Tomorrow’s grocery shopping

Grocery shopping has undergone deep changes over the last 100 years and, like anything else, it will do the same in the future. The current Covid-19 pandemic is contributing to this evolution. Regardless of whether it will be over soon or not, one thing is sure: it has forced us to make adjustments and in a way, the virus has just accelerated changes that were already in the works. Here is how I see what to expect.

First of all, Covid-19 has changed how we live, and therefore how we shop. Online retail was growing but then it became almost a necessity for grocery stores to jump on board and engage in online sales. It was not always smooth. It took time for many outlets to organize taking orders, preparing them and get the orders ready for pick-up or for delivery. There was a lack of staff. The staff was not trained properly and there were all sorts of logistics issues to fix. Without getting in details, stores have been able to get a better presence online and ensured a better and smoother service over time, and rightly so, because many people have discovered the convenience of shopping at the time of their choice, not having to drive to the store, not having to be in the herd, which was already a pain in the neck before the pandemic, and not having to wait in line to check out. It saves them time and stress. These are the main reasons why I expect online grocery sales to stay and grow further. The offering and the navigability of online stores will have to improve as for now, it is still a tedious experience. The execution of orders is still a challenging area. More staff is needed and at the moment, this part of the business is the busiest and currently the largest employment opportunity at Wal-Mart. Amazon has also hired large numbers of new staff. Yes, it takes time and manpower to fill orders. It is nothing new. I used to do that part at my parents butcher’s shop. I used to prepare orders and deliver them to the customers who required it. Of course, my parents’ store was a relatively small operation and our phone and my brain (and my legs and arms, too) were all it took to get things done. The volume of business of modern grocery store is such that it could just be a family thing. My point is that preparing orders and executing them is nothing new and actually not all that complicated, and it is a pillar of good customer care.

Here is where I see more changes in the future. Having to manage so many new people to fill order –or to be personal shoppers to put it in fancier words- is a complex task. Such staff is usually paid little, not particularly motivated and always looking for better job opportunities, not to mention they can get sick or absent. Of course, the numbers and he economics will have to adapt, but I believe that in the future, order filling staff will be replaced by robots, connected to order software. The robots will manage orders, prepare and pack them. There are already robot waiters in some restaurants, so it is not so far-fetched. The robots also will be connected with the warehouse and the inventory management software. They will re-order for the warehouse, ensure first in first out, eliminate loss and waste and know exactly where to pick what and complete the entire job much more efficiently than humans and that on a 24/7 basis, and not require being unionized. I believe that corporations will like that.

Another area where I see potential for change is the sharing of online platforms. French retailer Carrefour offered that possibility to small retailers who had to close because of the Covid -19 lockdown in France. Thus, small stores did not have to venture and spend on developing their own online presence, which could have been challenging, not to mention stressful considering the circumstances. Further, cashing in fees for a online platform can be a business, too. What Carrefour offered is in fact the same as large online retailers like Amazon and Alibaba have done for independent sellers for years now. It is also not all that different from an EBay type of concept. Sharing of online platform will be a way of making the jump for small stores and from, there they will decide whether to keep using such platforms or build their own.

Order pick-up will certainly be a solution of choice for quite some time. Home delivery will have to evolve further, simply because it can be costly, except for outlets that can offer free deliveries for a minimum purchase amount, which is already the case. Deliveries might also be carried out by driverless vehicles in the future, such as Kroger has been testing for some time. Of course, there is always the possibility for restaurant delivery organizations to make the move to help retailers. After all, many of them want to be listed on the stock market and that will mean the necessity for them to keep growing always more and that will mean going beyond restaurants as per today. Here, the key will be to drop their fees. What these organizations charge for meal deliveries is rather brutal for pop-and mom restaurants and volume will have to take over fee based on bill percentage.

Retail will evolve further and there is no shortage of possibilities. Although everyone claims to collect data and know their customers, I think that it is more something in the realm of talk than actual effective execution. I have loyalty cards but I never get any shopping advice. My shopping news is either through the generic flyer that I find in my mail box like all other shoppers. And if I take a look online to see what is attractive, I have the exact same online flyer, as the paper one, with absolutely nothing specific or special about my own particular needs. I thought they would know what I buy and don’t buy and help me accordingly, but no, none of that ever happens and I do not have the feeling that is in the works. Hello, retailers! One the most daunting thing that shoppers go through is to make the bloody weekly shopping list. What do we need? What are we going to eat? What do they have on ad for us? Should we buy at retailer A or retailer B? No answer to any of that ever comes my way. If your retailer sends you personal shopping lists and tips, specific nutrition and menu tips you are lucky, and I am not. But I doubt it because I have never met anyone who did get of shopping tips. Retailers like Amazon do give some shopping tips and online ads also appear when I browse on Internet, but as far as I am concerned, they tend to miss the mark about every time. Perhaps, my being a frugal person makes me one of those difficult individuals to influence and to get to buy stuff but I really think that shopping tips should be a lot more on target than they are. I also believe that to improve this situation, it would be much better to have a voluntary and active participation from the shoppers themselves by having them giving more inputs about their needs and wants, although this of course enters the slippery area of online privacy, but you aill have to admit that it is a lot easier to serve customers well when they are in a position of telling you what they are exactly looking for. And in these times of “Internet of Things” why not combine store information with producer information and process it in a virtual production information and shopping advice system where people can make choices based on their values, their needs and all relevant information they need to make their decision, in a totally transparent manner? With such a system, why not even include a virtual tour of farms and packing facilities and show people where their food comes from and how it is produced and by whom? It could be accessible at home, could make use of VR helmet and could be consulted at a convenient time, not in the stressful rush of the in-store shopping with others breathing in their necks, especially if shoppers do not wish to go inside the store again.

Yet, as I show in this picture below, data servers and supermarket aisles look surprisingly similar. Every purchase and consumption is a transaction that goes way beyond money and product. It is a transaction between data – and therefore lifestyle choice, personal choices and values – versus the price shoppers pay. Why not include it in the shipping experience, then? I believe the answer is in the area of business thinking. In spite of the many claims, it is still a primarily production-driven, volume-driven cost-obsessed model, and not enough of a service-minded customer-oriented value-obsessed model. Of course, there is no reason why this would not change and anyway, the former model I mention is pushing for some positive innovations, such as cashierless stores where you can come in buy and leave without going through the tedious checkout lines or the even so much more fun do-it-yourself checkout where half the people I see seem helplessly stuck unable to figure out which button to press.

With what I just described, one could easily wonder why to have large supermarkets anymore. Why should the corporation spend all that money in prime –therefore expensive- locations, with fancy stores with light and all sorts of amenities, while in the future, most of the shopping might actually be just a warehouse order filling activity. This is an even more relevant question for staple foods and undifferentiated commodities? Since commodities are really mostly about low cost, then retailers keep your costs down and focus on specialties and value for the store experience. I see several areas for which this would make sense. Non-perishables should be in the warehouse and not take much space in the shopping area real estate. But perishables are another game. First, they are perishable products and they have to receive special care to avoid loss and waste. Second, people like to use their senses to purchase perishables. They like to touch them, to see them and inspect them, and to smell them. Perishable shopping is still a highly sensory activity, and it quite personal. Some people like their meat lean and others prefer a marbled one. People like to take a look at the produce to make sure it is not damaged, bruised or blemished or that it is ripe. They like to make sure it is fresh. Some people like baked goods to be well-baked and others prefer when it is on the paler side. Color is an important factor. For all these reasons, leaving the choice to underpaid staff who do not know the customers and do not care overly for them is quite a bit risky in terms of customer satisfaction, and I am not even talking about cases of mistakes such as delivering bacon instead of the ordered pork tenderloin I heard of at the beginning of the pandemic and the early times of packing orders for curbside pick-up. No, perishables will require special attention and my guess is that personal service will be high on the list.

When it comes to produce, I expect another evolution. Produce is delicate and with too high waste along the supply chain and in the store. Local production may have its advantages in term of sustainability, in particular when it involves truck road transport, but it makes a lot of sense about freshness and waste reduction. Just like the fruit and veggies that I get from my garden, picking fresh ripe produce just on time makes a world of difference. Just ask my wife about how it tastes compared with what we used to buy from thousands of kilometers away. In such a quality approach of perishable retail, why not get them locally. Urbanisation push produce farmers further way and yet, there is an amazing acreage that can be used to grow produce in cities, and interestingly enough a lot of that acreage is on top of supermarket, malls and warehouses. So why not build greenhouses on top of the store and sell the produce superfresh downstairs?

If you have to point of sale, it is much easier than being an urban farmer looking for customers. The store is there, people come to buy all sorts of things, just add the produce from the roof farm. Actually that is what a number of retailers have already started. France’s Carrefour, again, is one of them, but Benelux’s Ahold Delhaize has been working on the same thing and I am sure other will come and offer freshly picked local (roof) lettuce, leafy greens and tomatoes and strawberries.

Quality of products and quality of service will be the top demands and the old concept of small butcher, baker, greengrocer store will be the answer, although with a modern touch and with help of technology. I expect future supermarkets to be just that. They will be markets, like in the old days and they will be super, as they will wow their customers with prime shopping environment, prime products and prime personal service. A side advantage of this will also be that it reduces the use of packaging and has the potential to require no plastic whatsoever. After all, the purpose of plastic packaging has been to replace human labour by allowing self-service.

Copyright 2021 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

The quiet revolution of food retailers

While many debates continue in the political and “parapolitical” world about many aspects of food production systems and the impact of human activity on the environment, retailers lead a quiet revolution. Without making the headlines, they gradually change the way their suppliers will do business in the years to come.

Such an evolution is certainly welcome, especially in a time where important decisions need to be made. Political leaders seem unable to reach any agreement on environmental issues, as the world could see at the late Climate Summit of Copenhagen. In the food sector, there are many discussions going on about sustainability and genetic engineering, to name the two hottest items, but the political class does not seem to generate clear and concrete action plans.

Just like what happened in the 1990s about food safety in Europe, retailers are taking the initiative to create momentum on the current issues. The problems that plagued the food industry in Europe, such as salmonella in poultry, the mad cow disease, or the dioxin in Belgian fat for chicken feed showed a number of weaknesses that needed to be addressed. In the case of BSE, UK retailers did not wait for British or European legislation to demand meat and bone meal-free feed for farm animals. As I was working for a company supplying the UK market with chicken meat, I can testify that these were dramatic times. Tough decisions had to be made on a very short notice that had serious financial consequences. By then, a couple of reasons made the retailers took the lead. First, the inability of the government to prevent and tackle the issues was creating a bit of a vacuum on leadership. Consumer confidence in their institutions was fading, and retailers were the only ones, true or not, perceived to take the proper actions to protect the public. The second reason was the fact that many retailers had their own private labels. In this case, the problem was not the supplier’s problem anymore because the supermarket chain could have risked serious PR damage if a food safety issues would have been associated with their brand.

This time, retailers are again in the position where they can present themselves as the consumers’ champions. Legislation is slow to move and make significant decisions. The involvement of interest groups adds to the infighting and delays decision-making.

To prepare for the future, they already have come out with plans and communication on how and where they want the food they sell to be produced, and they try to offer a choice to consumers. By doing so, the most active among them are setting new standards, and forcing the whole production and supply chain to think about the things to come.

In previous blog posts, I have mentioned some of such initiatives, and in Future Harvests, I described the increasing leadership role of food retail in agricultural practices.

In particular, I mentioned the carbon footprint labelling on dairy products by Tesco, Wal-Mart’s Sustainability Index questionnaire to suppliers, and the seafood sustainability programs of many retailers. Marks & Spencer started their Plan A in 2007 with the objective of making their business more sustainable. To achieve this, they are involving their suppliers and the farmers producing for them to carry out the changes that M&S finds necessary for a better future.

More recently, new initiatives indicate that retailers are pursuing further on such initiatives. Wal-Mart came last week with their plan for sustainable agriculture. In the UK, Sainsbury let know last week that they were committing GBP40 million to invest in farming. Earlier this week, Carrefour unveiled their “Reared without GMO” program. In their stores in France, they will sell 300 food items labelled as being GMO-free, to offer consumer a choice based on transparent information. If Carrefour ventures into this, one can be sure that they do so because they already know that this will be good for their business. By gaining market share, it is very likely that their competitors will soon react by issuing similar programs. The EU Commission may be struggling to figure out how to deal with GMOs, but Carrefour says “Let the consumers tell us!” Vox populi, vox dei!

Of course, such initiatives do not please everyone. Today, I could read in a blog for a US magazine backed by the meat industry some interesting reactions about Carrefour’s new plan. Some readers were bringing up the typical arguments. Meat would be so expensive in Europe. Well, meat is quite affordable in France, even without GMOs, so think again! The other argument was about freedom of choice: people should be able to eat what they want. By labelling its food item, Carrefour does just that. French consumers are free to buy at Carrefour or somewhere else, and they have the right to choose what label they prefer. The freedom of choice is ironic coming from the US meat lobby, since American consumers do not have that freedom. Reared with GMOs is pretty much the only choice in the US. For now, that is. However, it is interesting to see on Carrefour’s press release that the pictures of fish, chicken and pork chops are exactly the same, regardless of whether they would be grown with or without GMOs.

In the 1990s, British and European consumers, and retailers, were challenging food industry practices because they were worried about their health and about the lack of transparency about food. Nowadays, in the USA, consumers are increasingly suspicious of their agribusiness, because they are worried about their health and the lack of transparency of the industry. Beef recalls because of E. coli, egg recalls because  of salmonella, spinach contaminated with manure are in the news on a (too) regular basis. They are also increasingly aware, and suspicious, of the relations between interest groups and their government agencies, and how this influences decisions on what they eat.

Retailers are now saying that they are not waiting for politicians to make decisions. They have defined their vision, they know what they want, and they are passing the message on to the suppliers. What would happen in agribusiness USA if Wal-Mart took a similar approach as Carrefour?

Copyright 2010 – The Happy Future Group Consulting Ltd.