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We recently visited Walmart’s Supercenter in Rogers, Arkansas. As one of its key locations for testing new initiatives, the store features the retailer’s pharmacy of the future concept.

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Walmart is using artificial intelligence (AI) to improve the self-checkout experience at its US stores.

Reducing error rates

As reported in Business Insider, Walmart has equipped self-checkouts in around 1,000 Supercenters in the US with AI technology which has helped it to improve the accuracy of customer scans and reduce error rates. In partnership with technology company, Everseen, the checkouts help to identify when products have been mis-scanned. Overhead cameras help to compare customer baskets with scanning data and identify unusual scanning movements. Any potential issues are flagged to an app accessed by a checkout host.

Source: IGD Research

Improving scanning rates

This technology also helps to overcome one of the key customer pinch-points of self-checkouts, namely unexpected items in the bagging area. Most self-checkout systems use a scale in the bagging area to compare what’s being scanned and what is bagged. Everseen’s technology provides retailers with the opportunity to remove the scale, enabling faster scan rates and lower incidents of customer errors, which often require store intervention to resolve.

Source: IGD Research

Innovating at the front-end to drive impulse sales

As Walmart has expanded the number of self-checkouts, with many stores featuring two banks of self-checkouts, it has rolled-out a new configuration for impulse products. Incorporating chilled soft drinks, confectionery, healthcare and non-food items, this part of the store has been re-designed to help drive sales of items which perform strongly within its conventional checkout lanes. The roll-out of self-checkouts in many retailers has often led to reduced space for these types of products, or less opportunity for customers to purchase. Branded product suppliers have been focusing on developing more creative solutions, including enhanced displays such as the latest solution at Walmart.

Source: IGD Research

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We review Kroger’s first quarter results and the factors driving growth at the world’s second largest food retail business.

Identical store sales behind expectations

Kroger’s first quarter sales fell by 1.2% to $37.3bn, reflecting the divestment of its convenience business last year. Total sales, excluding fuel and the impact of selling the convenience store business, increased 2.0%. Identical store sales over the period increased 1.5%, excluding fuel. This is below the run-rate required to meet its full-year guidance, with several initiatives underway to try and accelerate its performance. The work undertaken on space optimisation last year is expected to generate a tailwind for the business going forward.

Source: IGD Research

Investing to redefine the customer experience

Kroger remains a business in transformation, driven by its strategic plan Restock Kroger. Central to this is its goal to increase operating profit by $400m over a three-year period, driven mainly by alternative profit streams. This will enable the business to continue to invest in the customer experience, including its ecommerce and private label operations. The business remains confidence on achieving this, with alternative profit streams expected to contribute an estimated incremental $100m this year. The retailer has made several appointments across its media and data business units to enhance its capabilities in these areas.

Ecommerce sales up 42%

Ecommerce sales increased 42% in the quarter as it expanded grocery pickup to 1,685 locations and delivery to 2,126 locations. It also started to test a 30-minute delivery service, Kroger Rush, in the Cincinnati area. The retailer made further progress with its private label business, launching over 200 new products. These contributed to sales growth of 3.3%, helping unit share to increase to 28.9% in the quarter. Its Simple Truth and Private Selection ranges performed particularly well, delivering double-digit sales growth.

Partnerships underpinning transformation

Partnerships are an important part of Kroger’s transformation. During the quarter it formed PearlRock Partners with private investment firm Lindsay Goldberg. This is a new platform to identify, invest in and help grow the next generation of leading consumer product brands. It also formed a new direct relationship with Pinterest, further enhancing its Kroger Performance Media division. The retailer also broke ground on the first customer fulfillment centre that is being developed as part of its partnership with Ocado. Developing these types of partnerships has become a much stronger focus throughout the food retail industry as retailers look to move at pace and bring new capabilities and thinking into their businesses.

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Loblaw is expanding its food waste programme with Flashfood to additional stores across Canada.

Products purchased through the Flashfood app

The Flashfood app enables Loblaw customers to purchase food items nearing expiration at a reduced price, with discounts of up to 50%. Earlier this year, Loblaw launched the programme in 139 stores in Quebec. This has been extended to its Real Canadian Superstore format in Ontario, while over the summer it will be introduced to more than 250 stores, including Real Canadian Superstore locations in Western Canada, Loblaws and Zehrs stores in Ontario, and all Atlantic Superstore locations.

Source: IGD Research

Products purchased through the Flashfood app

Through the Flashfood app, customers can see products nearing their expiration date and purchase them at a significant discount. Customers can browse available deals at any participating store. Products are purchased directly through the app and collected by the customer from the Flashfood zone in the store. Loblaw’s ability to launch this programme follows on from the work it has undertaken to understand date codes at the item level.

Commitment to reduce store-generated food waste by 50% in corporate retail operations by 2025

For Loblaw, this forms part of its major initiative to reduce costs, while also tackling an issue which resonates strongly with consumers. In January, Second Harvest and Value Chain Management International’s ‘Avoidable Crisis of Food Waste’ report revealed that 58% of food produced in Canada, is lost or wasted each year, a third of which could be rescued. Last year, the retailer made a commitment to reduce store-generated food waste by 50% in corporate retail operations by 2025.

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