The Transformation of Supermarkets: From Products to Digital Platforms

18

September

2024

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Purchasing goods in bulk, stocking shelves, and selling to customers; this is how supermarkets used to operate as they were using a traditional product-based business model. Over time, supermarkets evolved by integrating technology, such as self-service, price scanners, and loyalty programs (Sundarabharathi & Muthulakshmi, 2023). The landscape is changing rapidly as supermarkets shift toward a digital platform business model. This shift focuses on personalized experiences, with data analytics predicting consumer behavior and adapting to innovations (Sundarabharathi & Muthulakshmi, 2023). One key player embracing this transformation is Albert Heijn, a Dutch supermarket chain leading the way in digital innovation.

Albert Heijn was the first Dutch supermarket who took the omnichannel approach where in-store meets online (Albert Heijn Launches Subscription, ‘My Albert Heijn Premium’, 2021). The introduction of digital tools, like Albert Heijn’s bonus card and mobile app “AH app”, have transformed the way customers interact with the brand. Their bonus card initially started as a loyalty card for discounts, but has since evolved into a sophisticated data-gathering tool. The combination of the bonus card and the multifunctional AH app, lets Albert Heijn track customers’ shopping habits. With the use of artificial intelligence, the supermarket can recommend personalized offers, recipes based on what you buy, and even predict future purchases. This personalized shopping experience keeps customers engaged while generating valuable data.

As these apps and digital tools grow in functionality, they are part of a broader trend where supermarkets collect an increasing amount of data. Every interaction, from the products scanned to online searches, feeds into algorithms that help supermarkets optimize inventory, suggest new products, and refine marketing strategies. This approach transitions supermarkets from merely being places to purchase goods to digital platforms that provide value-added services based on consumer behavior.

The future allows supermarkets to become even more platform oriented due to new technological innovations and upcoming trends. There are different opportunities around the corner for supermarkets to make this transformation. Examples are the replacement of barcodes with QR codes in 2027 in the Netherlands and Artificial Intelligence becoming more sophisticated (DigitalTrends, 2023)(NOS, 2024).

As supermarkets adopt these technologies, their business models will need to continue evolving towards more digitally-driven, data-powered operations. It is interesting to see how it affects the business models of supermarkets like Albert Heijn right now, and how it will develop in the future years. How far can we transform to this digital platform model and will the traditional physical supermarket as we know disappear completely in the future?

References:

Albert Heijn launches subscription, ‘My Albert Heijn Premium’. (2021, 27 oktober). https://www.aholddelhaize.com/en/news/albert-heijn-launches-subscription-my-albert-heijn-p

remium/

DigitalTrends. (2023, 19 juli). How Artificial intelligence (AI) is becoming increasingly sophisticated. Medium. https://medium.com/@digitaltrends1/how-artificial-intelligence-ai-is-becoming-increasingly-sophisticated-4b837f7e31ba

NOS. (2024, 26 juni). De streepjescode bestaat 50 jaar, maar het einde nadert. https://nos.nl/artikel/2526164-de-streepjescode-bestaat-50-jaar-maar-het-einde-nadert

SUNDARABHARATHI, M., & MUTHULAKSHMI, C. (2023). American Supermarkets – PAST, Present Vs. Future Trends and Technologies. In G. Venkataswamy Naidu College & Manonmaniam Sundaranar University, Res Militaris (Vol. 13, Nummer 2, pp. 6270–6271).

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Albert Heijn, the Dutch Amazon Go?

24

September

2018

No ratings yet. Today, 24th of September 2018, Albert Heijn, the largest supermarket chain in The Netherlands, enabled cashier- and cash free shopping in two of their stores. With a ‘tap-to-go’ card or Android app their customers can scan the barcodes of the products they would like to buy. After 10 minutes the purchased amount will be withdrawn automatically from their linked bank account. This means the customer doesn’t need to wait in line for a cashier or spend time paying at a self-scan machine, thus will spend less time in the store.

This concept makes all of us think about the Amazon Go concept, but the technique Amazon uses is completely different compared to Albert Heijn’s solution. Amazon Go uses cameras with computer vision to scan which items has been taken from the shelf by which customer. The computer vision system is trained with deep learning technology, which enables the cameras to recognize the distinguishable patterns in products and people. Interestingly enough, the cameras also see when a customer puts a product back on the shelves, whilst not using facial recognition. When I first read about Amazon Go a few years ago, I thought that this futuristic idea would disrupt the retail industry and their industry leaders. Fortunately, I am proud to see that ‘our own’ Albert Heijn responded on time with a different technology, whilst still reaching the goal of consumer convenience.

Now, as a Business Information Management student, it is interesting to see what opportunities come with this way of cashier- and cash free shopping. I will start with the following possibility: if customers scan their products while standing before a shelf, the retailer could better understand customer in-store behaviour and monitor consumer traffic. This enables retailers to not only offer personalized discounts or promotions based on product preference, but even based on in-store behaviour. In the future, they could offer an extra discount for a product you just put back on the shelf or use in-store promotion screens who recognize your tap-to-go card and adjust their promotion to your preferences and the shelf you are standing at.

I am sure that Amazon and Albert Heijn didn’t use the only technologies who could enable cashier-and cash free shopping. Also, I believe that there are way more possibilities enabled by cashier-and cash free shopping. Let me know in the comments which technologies and opportunities you would relate to cashier-and cash free shopping!

Sources:

https://nos.nl/artikel/2251836-zonder-af-te-rekenen-de-supermarkt-uit-ah-begint-met-kassaloos-winkelen.html

https://dzone.com/articles/impact-of-big-data-analytics-in-retail-industry-te

https://www2.deloitte.com/content/dam/Deloitte/in/Documents/CIP/in-cip-disruptions-in-retail-noexp.pdf

https://www.wired.co.uk/article/amazon-go-seattle-uk-store-how-does-work

https://www.zdnet.com/article/amazon-go-heres-a-look-at-the-impact-on-human-jobs-retail-innovation-amazons-bottom-line/

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Digital Transformaton Project – self-driving carts

14

October

2016

No ratings yet. Chris Anderson argues in his book on the Long Tail that there are retail scientists who are dreaming of smart shopping carts which can detect content in the carts by their RFID tags, and consequently give the customer recommendations of products that fit next to the products in the cart (Anderson, 2009). This means that one could have cheese in his cart, and through recognition, the cart would recommend certain bread that fits with the cheese. After this, Anderson mentions that “even these scientists still can’t transport matter into reach and make acting on those recommendations easy. In the physical world, shoppers move; products don’t.” (Anderson, 2009). This is exactly the point where Chris Anderson could be wrong, and where modern day scientists could be right, by designing a self-driving shopping cart. Even though the products won’t fly into one’s cart literally, the cart brings itself toward the products, leasing little to the imagination of the customer. The self-driving shopping cart is the emerging technology which will be discussed further in this report. The company which is the subject of the report is Albert Heijn. Albert Heijn is a supermarket which was founded in 1895 and currently has over 850 branches spread in the Netherlands. (AH, 2016)

Emerging technology of self-driving cart

The concept of self-driving (shopping) carts is a concept that could potentially change the whole way of shopping. With the Internet of Things growing and the expectation of over 50 billion things being connected in 2020 (Hbr, 2016), it becomes clear that self-driving carts fit right into the future. It is an emerging technology for which Wal-Mart has filed a patent in March of 2016 (Atherton, 2016). The shopping-carts will contain a robotic device under the cart and this will cause it to drive in the way the customer wants. Additionally, the entire system will work in a “sensor-rich world, where central computers track inventory and match customer needs to what’s available in the store for the shopper” as Atherton also mentions. Also, the carts will be able to bring themselves back, after being left by customers in, for example, the garage. This causes the employees to have more time to spend on other duties, instead of assembling carts. The concept of self-driving carts resembles online shopping, in a way that one is working with a digital device. However, with a physical purchase, its advantage being an immediate purchase instead of waiting for shipping, it might even win more ground over online shopping (in the supermarket industry) (Atherton, 2016). As more and more customers are switching to online shopping, retail stores are probably looking for way to nevertheless attract these customers (Mintel, 2016).

Customer Experience

Customer experience is an important aspect of shopping, and it is very likely that it is easier to gain a positive customer experience in a traditional brick-and-mortar store than online. It is true that online shopping may have a larger inventory and more possibilities, however it loses on the aspect of instant gratification. Also, doing the groceries with a few clicks on one’s keyboard will never top the physical experience of strolling through the supermarket with one’s family. It is important to realize that this concept of self-shopping carts has many possibilities, such as a screen being connected to the cart, with enables the customer to, for example, browse through available products or a see a map. However, it would probably be easier, and cost effective, to let an application on a smart-phone control the carts. The implementation of this concept of self-driving carts could cause Albert Heijn to stay ahead of its competitors, and this is ultimately what also causes them to have a first-mover advantage in the Netherlands with the introduction of this technology.

 

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References

AH (2016) Alles over Albert Heijn Retrieved from: http://www.ah.nl/over-ah

Anderson, C. (2006) The Long Tail: Why the Future of Business is Selling Less of More. New York City, N.Y.: Hyperion.

Atherton K., (2016), Walmart patents robot carts for better shopping. Can robot carts compete with Amazon? Retrieved from: http://www.popsci.com/walmart-patents-robot-carts-for-better-shopping

Harvard Business Review (2016) To Predict the Trajectory of the Internet of Things, Look to the Software Industry. Retrieved from: https://hbr.org/2016/02/to-predict-the-trajectory-of-the-internet-of-things-look-to-the-software-industry

IMAgency (2016) Albert Heijn. Retrieved from: http://imagency.com/work/albert-heijn/

Mintel (2016) 29% of UK online grocery shoppers are shopping for groceries more online now than a year ago. Retrieved from: http://www.mintel.com/press-centre/retail-press-centre/29-of-uk-online-grocery-shoppers-are-shopping-for-groceries-more-online-now-than-a-year-ago

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