Last fall, Neil Z. Stern (@neilstern1), a senior partner of McMillanDoolittle, had the opportunity to visit a unique store in Amsterdam called Bilder & DeClerq. Stern reports, “Each day, the store offers 14 recipes, complete with all of the ingredients that one would need to prepare that recipe. And by all, we mean that each ingredient is available, portion controlled, so there is no waste. Preparation time for most dishes is around 30 minutes, and the company makes a point of actively searching our local and sustainable ingredients.”[1] A few thoughts raced through my mind when I read about Bilder & DeClerq’s business model. The first thought was, “This has to be expensive.” Every buyers’ club member knows that purchasing goods in bulk is much cheaper than buying them in portion-controlled quantities. That thought was quickly followed by another, “Sounds convenient.” One of the emerging traits of Generation Y (the Millennials) is that they like to cook at home but they also appreciate convenience. Another apparent preference of Millennials is eating healthier than previous generations. The founders of Bilder & DeClerq appear to have taken notice of these trends.
Another group that has noticed these trends is Whole Foods. Husna Haq (@husnahaq) reports, “The natural foods purveyor is planning to open a new chain of lower-priced, ‘hip, cool, and tech-oriented’ stores next year — and consumers have Millennials to thank for the new chain.”[2] During the announcement of the new chain, Walter Robb, co-CEO of Whole Foods, stated, “It will deliver a convenient, transparent, and values-oriented experience geared toward Millennial shoppers, while appealing to anyone looking for high-quality fresh food at great price. We believe the growth potential for this new and complementary brand to be as great as it is for our highly successful Whole Foods Market brand.” The interesting twist in the new Whole Foods’ scheme is that it will be “tech-oriented.”
Although Whole Foods didn’t detail what those technologies would be, Carolyn Heneghan (@carolynheneghan) provides a glimpse of seven grocery-related technologies that could change the grocery shopping landscape in the years ahead.[3]
1. Grocery Shopping Apps
Heneghan reports that available apps “run the gamut” from helping create shopping lists to taking advantage of loyalty programs. She notes, “H-E-B is offering a new app that enables shoppers to use digital coupons, find out if their store carries a particular product, manage their grocery lists, and has easy-to-swipe shopping and sharing options.”
2. Online Shopping with In-store Pickup
The online grocery business model that seems to be garnering the most attention is the “click and collect” model highlighted by Heneghan. To learn more about this growing sector, read my article entitled “Online Grocery Shopping Continues to Grow.” Heneghan reports, “One recent Nielsen survey of 30,000 shoppers in 60 countries showed that about 12% of consumers already order their groceries online for in-store pickup, and 10% place online orders for curbside pickup. In the report, Patrick Dodd, president of Nielsen’s global retailer vertical, called this ‘the connected commerce era’ in which consumers are taking a more ‘blended approach, using whatever channel best suits their needs.'”
3. Home Delivery
Heneghan reports that a slew of companies have entered the grocery home delivery business. Of course, some mom-and-pop stores were home delivering groceries a century ago. What’s new about home delivery is that groceries are ordered online. Greg Bensinger (@GregBensinger) and Laura Stevens (@laurastevenswsj) report, “Fresh grocery and meal delivery has become a hot battleground, with competition in same- and next-day service from Wal-Mart Stores Inc., Safeway Inc., Peapod LLC and startup Instacart Inc., among others. Amazon is testing its own same-day delivery network in some markets.” In one of the most recent twists in this area, Bensinger and Stevens report that Amazon has announced that its AmazonFresh unit is going to team up with the U.S. Postal Service to deliver fresh food.[4]
4. Personalization
Heneghan reports, “Bi-Lo Holdings, now known as Southeastern Grocers, recently introduced a smartphone app geared toward personalized digital coupons based on shopper’s purchasing behaviors and geographic interests. The app includes a virtual rewards card that can track savings, a scanable shopping list, GPS-enabled location finders, and a weekly circular custom-made for a particular store, among other features.” If you really want to get personal, however, Jerry Wolfe (@wolfeman60), CEO of Vivanda, recommends that you get your own FlavorPrint®, a previous version of which Enterra Solutions® helped develop. In a recent tweet, Wolfe called FlavorPrint an eighth grocery-related technology that is going to change the food landscape. FlavorPrint can help you find recipes and ingredients that fit your personal flavor profile. It doesn’t get more personal than that.
5. Mobile Wallets
Heneghan reports, “Mobile wallets are becoming a more popular way for consumers to pay for purchases. Major credit card networks have jumped on board as well, which should signal a shift in shopping perceptions for grocery retailers to adapt to. However, due to the hardware and software investments involved and uncertainty surrounding whether definite changes are coming with mobile wallets, many retailers are still hesitant to integrate mobile solutions into their stores. Despite these drawbacks, some major retailers have already adopted mobile wallets in their POS interactions, including Whole Foods Market and Wegmans Food Markets.”
6. Data Analytics and Consumer Insights
There is near consensus that we have entered the age of big data. Data, of course, is meaningless if it lies fallow in a database. Its value lies in the insights that can be gained when the data is analyzed. Heneghan reports, “Analyzing that data can produce insights to help retailers personalize the shopping experience and improve their bottom line. Customer data can influence decisions at many levels of grocery retail, from smart staffing and stocking strategies to rewards programs and weekly sales. Kroger recently acquired a majority stake in its data analytics partner DunnhumbyUSA, wherein the retailer entered a long-term licensing agreement to continue using DunnhumbyUSA’s technology while spinning off a new Kroger-owned subsidiary for it, called 84.51°. Through this technology Kroger has been able to make informed data-backed decisions.” As president and CEO of a cognitive computing company, I obviously believe that the best analysis involves cognitive computing. In Enterra’s case, we use both mathematical and semantic approaches. Both approaches are necessary because much of today’s data is unstructured. Semantic reasoning is necessary to bridge the gap between pure mathematical techniques and semantic understanding.
7. In-store Wi-Fi
Heneghan reports, “According to a recent study, about 28% of participating retailers of all types and sizes saw increased customer loyalty after instituting in-store customer Wi-Fi, which came along with a 2% increase in sales. About 21% of retailers also confirmed that their customers spent more time in the store thanks to in-store Wi-Fi. In-store Wi-Fi enables both customers and employees to find more information about products while in the aisles.” Undoubtedly, Wi-Fi will be one of the technologies featured in Whole Foods new Millennial-focused stores. Mobile technologies (especially smartphones) are ubiquitous and they are becoming an integral part of the grocery buying experience. To learn more about how mobile technologies are impacting grocery shopping, read my article entitled “Grocery Shopping: The Digital Path to Purchase is Here and It’s Mobile.”
Heneghan concludes, “Grocery retail technologies continue to multiply and retailers are still just at the surface level on integrating these functions into the business model.” I agree with that conclusion, but the learning curve is steep. Over the next few years, these technologies will become commonplace.
Footnotes
[1] Neil Z. Stern, “Are meal solution stores on their way?” Supermarket News, 13 October 2014.
[2] Husna Haq, “Millennial shoppers to spawn a cheaper, trendier Whole Foods chain,” The Christian Science Monitor, 7 May 2015.
[3] Carolyn Heneghan, “7 grocery retail technologies to innovate the shopping experience,” FoodDIVE, 22 May 2015.
[4] Greg Bensinger and Laura Stevens, “U.S. Mail Delivers Amazon Groceries in San Francisco,” The Wall Street Journal, 4 September 2014.
