Grocery shopping has been an activity in which humans have engaged since the first marketplaces were set up millennia ago. This year, however, may introduce a few surprises and twists in the grocery shopping experience. Although not a new twist, online grocery shopping is gaining traction with consumers. According to data from IBISWorld, “Online grocery sales are expected to increase 9.5 percent annually to become a $9.4 billion industry in 2017. … Safeway, Amazon and Walmart have expanded digital capabilities for selling food and beverages as interest in home delivery grocery service increases. Experts suggest brick-and-mortar supermarkets might be better prepared to manage the back end than e-commerce companies that don’t have trucks, drivers and warehouses in place to handle growing demand.”[1] Although online grocery shopping will remain a small percentage compared to traditional in-store grocery sales, the trend is certainly upward. Sandy Skrovan (@SandySkrovan), founder of Gluten Free Retail HQ , writes, “While grocery shopping online continues to lag behind general merchandise, home and apparel, progress is being made. According to the latest data from Prosper Insights & Analytics’ November 2016 survey, 7.7% of U.S. consumers shopped for groceries online in the past 30 days, up from 5.7% two years ago. Not surprisingly, younger generations are driving the uptick. One in ten millennials and Gen Xers did online grocery shopping in 2016, up from 8.4% and 6.8% respectively in 2014.”[2] Analysts at Pymnts.com add, “A recent Harris Poll of American shopping habits shows that, while 2016 was a big year for eCommerce, the vast majority of consumers still largely prefer to shop in physical stores for particular personal care items.”[3] As Baby Boomers age, they may actually be the generation that spawns the greatest growth in online grocery shopping since they will face mobility issues associated with age. Having groceries delivered to their doorsteps could prove too tempting to pass up. Other trends are discussed below.
The Robotic Grocery Provider
Ocado — the world’s largest online-only grocery retailer — operates the world’s most automated grocery business. Jamie Condliffe (@jme_c) reports, “Ocado claims that its 350,000-square-foot warehouse in Dordon, near the U.K.’s second city of Birmingham, is more heavily automated than Amazon’s warehouse facilities. The company’s task is certainly more challenging in many respects: most of the 48,000 lines of goods that it sells are perishable, and many must be chilled or frozen. Some, such as sushi, must be delivered on the same day they arrive in the warehouse. That turns storing, picking, and shipping items into a complex, time-constrained optimization problem. But in order for Ocado to grow and turn a profit — which it does, despite a crowded U.K. grocery market — it has to make every step as efficient as possible.”[4] To increase efficiency, Ocado relies heavily on artificial intelligence (AI) and robotics. Condliffe explains:
“Currently, when a customer orders groceries via Ocado’s website, large plastic crates are swiftly filled. The containers are packed by hand, but little legwork is required: 30 kilometers of conveyor belts at the Dordon warehouse carry empty boxes straight to people who work as pickers. They grab items from shelves that are replenished by robots, or from boxes brought out of storage via cranes and conveyors. Ocado’s algorithms monitor demand for products and use the information to map out an optimal storage scheme, so that popular items are always within easy reach. Once an order is packed, it’s hauled off in a large truck and taken to a distribution center to be loaded into a van. Each van then embarks on a delivery route that can be carefully optimized according to factors such as customer time preferences, traffic, and even weather.”
Condliffe reports Ocado’s goal is eventually to create a fully-automated warehouse. “Ocado is working on robotics that could one day pick orders from the crates carried by its swarm of robots,” he writes, “but that’s difficult, thanks to the wide variation in the shape of groceries — from, say, a bag of oranges to a bottle of wine.”
Internet of Things-enabled Grocery Shopping
Related to online grocery shopping is the growing “smart home” market which includes Internet of Things (IoT) connected appliances. Skrovan writes, “Imagine a fridge that can track food usage and then auto-order items when running low — or at the very least automatically add them to the household grocery list.”[5] Although she admits no such refrigerators currently exist, she reports, “Samsung’s latest take on the smart fridge is the closest to that ideal. The company’s Family Hub refrigerator not only is equipped with monitoring sensors, but also has cameras and a large LCD touchscreen display. The cameras take photos of the refrigerator’s contents every time the door is closed. Consumers can then connect to a smartphone app to remotely view the pictures while in the grocery store to actually see if they’re running low on eggs, milk or other items. The Family Hub’s WiFi-enabled touch screen panel enables consumers to order groceries online with a ‘Groceries by MasterCard’ app, all without booting up a computer. FreshDirect, MyWebGrocer and ShopRite are on board as initial retail partners.”
The IoT-connected devices many more consumers will be using in their digital path to purchase are voice-enabled devices like the Amazon Echo and the Google Home. Skrovan explains, “Amazon Echo, Echo Dot and Google Home, [were] under many Christmas trees this holiday season. Powered by artificial intelligence technology, the devices have potential to disrupt the path to purchase in the coming year.” With a voice command, these devices can order something and have it delivered to your door or you can put an item on your shopping list to purchase in-store. She goes on to explain Amazon Dash could also affect the retail sector. “While not Alexa-powered,” she writes, “the one-touch-button functionality of Amazon Dash will continue to shake up grocery product fulfillment as we know it. Dash is essentially an adhesive button that connects to the Internet. Once it is pressed, an order is automatically sent to Amazon. Since its unveiling in early 2015, more than 200 different vendors and products have joined the program, making automatic ordering of everyday household items easy and accessible.”
The Self-serve Grocery Store
Amazon has introduced some of the newest twists in the grocery business over the past few years. And the company is not yet finished. Amazon’s latest venture involves a new brick-and-mortar store business model it introduced in the Seattle area. According to Daphne Howland (@daphnehowland), the store includes “roughly 1,800 square feet of retail space that is conveniently compact so busy customers can get in and out fast,”[6] Dubbed Amazon Go, the store has “no checkout process, much less checkout lines. … [It] requires customers to launch a QR-code based app, which they scan upon walking into the site. The retailer’s ‘Just Walk Out’ technology detects when products are removed from or returned to shelves, keeps track of them in a virtual cart, and totals the cost when customers depart the store. The app eventually automatically charges the card saved in the associated Amazon account and provides a digital receipt. The system leverages technologies used in self-driving cars, including computer vision, sensor fusion and deep learning, according to Amazon’s website. At the moment, only Amazon employees have access to the store, though others can sign up to be notified when it’s available more widely.”
New Definitions for Meals and Meal Occasions
Kristen Cloud (@KCloudShelby) observes that people’s eating habits are changing. Not only are more people eating healthy foods, but the variety of foods they are trying is changing as are the opportunities they take to consume food. She explains, “Consumers will seek out foods with a variety of value-added attributes (fresh, natural, organic), positive benefits (energy, brain food, etc.) and social value (local, sustainable, transparent). Some of these opportunities may seem small by big company standards, but that is where the growth is. … People aren’t adding new eating occasions to their day, but how meal and between-meal occasions are composed will continue to change. Foods that offer the flexibility to compose an eating occasion to fit specific needs at a given time will grow, whether packaged goods or foodservice offerings. Consumers will make choices on price point, portion control and portability — whatever allows them to craft a snack or full meal, spend a little or a lot, take a break or eat on the run.”[7] These trends will undoubtedly affect what grocers stock on their shelves.
Footnotes
[1] “Online Grocery Shopping On Pace For 9.5 Percent Annual Growth,” Retail Leader.
[2] Sandy Skrovan, “Food for thought: 7 trends set to define grocery retail in 2017,” Food Dive, 5 January 2017.
[3] Staff, “Grocery Tracker: 2017 Food Predictions,” Pymnts.com, 27 December 2016.
[4] Jamie Condliffe, “The Robotic Grocery Store of the Future Is Here,” MIT Technology Review, 29 December 2016.
[5] Sandy Skrovan, “10 innovations that could disrupt grocery in 2017,” Food Dive, 14 December 2016.
[6] Daphne Howland, “Amazon unveils futuristic checkout-free grocery store,” Retail Dive, 5 December 2016.
[7] Kristen Cloud, “Eating Attitudes And Behaviors To Watch In 2017,” The Shelby Report, 28 December 2016.
