The Digital Future of Grocery Shopping

The supermarket of the future is here — at least in Europe. Italy’s largest supermarket chain, Coop Italia, claims to have reinvented the customer experience in grocery shopping, with some help from Avanade, a joint venture of digital technology companies Microsoft Corp. (NASDAQ: MSFT) and Accenture PLC (NYSE: ACN).

The new flagship store in Milan:

… provides a welcoming, innovative and informative shopping environment. It merges the physical and digital to recreate the atmosphere of local open-air markets, combined with innovative digital solutions that provide useful product information, while improving store navigation.

The new supermarket’s information architecture is underpinned by a Microsoft Azure cloud-based platform. Interactive food display tables and smart shelves aim to make shopping more relevant and personalized by providing customers with a range of product information.

The largest U.S. supermarket chain by revenue (and second-largest general retailer behind Wal-Mart) could use a boost. While Kroger Co. (NYSE: KR) recently was named the top retailer in the Kantar Retailer PoweRanking, investors have not been impressed with the company’s recent performance. Kroger shares kept hitting new 52-week lows throughout the fall. And recently the company reported fiscal third-quarter financial results that matched the consensus forecast on the bottom line but were accompanied by lowered earnings guidance for the fiscal year.

Rival grocery chain operator Whole Foods Market Inc. (NASDAQ: WFM) was among the top 10 retail brands in the Brand Keys survey. Its recently reported fiscal fourth-quarter results included an earnings beat, but with revenue in line with expectations. However, the results were somewhat overshadowed by the announcement of sweeping changes to the corporate structure. Whole Foods has eliminated its co-CEO positions, consolidating the roles under just one CEO, John Mackey.

Given that Whole Foods is seen as providing a more upscale shopping experience, one might guess it would be likely to bring the type of information architecture of smart shelves and interactive displays as in the new Coop Italia store. Time will tell.

But can such an interactive shopping experience compete with online grocery shopping via Inc. (NASDAQ: AMZN), including its Dash Button feature that makes purchasing certain goods almost effortless?

Shares of Whole Foods closed Monday flat at $30.76, with a consensus analyst price target of $29.89 and a 52-week trading range of $27.67 to $35.58.

Kroger shares closed down fractionally to $32.93, within a 52-week range of $28.71 to $42.75. The consensus price target is $35.50.

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