screen content can be timed, creating a sense of urgency and reward. The fifty-cents-off cream cheese offer could be only valid in the next minute, urging the customer to act quickly, and rewarding the customer extrinsically – with the discount – and intrinsically – with the happy feeling of scoring an “only-for-me” special.
If shoppers sign in with a loyalty card, the personalization is exponentially more relevant. 80% to 85% of grocery shoppers participate in loyalty programs and their experience will be much richer. Running out of bread or paper towels? Apricot can remind shoppers of frequently bought items, chart the most efficient route for a given shopping list, and will even alert the customer for known allergens selected by the customer.
Apricot includes an on-cart point-of-sale (POS) system and functions as a mobile self-checkout, eliminating the front end check-out process – improving customer throughput and experience while saving retailers’ labor and frontend real estate expenses.
Adding Value To The Customer And Retailer
Apricot offers an attractive value proposition for three markets: food retailers, FMCG insight providers, and FMCG advertisers.
For food retailers, Apricot offers an on-cart fraud and frustration free self-checkout process while also providing valuable observational data on shopper behavior, and a platform to utilize that data to instantaneously drive sales. Currently, millions of customer and cashier hours are wasted in traditional checkout lanes. Checkout lanes are expensive to staff, equip, and the lanes take up valuable store real estate.
Self-checkout lanes have high rates of fraud and are often frustrating for shoppers to use. Current mobile check-out solutions (apps or handheld UPC scanners) have single-digit adoption rates and rely on the honor system so they also have high fraud rates. Apricot records every item that goes into the cart, mitigating theft that is trying to walk out the front door.
Additionally and more uniquely, Apricot presents an opportunity for retailers to experiment with dynamic, timed pricing models (think of a flash sale) that don’t exist today in other products. Apricot also provides an extensive analysis of the data. For example, customer traffic data from Apricot can be used to correctly value in-store real estate, justifying higher placement and slotting fees. Can dynamic in-store advertising draw perimeter-only shoppers into the aisles? Apricot can answer the question.
For Fast-Moving Consumer Goods (FMCG) Insight Providers, the never-before-available, granular data is clearly valuable. “Apricot will be collecting a unique and rich set of data,” says Dr. Ramond Burke, a distinguished professor of marketing and a leading academic in shopper experience research. “My colleagues and I are very interested in studying the data – it is a great fit with our ongoing research.”
Marketing is becoming more data-driven by the day. It is widely understood a majority of shopper purchasing decisions are made in-store, however, there is no large data set of reliable in-store path-to-purchase data available. Currently, marketers use a variety of methodologies to understand shoppers. Traditional and widely used methods, such as surveys and panels, are simulations given to biases that render their reliability suboptimal.
Observational data methods are the most reliable, but currently, have smaller data sets, are expensive to administer, and have a time lag between data acquisition and preparation of actionable intelligence. For instance, the current standard-bearer, beacon technology, simply capture the number of turned-on smart devices that pass by. A person with a smartwatch, phone, and laptop or tablet in their backpack would count as three people. Someone whose phone ran out of battery or who left their phone in the car wouldn’t be counted at all. Academic studies using video from security cameras take hundreds of hours to code.
Compare that to Apricart’s data which measures not only every footstep but the speed of the shopper, noting every display the shopper pauses at and every display the shopper rushes past. For FMCG insight researchers, Apricot provides an all-encompassing, rich data set of detailed observational path-to-purchase data and instantly available actionable insights customized for each individual shopper.
Who gets the circular out of the newspaper and remembers that Doritos are on sale this week? Who clips coupons from the Sunday paper any more? Who keeps the receipt coupons and brings them back a week later? FMCG Marketers will find significant value in Apricot’s data and on-cart, direct-line-of-sight platform.
Apricot’s interactive screen functions as an open window on a personal computer, melding the benefits of internet shopping with shopping in real life. Online shopping and tech breakthroughs have led brick and mortar customers to demand more personalized content and pleasant experiences.
Today offers for supermarkets are primarily received before the shopping trip (online, flier, cut-out coupons) or given with the receipt after purchasing is finished. In-store offers are conveyed on static signs, shelf coupons or sometimes on a shopper’s smartphone via beacon technology. All these methods have high friction coefficients that significantly limit their adoption rates.
A screen in front of the handlebar on each Apricot offers FMCG Marketers a dynamic platform to influence and inspire shoppers with personalized content as they shop. Did the shopper respond to the cream cheese offer? The conversion rate is instantly known. Apricot advertising comes with a measurable ROI, a rarity in the advertising world.
The unique path-the-purchase data Apricot will collect is valuable not just for the individual shopper, but in aggregate as well. Currently, syndicated Point of Sale (POS) data is sold by Neilsen and IRI. However, POS data tells the story ends, not the narrative arc of a shopper’s purchasing story. Currently, there is no wide-scale, syndicated P2P data. Apricot data will fill that void.
Today, advertising in food retail is predominantly static: traditional signs placed around the store and sometimes on the sides of the cart, or less often, the floor. There are shelf-mounted coupon dispensers. Occasionally there are in-store video screens. The content is not personalized.
Any personalized advertising comes through shoppers’ smartphones, requires changes in shopper behavior, and therefore has low adoption rates. Beacons are able to push personalized content – to shoppers who have downloaded, installed and opened a store app on their phones. And then shoppers must still check the push notification while shopping and perhaps show it to an associate to receive a discount.
Numerous companies have apps which can deliver personalized content to shoppers that scan goods or their receipts. For example, when the shopping trip is over, Catalina offers personalized coupons with the receipt at the Point-of-Sale. All pale in comparison to Apricart’s personalization, which allows shoppers to shop naturally, receive offers in-store, at the moment of decision.
Although Apricot can benefit any store that uses shopping carts, its initial target market are the thousands of stores of Tier 2 grocery chains. Tier 1 chains – Walmart, Kroger, etc. – have extremely high customer acquisition costs. Tier 2 chains are the regional grocery chains that have been 100-400 stores, do not have the resources to develop technology, but which have the greatest need to innovate to remain relevant in the face of relentless innovation by Amazon and Walmart and other deep-pocketed tech-savvy competitors.
Moving The Innovation Needle
I think Apricot has an advantage over other companies leveraging grocery carts for an enhanced shopping experience as Apricot is focused on reimagining the shopper experience. To most, “frictionless” simply means “cashier-free.” Apricot is refreshingly different. Apricot understands the current grocery shopper experience better than the majority of companies that I’ve evaluated. Apricot sees numerous friction points in addition to the checkout bottleneck, and the company has a comprehensive plan to tackle them all.
Data that can be utilized to better understand customer behavior is incredibly valuable to retailers and FMCG companies. When I worked with 7-Eleven in Japan, we studied customer behavior to such an extent that we knew what customers wanted by the day of the week, an hour of the day, and even to the minute of each hour. 7-Eleven used that data to change displays frequently in response to customer demand significantly improving the bottom line.
When I speak to retailers, it is apparent they don’t have the same type of granular data as 7-Eleven Japan. A question I like to ask grocery retailers is what their top-five best sellers are every Wednesday between 1 PM and 3 PM taking into account seasonality and holidays? Only one grocery retailer was able to answer the question. Apricot recognizes the need for data and providing the data to retailers to make better business decisions by product, by category.
If anything, I think focusing on grocery might limit Apricot as its technology can benefit any retailer that uses shopping carts. The value of Apricot is the totality of its solution: data, personalization, and convenience. I rank Apricot at the top of the list of companies competing to leverage grocery carts to revolutionize retail for consumers and retailers.