5 tech trends that will shape grocery in 2018
Operational efficiency and a better online experience are the key drivers in this year's list.
From aisle-wandering robots to artificial intelligence, there's no shortage of eye-catching technology available to retailers right now. But what are the trends to watch? After a year that saw many grocers expand their e-commerce presence following Amazon's Whole Foods acquisition, 2018 will be the year supermarkets deepen their engagement with online shoppers, according to analysts interviewed by Food Dive.
At the same time, as competition and pricing pressure grows, sources predict retailers will also invest in technology that helps them operate more efficiently and enhance the buying experience for shoppers.
"The most successful people in retail technology are excited about the the potential to not just improve performance, but to change the nature of what we do with food," Bill Bishop, chief architect of consulting firm Brick Meets Click, told Food Dive.
Here are the five technology trends shaping up to be big stories in grocery this year.
1. Artificial Intelligence
Supermarket operators have gotten better at collecting customer data over the years, but mining and using that information hasn’t always been a foolproof process. As Amazon expands its presence in the grocery industry, retailers are beginning to examine artificial intelligence as a tool for guiding their pricing, promotions, product distribution and more.
Retailers like Target and Whole Foods have deployed machine learning to make their store deliveries more precise. AI helps locations forecast demand, then receive a precise count of the individual products needed, in a way that allows for more efficient distribution throughout the aisles.
AI also promises to help grocers price products more effectively, print more impactful circulars and run sharper in-store promotions. Earth Fare, a natural and organic chain that operates throughout the Southeast and Midwest, last year reported improved top-line sales and efficiency one year after adopting AI technology that optimizes its store promotions, pricing and demand forecasting. The firm Earth Fare partnered with, Daisy Intelligence, claims its platform’s recommendations can improve yearly sales by 3%.
Bishop said retailers are “right on the cusp” of widespread adoption of AI.
“Artificial intelligence is a way to take these pools of data retailers have and create additional value from them,” he told Food Dive.
Still, many chains have long relied on experienced managers to guide their decision-making, and are reluctant to give up that practice.
Other experts caution that AI technology in retail is still new, and far from a cure-all. Nikki Baird, managing partner with Retail Systems Research, a technology consulting firm, wrote in a recent Forbes column that many retailers mistakenly see AI as a “silver bullet” to boost their data utilization.
“If a retailer doesn’t already value data and the insights that can be derived from data, buying an AI solution isn’t going to get them very far,” she wrote.
2. Voice ordering
As Amazon and Google heavily promote their voice-ordering devices, adoption of the convenience-focused technology has grown. According to a report from Juniper Research, 55% of U.S. households will have voice-powered smart speakers like Alexa and Google Home in them by 2022.
But voice ordering isn’t limited to just Amazon and Google devices. Smartphones are actually leading usage, research firm eMarketer noted in a recent report. There are also voice-connected TVs, wearables like Apple Watches, tablet computers and cars. Last spring, Ford and Starbucks teamed to offer in-car ordering through voice-enabled models.
For the most part, grocery retailers have yet to tap into this network. But as online shopping increases and Amazon — the leader in voice-ordering technology — extends its influence in the industry, analysts predict more supermarket chains will come on board. In August, Walmart partnered with Google Home to enable voice ordering of a wide assortment of the retailer’s products. Shortly before that, online grocer Peapod launched an “Ask Peapod” capability to Amazon’s Alexa program.
Michelle Grant, head of retailing research with Euromonitor International, told Food Dive that grocers might have qualms about partnering with Amazon. As with Walmart, she predicts retailers will drift towards Google as a partner in this area.
Whoever they partner with, supermarkets will likely have work to do in order to make voice ordering as frictionless as possible. Diana Sheehan, director of retail insights with Kantar Retail, said she recently grew frustrated trying to use Peapod’s new program, noting that “if you don’t ask Alexa the exact right way, it doesn’t work.”
Still, she sees huge potential in the technology, noting that it could eventually allow shoppers to easily reorder from lists, and to add products as they come to mind. She predicts voice ordering will enter its “pre-teens” this year, then reach full maturity by next year.
“It’s the perfect tool for online shopping. If you’re in the kitchen, you can just say what you need,” Sheehan told Food Dive. “But right now, it’s such a chore.”
In an industry where various stakeholders in the supply chain often aren’t speaking the same language, blockchain promises to make data management between these parties faster, more uniform and more secure.
The technology works by grouping data into individual “blocks” that are secure, inalterable, and can be easily distributed to companies throughout the chain. First developed under the digital currency Bitcoin, blockchain is essentially “a de-centralized ledger” companies can use to record product information, according to Grant, allowing a full, detailed picture of a product’s journey through production and onto the retail shelf.
Food safety has been touted as the most promising field for blockchain applications. Knowing exactly where a product has been distributed, and in what quantities, could help stores pull products faster. Blockchain could also help retailers and regulators pinpoint the source of foodborne illnesses. This process often takes weeks using traditional methods, but could take just seconds under this new technology.
A more transparent and efficient supply chain also has benefits beyond enhanced food safety. Grant pointed out that blockchain can also improve store distribution and even have promotional benefits. A blockchain certification system recently launched by blockchain company Viant and the World Wild Fund for Nature helps consumers track fish from ocean to plate.
“There are a lot of applications for blockchain within the supply chain,” Grant told Food Dive.
In August, nine companies including Walmart, Kroger, Nestlé and Unilever kicked off a large-scale test of blockchain technology with IBM. This, Grant said, is a crucial step in the technology’s growth that indicates widespread industry acceptance. She predicts the test will be closely watched this year, and that blockchain will be widely adopted within a few years.
“The motivation and effort is there, it’s just a matter of how fast can they turn a very complex system around,” she said.
4. Rapid checkout
From barcodes to self-checkouts, grocers have always sought ways to make the front-end experience faster and easier. Technology that allows shoppers to skip the register altogether, meanwhile, has been in testing mode for several years, and may hit a tipping point this year, analysts predict.
Kroger recently announced that its “Scan, Bag and Go” program, which allows customers to use a mobile app or store-provided handheld devices to scan products and then pay for them, will expand to 400 stores this year. Not to be outdone, Walmart says it will expand its mobile-enabled “Scan & Go” program to more than 100 stores by the end of this month. The mega-retailer is also working on a checkout-free store concept similar to the much-hyped Amazon Go store, Recode reported last month.
These industry leaders stand to drive wider industry adoption, particularly if their rapid checkout programs prove to be popular. Grocers are also feeling the pressure to elevate their store experience as online shopping grows, according to Grant.
“Especially with the growth of click-and-collect and home delivery, retailers want to offer a similarly frictionless experience in store,” she told Food Dive.
There’s also the simple fact that consumers are tired of waiting in line. A 2015 study conducted by Harris Poll found that 88% of consumers want retail checkout to be faster.
Testing mobile checkout programs will be a big focus for retailers this year, Grant said. As for whether those tests will be successful, that all depends on companies’ ability to alter shopper habits.
“Will people get used to scanning 30 different items as they walk through the store?” she said. “Or is it more efficient just to throw things in and just go to the self-checkout or the cashier? The adoption really relies on consumer behavior changes.”
5. Mobile app enhancements
Most major grocers now have mobile apps that link in with customers’ loyalty cards and offer shopping list builders, digital coupons and other tools. Kroger’s app lets shoppers find products on their shopping list by store aisle, while Publix has a special pharmacy app where customers can manage their prescriptions online.
Last summer, to coincide with its widespread store remodels, Ahold Delhaize-owned Food Lion released a new mobile app that links shoppers to recipes, automatically loads coupons to their loyalty card, and more.
These features are all helpful, and retailers will likely add more to their apps this year. But analysts agree that what grocers are missing — and what they'll likely focus on this year — is integrating e-commerce capabilities to their main apps.
Few grocers, Sheehan pointed out, have linked their shopping list builders, loyalty card applications and other capabilities with online ordering. That will quickly change, she predicts, since consumers are increasingly use their phones to place orders and manage their shopping habits.
According to Pew Research, 77% of Americans now own a smartphone, up sharply from 35% in 2011 — posing a lucrative opportunity for supermarket operators.
“Retailers in 2018 are going to do a much better job of integrating mobile into online ordering,” said Sheehan. “So many orders are coming through mobile technology, and you’re going to have to see investment in getting those systems up and running.”
Grant predicts grocers will eventually integrate self-checkout capabilities into their apps. Programs like Walmart’s Scan & Go and Kroger’s Scan, Bag and Go, are separate apps, she pointed out, which can be one extra step too many for consumers who want everything available in one location.
“That’s going to be an uphill battle for Walmart and Kroger,” she said.
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