Depending on the source, 89% to 95% of grocery purchases happen in stores. But the second Groceryshop conference, held September 15-18 in Las Vegas, showed the industry is preparing for a digital future.
Many sessions and exhibits highlighted the changing face of grocery retail technology. Among other things, the event highlighted the ways grocers have embraced new technology in ways that would have been inconceivable five years ago. Traditionally, low-tech grocery stores are not adopting technologies such as robotics, omnichannel fulfillment, online ordering and mobile apps at a fast pace.
What follows are a few of the most interesting tidbits I picked up while attending the Groceryshop event.
Grocery ecommerce is happening
A lot of important ecommerce sectors—including apparel and shoes—initially seemed immune from digital transformation, Farhan Siddiqi, chief digital officer for grocery chain operator Ahold Delhaize said during a Groceryshop presentation. And just as other sectors adapted to selling on the web, he expects grocery retail to do so as well.
“Once you solve for the pain points, creating a value proposition, it creates a tipping point and the [digital] penetration changes,” Siddiqi said. The same will happen in the grocery sector, he said. That will happen, in part, because of the inherent convenience of online shopping and the expansion of same-day grocery delivery across the country.
“There is a whole perspective that people are good at picking fresh products and meat themselves. The same-day [offerings], in my opinion, could solve for that.” After a few successful experiences, he said, consumers realize they aren’t as good as they thought they were at picking those products.
Other factors pushing online grocery shopping forward include the increasing availability of buy online pick up in store in its various forms, Siddiqi said. And for both delivery and pickup, the retailers are experimenting with options such as picking and packing inside stores, the use of automated systems and specialized fulfillment centers.
“When you look at all these variables of the equation, I think when you actually have maturity in all these…the grocery ecommerce model and the global picture of omnichannel shopping could be very different,” Siddiqi said.
Several Groceryshop attendees said ecommerce and the adoption of enhanced in-store technology is essential to grocers who want to match growing consumer expectations and avoid losing customers to competitors that embrace the digital tools.
Shoppers are raising expectations for grocers to match those they have for other merchants, said Garry Senecal, chief customer officer with Loblaw Cos. Loblaw, a Canadian retailer, runs grocery and pharmacy chains, among other businesses.
Those growing expectations have led to rapid change and a need to continually think ahead, Senecal said. When Loblaw evaluates changes in technology, the retailer tries to assess more than the current impact, with an eye toward anticipating future needs.
“We’re also really focused on what the impact is going to be on the next generation,” Senecal said. That forward-looking approach has led the retailer to enter partnerships with tech companies, including Microsoft Corp. and the app-based delivery service Instacart, he said.
Schnuck Markets Inc., which uses robots from Simbe Robotics Inc. to audit inventory in its stores, will start using its mobile app to provide shoppers with the product-location collected by those robots.
Dave Steck, vice president of information technology infrastructure and application development at Schnuck Markets, says the change isn’t necessarily about selling more goods. It’s mainly about customer retention by offering better service.
The goal, he says, is to “enable that shopping experience” for customers and make them want to come back more often.
Instacart says it’s your friend (honest)
Instacart gets criticism from those who think its real business model is to collect data and then compete against the grocery retailers it now serves.
But, during his presentation at Groceryshop, Nilam Ganenthiran, chief business officer of Instacart, insisted the company has no hidden agenda. Instacart has no ambition to become a retailer or offer its own product lines that could compete with grocers’ private-label brands, he says.
“We exist to serve bricks-and-mortar grocers,” Ganenthiran said. And, rather than stealing customers from retailers, Instacart helps grocers connect with consumers they otherwise might not reach. He says serving bricks-and-mortar retailers involves giving them data and providing new channels to build loyalty to new customers as those customers move online.
As proof of Instacart’s good intentions, Ganenthiran said Instacart is developing an option called Instacart Enterprise. The service will allow retailers to build Instacart technology into their existing websites and mobile apps. The new service could be important for retailers that worry about sharing their customers with the delivery service.
Sam’s Club continues its restructuring
Sam’s Club—the warehouse club unit of Walmart Inc.— has been in transition since early 2017 when John Furner took over as Sam’s Club CEO. The changes have included closing some stores and building up the retailer’s omnichannel capabilities.
Among the most recent changes was the rollout this summer of same-day pickup of online orders at all clubs nationwide. Sam’s Club also added alcohol delivery for shoppers in some markets who use Instacart delivery.
“What we’re trying to do is understand the ways in which we can reduce friction for our core shopper and also for the people who work in all our buildings,” Furner said at Groceryshop.
Speaking at Groceryshop, Furner said he sees digital transformation as a means to achieving the broader goals of making customers happy and wringing more efficiency from operations.
Another high-profile experiment was the creation of a Dallas location, opened late last year, that will operate without cashiers. The 32,000-square-foot store (about a quarter the size of other stores) allows shoppers to check out using the Sam’s Club Now app.
The app also creates smart shopping lists using technology that combines machine learning and consumer purchase data, helps consumers navigate the store. Also, consumers can use the app to make online orders for pickup and access augmented reality features that provide them with product information and special offers.
“What we’ve done with that location…in Dallas is we have carved out space where we can experiment, learn [and] innovate with real customers, with real members who can provide us feedback. And from here, we can end up building a library of technologies and products that can help us serve members in new ways,” Furner said.