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The Grocery Store of the Future

November 02, 2018

Increases in online grocery shopping, IoT and data analytics are the among the major trends impacting the digitization of brick-and-mortar grocery stores and the overall grocery shopping experience of the future.

Of all of the consumer habits, grocery shopping seems to be the most intractable. The average American grocery shopping trip is 41 minutes. Almost all of that still occurs in brick and mortar stores. Some 75 percent of consumers say they rarely or never buy groceries online.

In a large part, that’s due to the freshness factor. Research shows that 84 percent of consumers don’t like ordering groceries online because they want to touch and feel the merchandise.

Some people believe this is all about to change. Within five or seven years as many as 70 percent of consumers will buy food and beverages online, according to joint research from Nielsen and the Food Marketing Institute. By 2024, U.S. consumers could be spending $100 billion online -- the equivalent of $850 per household per year.

That still leaves a lot of in-store shopping. But since they’ll have to compete with online shopping, grocers will have to fight harder for consumers’ business. Successful grocers over the next decade will need to make food shopping a fun, personalized and omnichannel experience. Digital can help in all of these respects.

The Online Inevitability

While online grocery shopping hasn’t yet beguiled the masses, consider that in 2016, 23 percent of consumers purchased food and beverages online. As Laurie Rains, SVP, Retail Services at Nielsen, noted, crossing the 20 percent threshold was significant. Once 20 percent of consumers started buying books and music online, it took 15 years until 70 percent of the public did, the point in which the category has reached maturation.

Since the next industry to go online, banking, only took 10 years to reach maturity, Nielsen is predicting grocery shopping will reach that benchmark between 2022 and 2024.

There are various reasons why. Consumers have gotten used to shopping for other items online, for instance. Some 79 percent of consumers now do so, often because it’s cheaper. Consumers are also more amenable to buying household items like razor blades, coffee, and dog food on a subscription basis. IoT devices add another wrinkle; soon your smart washing machine will be automatically ordering new detergent when it’s about to run out. This isn’t a new model. In the 1950s and 1960s, milkmen were common in North America and Europe and so was the delivery of other household staples. This is still a popular model in India.

It’s possible to blend home delivery and standard grocery shopping. “Click and collect” lets consumers purchase online and then pick up their items at their local supermarket. Some 37 percent of retailers worldwide offer this option.

Catering to Particular Needs

One objection to the notion that online grocery shopping will soon become the norm is that grocery shopping is different and insulated from the type of digitization that banking and books have endured. Because of the freshness factor, some 99 percent of consumers continue to shop in brick-and-mortar grocery stores.

Grocery stores that aim to appease such shoppers have sought to eliminate pain points in the experience, like checkout lines. To keep prices low, many are automating back-room tasks like counting money and scanning shelves to ensure consistent stock levels and replace missing items.

They are also interactive adding digital signage. In one “supermarket of the future” prototype design, shoppers can hold up their chosen items to a digital screen. The screen’s motion detector and sensor recognize the item and the display data like price, pesticides or fertilizers used in production, nutrition facts and details of its journey to the store. Another, increasingly more common fixture, are Bluetooth-connected beacons – hardware devices about the size of a bar of soap or smaller that shoppers can use to help navigate store shelves. Beacons can also beam recipes to the consumer’s smartphone and direct them to other necessary ingredients to pick up during the same shopping trip.

A cutting-edge supermarket in China, meanwhile, offers the same type of data delivered via smartphone apps that read barcodes. That supermarket also features in-store dining and 30-minute delivery. Still another design is a “virtual supermarket” which stocks no actual items but where consumers can shop and have their items delivered to their homes.

When asked for her vision of the supermarket of the future, Rains described a hollowing out of the center of the store -- which currently houses items that could become subscription items. In their place, she sees an expansion of the outer rings of the stores where shoppers find fresh food. “A lot of it has to do with the experience,” she said. “Whether it be cooking demonstrations or more interactive education, we see more nutritionists and beauticians helping in store.”

More prosaically, supermarkets are addressing the freshness factor by training professional shoppers to pick the best items from the bunch. “There a relationship building among people who are using click and collect,” said Rains. “They build relationships with the picker. They may request a picker because they trained them well to know what they mean when they say, ‘a ripe banana.’”

Data can also add a personal touch. If a consumer is willing to share their data, a store can understand, from past behavior and real-time context, what that consumer’s goal is for a shopping trip. For instance, if a shopper wants to run in and out for a single item, the store could send a store map to ensure that she gets in and out quickly and can auto-pay to skip the line. If it’s a more leisurely trip, then the store could send coupons and special offers and suggest items based on their buying history, the way that online retailers do.

Of course, such experiences depend on a robust bandwidth connection. Delivering such experiences also requires direct connections to the cloud to call up a seemingly infinite amount of data.

As with other shopping experiences in the 2020s, the consumer will call the shots. Shoppers will determine what they want from the shopping experience and whether they need to visit the brick-and-mortar store at all. One thing is for sure -- the way we all buy groceries will change. Grocery stores have another four years or so to figure out how.

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