Kroger is building the grocery store of the future

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It's no secret that Kroger has been expanding the products it sells at it stores. But, customers might not know the company is making some high-tech updates on how a grocery store functions.

For example, few customers probably are aware that every time they walk into a Kroger, an infrared camera notes their arrival.

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In 2012, Kroger rolled out QueVision, a technology platform that uses sensors and predictive analytics to feed managers real-time data -- the first and currently only system of its kind in the US.

By granting managers knowledge of how many customers are in the store at any second in time, QueVision gives them real-time knowledge of when long lines will happen and where cashiers are needed before a pileup even begins. Data collected over time is fed into the algorithm to provide predictions of exactly what to expect on certain days of the week or month.

Before the feature was deployed, average wait time at the store was four minutes. Today, it is less than thirty seconds.

Plus, customers report that cashier friendliness have increased since the launch -- though Kroger believes the customers themselves have simply become more cheerful as wait time has been reduced.

QueVision is just the beginning of futuristic tech at the company. At an investor conference in late October, the company reported that 17 million customers have digital accounts with Kroger, with more than 20% of all customers using digital tools in certain markets.

Kroger grocery store supermarket

AP

In an industry that is swiftly turning its attention to e-commerce, Kroger has spent the last few years investing in companies with key insights and experience in the online grocery business.

"We're looking to develop an omni-channel offering," Kroger spokesperson Keith Dailey told Business Insider. "We believe our customers will tell us how they want to interact."

In 2014, Kroger finalized its merger with southern-grocery chain Harris Teeter, acquiring the company's online ordering platform, Express Lane, along with the chain's more than 200 locations.

Kroger began testing its own click-and-collect service called Click List based on the Express Lane model last year in Cincinnati. Click List allows customers to, for a $4.95 fee, buy groceries online, then pay and collect their goods at a pickup window at an appointed time, never having to even leave their car.

While traditional e-commerce services attract shoppers buying just a few items, Kroger says this service appeals to convenience-minded customers as a means of speeding up their regular shopping trips.

Today, Kroger has made Click List available at 184 locations, with plans to evolve and expand the service in coming years. Most are Harris Teeter stores where the service is still called Express Lane, but the service is now also available at 13 traditional Krogers in four markets, as well as three Fred Meyers locations in Portland.

Harris Teeter isn't the only acquisition that has helped the chain in the e-commerce segment. The 2014 purchase of Vitacost.com, a nutrition and healthy living e-commerce company, accelerated the company's e-commerce growth by two to three years, according to Dailey.

Notably, Vitacost assisted in making a new type of home delivery a possibility in Denver. In June, Kroger launched a natural and organic e-commerce website called King Soopers Live Naturally, which utilizes Vitacost's tech to deliver more than 36,000 health-related and organic products.

Colorado already had the unique pleasure of already enjoying Kroger home delivery of items available in local stores prior to the Vitacost purchase through the King Soopers Home Shop service. In other words, Kroger now has three very different different brands of e-commerce throughout the country.

kroger supermarket

AP

If groceries are increasingly delivered or picked up, what does this mean for future grocery stores? Will Kroger transform stores into storerooms, deserted except for a few old-fashioned customers who prefer to stroll around the aisles, unencumbered by lines?

Probably not -- and it shouldn't.

According to a 2014 PwC survey, only 5% of shoppers ranked online shopping in their top 3 shopping options, with half of respondents saying their main issue was that, online, they couldn't see and feel the actual product.

However, shoppers are still demanding grocery stores upgrade tech.

More than half of the respondents wanted to integrate their mobile device into their future shopping experience, whether to pay, view store maps, create grocery lists, or earn loyalty points. Kroger's app, which contains localized shopping lists, targeted ads, and in select areas the ability to scan and bag items while shopping, has been downloaded 9 million times.

Also, while most respondents said they prefer traditional grocery stores, overcrowded locations and long lines were the top two annoyances that would prevent them from returning to a store — issues that tracking programs and even a small number of time-strapped shoppers switching to online can help prevent.

"This is not a world that is binary, that here's digital and here's brick and mortar," Kevin Dougherty, Kroger's vice president of digital, said in a recent investor conference. "Both are really important and it's a rare day that one wins exclusively."

Kroger's vision of the grocery store of the future is not radically different than traditional grocery stores on the surface.

However, these tech changes are subtly changing how you shop in ways you can't always predict, whether you're grabbing your smartphone a few more times a day or waiting a few less seconds in the checkout line.

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