The technology and trends that are fast becoming table stakes as they transform the grocery business. By Mike Troy, Abby Kleckler and Lynn Petrak
nnovation in food retailing is everywhere and advancing at a pace so rapid that companies that are considered disruptors question whether they’re moving fast enough, while others wonder whether they can catch up. Wherever a company is on its innovation journey, retailers of all types have awoken to the reality that disruption never sleeps and is coming at them on two fronts: Technology is changing every aspect of how food retailers operate, while fast-moving trends related to consumer behavior, product preference and spending motivations are having a huge impact on sales. With more change ahead, Progressive Grocer offers its 2020 Innovation Outlook to help retailers get ahead of what’s next. One thing that’s abundantly clear when looking across the food retailing landscape is that there’s innovation as far as the eye can see. Entrepreneurs and startups intent on disrupting the food retailing world are dissecting every touchpoint on the shopper’s path to purchase, looking for pain points they can solve. Meanwhile, established retailers are doing the same, but with a heightened sense of urgency in recognition of the fact that their survival is at stake. Retailers have learned — some the hard way — not to be dismissive of a particular technology or trend that initially appears absurd, insignificant or impossible to profitably scale. Look at drone deliveries and plant-based proteins, for example. Both were relative novelties just a few years ago, but not anymore. Plant-based startups, most notably Impossible Foods and Beyond Meat, sport billion-dollar valuations, major CPG companies are racing to launch new brands, and retailers such as Kroger are right with them in rolling out store-brand options. Meanwhile, drones have entered retailers’ supply chain planning conversations, moving beyond an “if” to more of a “when” stage as a legitimate fulfillment option. When is now for some retailers. Deerfield, Ill.-based drug store chain Walgreens conducted its first drone delivery from a store in Christiansburg, W.Va., on Oct. 18 in partnership with the Wing subsidiary of Google’s parent company, Alphabet. Not to be outdone, fellow drug store operator CVS Pharmacy completed its first drone deliveries in Cary N.C., on Nov. 1, in partnership with UPS Flight Forward. “CVS is exploring many types of delivery options for urban, suburban and rural markets. We see big potential in drone delivery in rural communities, where life-saving medications are needed and consumers at times cannot conveniently access one of our stores,” says Kevin Hourican, president of Woonsocket, R.I.-based CVS Pharmacy.
Key Takeaways Technology is changing every aspect of how food retailers operate, while fast-moving trends related to consumer behavior, product preference and spending motivations are having a huge impact on sales. Drones, omnichannel, robotics, electronic shelf labels, cashierless stores, artificial intelligence and gamification are among the tech developments that grocers should keep an eye on. The rising popularity of plant-based foods, ensuring the local provenance of products and the ongoing importance of sustainability are among the consumer trends that supermarkets must contend with.
PROGRESSIVE GROCER December 2019
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