How Ad-Tech Is Invading Physical Retail Spaces

Walgreens’ coolers will feature digital doors that display images of the contents within, like drinks or frozen foods, and also offer targeted advertising opportunities.

Just as brands have long been able to target consumers online with cookies, retailers are now experimenting with their own form of tracking technology—mostly smart shelves and cameras—that allow them to determine consumer characteristics and deliver more personalized messaging as they shop.

These in-store placements enable retailers to sell real estate to brands that want to speak to shoppers as they walk down aisles. But, while the data is anonymized, it also means shopping is becoming more Big Brother than ever before. And, like online advertising, brands and retailers must offer relevance, but not so much as to make consumers feel they are living out George Orwell’s Nineteen Eighty-Four.

Jeremy Hull, vp of innovation at iProspect, said to think of it more like an evolution of digital out-of-home.

“This is much more individually focused and coming much closer to real-time traditional digital advertising,” he said.

Grocery chain Kroger is one retailer experimenting with the technology. In January, it revealed a connected store concept that will use Microsoft technology to store and process data generated in stores and on Kroger’s app.

Brands like Kraft Heinz are among the advertisers who have used Kroger’s existing smart-shelf technology. In two new pilot stores, however, Kroger is selling on-shelf ad space to brands that will be able to target customers using demographics gleaned from video analytics.

Smart shelves will enable retailers and brands to speak to consumers as they shop.Kroger, Microsoft

“We use basic, anonymized demographic data, focused on age and gender,” a Kroger rep said. “There isn’t an expectation of privacy in a store, so we are not legally required to post about the shelving cameras.”

AWM Smart Shelf has a similar concept. It uses a combination of smart shelves, end caps and tiny cameras to capture similar information. To date, AWM has worked with retailers like Albertsons, Stop & Shop and Walmart and brands like Frito-Lay, General Mills and Pepsi.

“If they grab a product off shelf X and put it back on the shelf and frown, that type of intelligence lives in our system,” said Kevin Howard, CEO of AWM. “Brands are using the system to, one, generate uplift of sales and, two, to understand better what people want on their shelves.”

This enables a brand like, say, Hershey’s to promote s’mores recipes for the Fourth of July.

“The messages will be specifically tied to the actual customer and who it is,” Howard added. “When you know for certain, what that allows you to do is streamline the supply chain because you’re not selling products on a hope and a prayer, but specifically [to that person].”

In addition,…

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