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Loblaw is launching a trial digital advertising service that rewards customers with loyalty points for seeing relevant and tailored ads on third-party websites.

Providing customers with more relevant digital ads

This new programme will optimise data from Loblaw’s PC Optimum loyalty and rewards scheme to provide its customers with more relevant ads as they browse the internet. PC Optimum is Canada’s leading loyalty programme, with over 18bn members. Initially, the service will be trialled with a small number of customers which will enable them to earn additional rewards points for seeing the ads.

Source: IGD Research

Opportunity for national brands to target loyalty scheme members

While the retailer has previously optimised its PC Optimum programme to provide customers with personalised offers and ads through its own web channels and email, the trial expands this to other websites, including social media sites. The service will enable national brand advertisers to target PC Optimum members across a range of digital properties. The ads will include a visible identifying mark or logo associated with PC Optimum.

Aiming to create more transparency in the media industry

Several other retailers, including Walmart, Kroger and Albertsons, have set up digital marketing operations, with a view to selling ads across first-party and third-party websites. However, this is the first instance where customers will be rewarded for allowing the use of their data to expose them specific adverts. Loblaw will be hoping that the prospect of providing greater transparency and seeing more relevant ads will prompt them to opt-in to the programme.

Creating new income and profit streams

Digital marketing is becoming a core competency for grocery retailers as they develop a strong digital presence. Last year, Kroger announced that digital marketing would form a key part of its alternative profits stream moving forward. It is aiming to build one of the most transparent media companies in the sector. Recently it formed an integrated media and measurement relationship with Pinterest which enables advertisers to optimise Kroger's data for targeting on the social platform.

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Walmart is partnering with Google to introduce voice ordering capabilities for its online grocery service.

Draws on previous shopping behaviours to identify specific products

The new Walmart Voice Order service enables customer to say “Hey Google, talk to Walmart” to activate the Google Assistant. Products will be added directly to the customer’s shopping basket, with the service learning and delivering improved accuracy the more it is used. It will also draw on previous purchases to help identify specific products through shoppers using generic product terms.

Source: Walmart

Innovation underpinning ecommerce growth

The introduction of this service aligns with Walmart’s goal of making every day easier for busy families. Its online grocery business continues to grow at a rapid pace. In the last year, it added an additional 1,000 pickup locations and took its delivery initiative to 800 locations. The retailer has launched several pilot programmes in this space including a self-driving test and a last-mile grocery delivery service, Spark Delivery. US ecommerce sales were up 43% in the last quarter.

Competing with Amazon’s Alexa service

While Walmart is initially partnering with Google, working across multiple platforms including the Google Home Hub, Android phones and iPhones, it plans to add others to the mix over time. Walmart initially partnered with Google for voice-based ordering in 2017, enabling customers to order more than two million items from Walmart.com. This new service will pitch Walmart directly against Amazon, which leads voice-based shopping in the US through its Alexa-enabled devices.

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In partnership with Carrefour, Zaitt has opened a 24-hour convenience store in São Paulo, which is fully autonomous, requiring no cashiers or members of staff. This is in line with Carrefour Brazil’s strategy of partnering with startups and growing its digital capabilities in the country.

Paula Cardoso, CEO of Carrefour eBusiness Brazil, said:

“As we do globally, we will be partnering with companies and startups that bring us new technologies and competencies to accelerate our digital transformation and generate scale for truly innovative services and solutions".

Source: IGD Research

Zaitt’s second store in Brazil benefits from more frictionless technology

This is the second store from Zaitt and opened on Thursday 21 March. Zaitt’s first store opened in December 2017 in Vitória, in the state of Espírito Santo (southeast Brazil).

The new store in São Paulo, however, is the first to use both QR (scan & go) and Radio Frequency Identification (RFID). RFID is much less manual as customers do not need to scan each item, which makes for a more frictionless shopping experience.

How does the technology work?

Customers are required to download the Zaitt app and register their credit/debit card details. Before entering the store via a set of two doors customers decide on their preferred payment method. The first uses scan & go technology, where customers manually scan products’ QR codes and these products are added to a virtual shopping cart.

The second, more innovative approach, sees shoppers enter and pay through facial recognition. When a customer enters through facial recognition Radio Frequency Identification (RFID) is used and automatically detects the items a customer has selected using radio signals.

Upon leaving the store, (for both payment methods) a screen displays the products the customer has picked up and once verified by them, payment is debited from their account and the doors open for them to exit.

Source: IGD Research

Source: Zaitt

What is the product offer?

The store has 900 SKUs and the product mix currently consists of predominantly food-for-now options, snacks, drinks (including beer and wine), a small selection of chilled items and personal hygiene items. Customers can also heat products in a microwave for immediate consumption at the store. Zaitt intends to extend this food service offer by adding coffee to go.

Carrefour has been rapidly expanding its Carrefour Express convenience stores over the last two years in São Paulo. Therefore, Carrefour is well-positioned to advise Zaitt on getting the product mix right, albeit on a smaller footprint.

Source: IGD Research

Source: IGD Research

Prime location

The São Paulo store is located on a high footfall parade of shops in the busy, upscale neighbourhood of Itaim Bibi. The area is known for its high-rise business head-offices, modern restaurants and luxury shopping malls. Zaitt’s on-the-move proposition is likely to be popular in this area due to the high frequency of both workers (in the day) and people visiting bars/restaurants in the evening.

Source: IGD Research

Partnership with Carrefour

The Zaitt store in Vitoria was the first store in the Americas to use QR pay and go technology. The partnership with Carrefour is a good example of the retailer’s strategy to partner with start-ups using innovative technologies. For now, Zaitt is only partnering with Carrefour at this store, but its success could lead to further expansion.

It is also likely that other businesses will want to adopt the technology being used at Zaitt, which would help the Zaitt business to grow.

Further expansion for Zaitt?

Zaitt intends to open a second store in São Paulo in the coming months. The Itaim Bibi store has been very popular with customers in its opening weeks, surpassing Zaitt’s expectations. If the store continues to perform well Carrefour may potentially partner with Zaitt on a bigger scale.

Zaitt’s small footprint (70 sq. m) makes it easier to find vacant units. The on-the-move proposition is more suited to metropolitan areas, so São Paulo is an obvious choice to continue to expand in the short to mid-term.

The success of last-mile delivery app’s such as Rappi in Brazil, with whom Carrefour has announced a new partnership, indicates there is a strong appetite for customers utilising smart phone technology, particularly if it makes things quicker and/or easier for them.

Oliver Butterworth

Oliver Butterworth

Retail Analyst - Latin America

The IGD team spent four days in Las Vegas exploring ShopTalk 2019. Based on what we saw, heard, learned and discussed, here’s five predictions for the digitisation of grocery retail.

We have been exploring EuroCIS a large trade show, focused on technological solutions for retailers and covering all retail verticals.

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