Magazine Article | April 19, 2017

IoT-Inspired Innovation

By Matt Pillar, chief editor

Kroger doubles down on the Internet of Things

As the IoT (Internet of Things) hype cycle finds its fifth gear, there are plenty of pundits, vendors, analysts, and tech futurists contemplating the great potential of a granularly connected retail enterprise. No matter your purview of retail operations, regardless of your disciplinary responsibilities as a retail exec, there are countless reasons to get excited about the prospect of seamless data sharing and interconnectivity among a growing host of devices, equipment, and infrastructure. Oh, the possibilities!

Meanwhile, the top brass at Kroger made a declaration years ago. We got the talking part done, they collectively said. Innovative Retail Technologies covered the company’s initial foray into IoT back in October 2015. Since then, the IoT initiative spearheaded by a cross-disciplinary team of Kroger execs including Director of LP Karl Langhorst, VP of R&D/OR Brett Bonner, LP Technology Manager Randy Christian, and Chief Technology Officer Kirk Ball has grown by leaps and bounds.

Birth Of The Retail Site Intelligence Platform
It started out as a theory. Bonner’s R&D team was working on the development of an interconnected IT system that would leverage radio and IoT-based technologies to enable everything from consumer-facing shopping tools to mobile device-enabled temperature monitoring for food safety. Langhorst’s loss prevention crew was mapping out a migration to IP video. Conversations between the two departments revealed synergies. Instead of developing and supporting two disparate infrastructures to meet each department’s objectives, the teams collaborated on the buildout of a single platform to serve store operations and LP. Kroger dubbed the project its RSI (Retail Site Intelligence) enterprise IT architecture.

The immediate benefit was monetary. Kroger’s in-house developed platform, featuring multiprotocol ZigBee/Wi-Fi/Bluetooth access points mounted strategically on IP video cameras that number anywhere from 120 to 200 per store, saved the company millions of dollars in redundant equipment, labor, and cost. But that was just the tip of the iceberg.

In this hyperconsumer-centric retail environment, Kroger has begun to leverage its homegrown IoT-inspired infrastructure to deliver more personal and interactive shopping experiences to its customers. RSI now incorporates its Edge shelving infrastructure, which features digital displays that not only save thousands of dollars in weekly labor and tag printing costs, but also drive consumer purchases. For example, Kroger is leveraging its digital shelf-level tags to highlight gluten-free products, eliminating the need for customers to scour labels and ingredient lists for that information. It sounds like a small convenience, but with gluten falling out of vogue for so many, it’s paying dividends for the grocer.

“Now, with integrated systems, we’ve engineered assurance and quality into the organization, and the quality o f that process equals productivity.”

Kirk Ball, CTO, Kroger

“Previously, we would print ‘glutenfree’ shelf labels as a service to customers, but we couldn’t be sure they were placed,” says Ball. “Now, with integrated systems, we’ve engineered assurance and quality into the organization, and the quality of that process equals productivity.” The integration he references includes rich product attributes acquired through subscription to GSN data, which is how Kroger can preemptively prepare to deal with trends like celiac awareness. “It’s no longer a manual exercise to identify and react to these trends,” says Ball. “As the trends reveal themselves, we’re armed with the product attributes necessary to take action.”

But consumer purchases aren’t just driven by digital shelf-level promotions. They’re also the product of produce, meat, and frozen food superiority derived from a temperature-monitoring solution that automates the task of keeping tabs on cooler temperatures. That element of its RSI infrastructure saves the retailer money through streamlined operations and the avoidance of food spoilage.

Real-Time Customer Interaction, Enabled By IoT
The four ZigBee radios mounted per camera at Kroger support queue management, mobile shopping apps, and of course, security alerts and a video analytics application. The latter application is exemplary of a Holy Grail that’s been much-hyped, but little-achieved in retail circles. Real-time analytics include a customer sentiment indicator, which allows Kroger to log, study, and deduce the actions its customers are likely to take when they’re happy or unhappy. The implications are profound, clearing the way for store associate intervention to thwart customer disappointment in real time.

“There are so many stories being told every minute of every day in a store,” says Ball. “From customer sentiment to the status and health of infrastructure, those stories are told when we can observe them.” With its RSI infrastructure in place, Kroger can even “hear” those stories from inanimate objects, like store shelves and cooler cases. “It gives us a much deeper understanding of what’s going on in the store,” says Ball.

“When we got started with the RSI, the IoT landscape was very fragmented, and we had to place bets. We made the right ones.”

Brett Bonner, VP of R&D/OR, Kroger

“When we got started with the RSI, the IoT landscape was very fragmented, and we had to place bets,” says Bonner. “We made the right ones.” Had Kroger rolled out its temperature tags using Wi-Fi, he surmises, it might have gotten two years of battery life from the system. The ZigBee approach extends that to 13 years. “The more you can wring out, the better, and it’s already been a massive savings for us,” he says. But, of course, ZigBee is far from the protocol of choice for consumer-held applications. “The right network protocol was to utilize ZigBee for low power consumption, but on the flip side, if consumer devices are Bluetooth or Wi- Fi, we have to go with those protocols, too. A multiprotocol approach allows us to do that.”

Many merchants are still muddling through the transition to IP video and analytics. At Kroger, every camera in the store equates to a supercomputer of its own, and every camera is feeding data to the company’s operations, merchandising, and LP teams, among others. That’s the power of IoT in action.



By Keith Aubele
CPP, LPP, president & CEO,
Retail Loss Prevention Group

Over the course of my 30+ years in this exciting industry, I have come to realize that some very basic core values hold most successful stories together. I would like to discuss those here with you.

1. Innovation. In the early ‘80s, as a young, energetic district loss prevention supervisor, I was cutting my teeth with a young upstart called Walmart. I remember vividly how exciting these times were. “Maverick” was a term of endearment afforded to those who threw caution to the wind and made dramatic positive moves — going against the grain of the established protocol. Many people proved successful and stand as part of the reason for the company’s lasting success. I recall the implementation of scanners at the register, reducing the need for price labels, the adoption of electronic credit card readers speeding up customer transactions thus increasing sales — basic processes that we take for granted today.

Fast forward to innovations being implemented today such as cash recycling systems, allowing retailers to speed up cash fl ow, and drone utilization for the delivery of product. Innovation is at the core of successful companies.

2. Teamwork. Ever been part of a bad team? Negative conflict, cross direction, poor leadership, paralyzed decision making. Of course, most of us have experienced these horrendous team settings. Rarely do these exist in successful companies. My experience is that solid team dynamics build the foundation for growth and success. Part of the teamwork process is knowing each team member’s strengths and weaknesses. Once aligned, team members can focus on their individual strengths and work to cover and stand in to support each other’s weaknesses. I have seen all kinds of teams in action: good teams, bad teams, broken teams, and exemplary teams. And my best memories and successes undoubtedly came from best teams; however, I was able to learn great things viewing bad teams in motion.

Teamwork is how winners win consistently.

3. Risk. Even though imitation is the sincerest form of flattery, rarely does a business succeed by duplicating the model of another established business. In most instances, companies take risks by improving on the successes of others. Some of these are so-called “calculated risks,” while others may be of the “swing for the fences” risk variety. Of the successful companies of which I’ve been a part, risk is a key part of the cultural DNA. Risk defines change — it encourages innovation. Risk is tantamount to developing a product or process, which sets companies apart from their competition and forges a trail that can be traveled toward greater and more innovative solutions and ideas.

Risk for the sake of risk is not smart. Risk with purpose is essential to success.

4. Trust. It is paramount to success and critical to bringing teams and ideas together. Without it, you have uncertainty, and in some cases, anarchy. Trust is built through a time-tested process. It takes time to build, and once betrayed, it takes even longer to repair. Businesses that function based on trust seem to be more agile, flexible, focused, and driven. A key part of trust is the acceptance of failure when the failure is the outcome of an honest attempt to do right.

Putting your trust in others is not always easy; however, in business it is a necessary component of success.

5. Avoiding the Status Quo. Who wants to follow the herd each and every day? You may have heard the saying that the view never changes. This is a truism that more people should embrace. The Status Quo is akin to quicksand. Once you position yourself or your organization firmly into the grips of complacency, the dominoes of demise begin tipping. Real leading-edge companies and leaders lead with a boldness that is designed to blow the doors off of the Status Quo and forge a trail counter to that of conventional wisdom. If you look back at the emergence and dominance of online shopping and just peek back a few years, you will understand the trailblazing philosophy applied to the then-virgin territory. It takes real brilliance and fearless leadership to move in directions never before traveled.

“Break from the Herd” should be imprinted on every retail executive’s forehead. Go forward. Success follows.

How does all this apply to our article regarding Kroger’s innovative ideas and designs? For each of the five reasons above, that’s how. Kroger took some very talented and skilled innovators, put them into a team setting, allowed them to focus on the future, and plied them with support. And Kroger, in its infinite wisdom, realized that, although the company had a great team, it was not complete, and thus company leaders reached out to partners they could trust, like Telaid and ZigBee, to support their initiatives and add the value which was missing internally.

Kroger took a risk designing tools that other retailers could utilize. What other grocery company does this? None that I know of. The company was truly bucking the Status Quo in a way that is honorable.

So when you think of Kroger as a leading grocery chain, stop and think about its innovative concepts, coupled with its internal focus on blazing a new trail to define the way retailers run their business. This is forward thinking — this is history being made.