If grocery stores could talk, they’d smirkingly utter the old Mark Twain quip: “Reports of my death are greatly exaggerated.” As Amazon, Instacart, and a host of start-ups have rushed into the arena, confident in their abilities to disrupt, revolutionize, and destroy, supermarkets have stubbornly and tenaciously held their ground against all challengers. While ordering all of your necessaries from apps and having them delivered to your door sounds like a winning concept, the new paradigm has failed to fully take hold of the marketplace (yet). Some consumers are experimenting with new methods of grocery shopping, but most have thus far loyally stood by their local supermarkets, prompting retailers to abandon the idea of doing away with brick and mortar entirely, and instead look for ways to optimize consumer experiences within actual, physical, grocery stores.
Let’s take a look at the strategies industry leaders are adopting to synthesize the possibilities of technology with consumers’ love for the supermarket experience...
Technology is poised to have a huge impact on the checkout process. As retailers focus on removing friction from shopping experiences, cashier-less grocery stores appear to be just around the corner. This ABC News story shows a few promising new technologies that use sensors, cameras and conveyor belts that could make checking out a breeze. The combination of barcodes, scanners, and scales also shows promise for limiting theft and seamlessly managing inventory. Amazon’s Go Stores have been largely successful, and have prompted other retailers to focus on speeding up checkout times and automating the payment process. But Amazon also found that customers were unhappy with the cash-less sales model, and at their recently opened 12th Go Store in New York, they’ve unveiled a new system that allows shoppers to pay the old fashioned way.
As retailers focus on speeding up transactions, eliminating lines, and streamlining shopping experiences, we expect the way that people shop to change. Jeff Bezos’ letter to shareholders in 2018 mentioned that the top-selling items in Go stores were water, coffee, sandwiches, cookies, fruit, and gummy bears. The company tried to pull half-triangle sandwiches from stores last year, but customers were so upset that Cameron Janes, Amazon’s Vice-President of Physical Stores said they “revolted”, and the item was returned to shelves. Janes also noted that Amazon executives expected the stores to be busiest at meal times, but found that they had the most traffic in the mid-afternoon. He remarked “it’s so low-friction, in shopping here, people are coming in really fast for snacks…they’re grabbing one thing, and then they leave… kind of treating it like a vending machine.”
In their newer stores, Amazon has created more space for snacks, and other retailers are exploring changing inventories and procedures to capitalize on “micro-shopping trips”, defined as visits to a retailer that take 5 minutes or less. Whole Foods has reported that these brief trips have increased by 8.5% since being purchased by Amazon. Lockers and other options allowing shoppers to order online and pick up at the store have become popular around the world, and Forbes notes that these trips “can result in higher-proportioned revenue because shoppers who place pickup orders, encouraged by the prospect of a quick in-and-out visit, remain prone to split-second purchase decisions.” Wal-Mart, Kroger, and Target have all worked hard to build up their “click and collect” capabilities, as statistics show that 34% of shoppers using these services buy more than originally intended, 89% report that they’re satisfied with the experience, and an estimated 40% of American shoppers are using these services with more expected to follow as it’s offered in more markets.
As screen, sensor, and shoppable packaging technologies improve, retailers will be able to provide consumers with jaw-dropping amounts of information as they stroll through the aisles of their local stores. One innovation in screens will allow marketers to track what kinds of content attract eyeballs in real time. One recent survey has concluded that digital signs are 34% more effective at promoting products than their static counterparts. Another recent study found that 85% of customers at stores with digital screens felt that they were entertaining and pleasant to watch, 78% said the screens caught their attention, 70% felt the content was useful, and 62% deemed it interesting. This video shows a screen connected to shelf sensors, which can instantly shift to display a wealth of information on the product a customer picks up, including origins, ingredients, allergens, recipes and nutritional information.
Meanwhile, shoppable packaging can connect smartphone-savvy consumers to brands, and allow for real-time communication between producers, retailers, and consumers. As brands and retailers unlock the potential of big data throughout the food and beverage industry, the supermarket will be a key center for collecting the information every company will need to stay successful, and creating incentives for consumers to share their desires will be essential. One of traditional supermarkets’ fundamental advantages against disruptive digital upstarts will be the sheer amount of data they can collect as thousands of purchasing decisions are made within their walls every single day. Leveraging and streamlining data collection and use may be the biggest factor in their ability to fend off online retailers.
Firms like Ocado and Alibaba are using robotics and AI to revolutionize retail. Hema, Alibaba’s popular, forward-thinking Chinese supermarket chain, has experimented with robotics to optimize shopping experiences and cut waste in logistics. Meanwhile, Ocado, a delivery and logistics company that uses automation and robotics to offer solutions in delivery and logistics has been partnering with large supermarket chains on both sides of the Atlantic, offering Amazon’s competitors access to online services and supply chain expertise that can keep traditional companies like M&S competitive in a digital world.
As you can see, brick and mortar supermarkets are unlikely to go away any time soon. They offer a unique, treasured experience to consumers, and they can develop into incredibly valuable centers for data acquisition. But the supermarket of tomorrow won’t look like the Safeways of old, and grocers will need to adapt to the digital world or fall by the wayside. If you’re looking for new ways to collect data, create shoppable products, or use cutting edge technology to track the results your adspend is producing, get in touch with Adimo today!