Technology has revolutionized the way that we do business and go about our everyday lives. From smart phones, texting, and FaceTime, to on demand streaming, virtual reality, and even self-driving cars, the conveniences we enjoy now were mere science fiction 30 years ago. Although the tech and entertainment industries have felt the force of this shift for years, now the food retail industry is facing the same rapid shifts.
During the recent Food Safety Summit held in Rosemont, IL, keynote speaker Carletta Ooton, Vice President of Health and Safety, Sustainability, Security and Compliance at Amazon, walked attendees through the evolution of Amazon’s food services. Amazon began as a simple e-commerce seller of books and has grown into the world’s largest retailer. Today, it sells non-food retail and food, including items traditionally found in food retail stores.
Ms. Ooton’s presentation highlights the competitive challenge that traditional brick and mortar grocery stores have on their hands.
Consumer demand for convenience and speed
According to a 2015 US Census, 78% of households have a laptop or desktop, 81% of adults have smartphones, and adults spend close to 50% of their day connected to technology. These devices have lead to a world where everything is at our fingertips – including groceries
Trends within the food retail industry such as online ordering, meal kits, mobile pay, personal shopping, curbside pickup, and home delivery are all driving conversations around how to best provide optimum levels of service with expedited times and minimal effort to the customer. Delivery services that specialize in fresh foods are now offering delivery times as short as one hour, pressing food retailers to examine how to make groceries available on demand while continuing to drive in-store visits and revenue.
The latest innovation grabbing headlines is AmazonGo, the cashier-less grocery store that uses smart tracking software to allow shoppers to pick up the items they desire and simply walk out of the store.
Traditional grocery formats still have a hold on consumers – for now
Despite the growing technology push, there is some evidence that the in-store experience isn’t on its way out anytime soon. A June 2018 study by the Food Marketing Institute (FMI) shows that the average household is still making 2.2 trips to the grocery store per week.
Some cite consumers’ desire to examine their own fruits, vegetables, and meats prior to purchasing as evidence that brick-and-mortar stores are still the consumer preference. However, as online retailers improve their offerings, consumers may be willing to forego their need for product examination to convenience.
Supermarket News reports that 39% of consumers are open to purchasing food or beverages online but either haven’t (21%) or are waiting until the options to do so improve (18%). Of those who reported having already purchased groceries online, 47% cited convenience as the main reason. With major retailers such as Walmart, Kroger, and Target remaining competitive by expanding their home delivery and curbside pickup operations, these convenient options are steadily growing and are expected to continue.
In another FMI study conducted by Nielsen, the industry group predicts online grocery sales will make up 20% of grocery retail by 2025. That will be $100 billion of the market in less than 6 years. With the speed of evolution in technology and generational rise of early tech adopters as decision makers, innovation and convenience will continue to be key.
Vendor technology is helping supermarkets improve the in-store experience
Innovative technology is also changing how retailers can interact with their vendors, helping to drive overall improvements in the in-store experience to keep customers coming back to the physical store.
The fast rise of blockchain technology is already helping some retailers track and trace product from its source. This evolving technology will help retailers stock and keep fresh products on the shelf, not to mention speedily address recalls when they arise.
Necessary services like pest control can now be tracked online and retailers can know exactly when and where pest activity is attempting to threaten their brand, automatically initiating a visit from their trusted provider.
A new frontier in food retail technology is already here – adapting is critical
Although Amazon’s model may not work for all food retailers and traditional stores, their innovation has made a significant impact on the industry overall. Wise retailers will be sure to watch as these new trends grow and evaluate how to best weave them into their business design. Technology has changed our world drastically and new innovations are being introduced at a breakneck pace. Food retailers that want to stay relevant will need to make a continual investment in technology and innovation to stay ahead of the competition.