The digital product journey ahead for retail

Henrik Valstad
Nov 21, 2018 · 8 min read

Retail companies, and in this article where I focus specifically on grocery retail, needs to innovate to keep up with how customer expectations and customer experience are changing. Platforms, aggregators and new technology are posing a real threat to existing brick-and-mortar retail if they don’t buckle up to tackle these threats. New companies are constantly finding new ways to excite customers with sticky business models. Stitch Fix seems to be on to something, InstaCart is still going strong and Inokyo is the indie response to Amazon Go.

How can the major players in grocery retail keep up and challenge the new players in innovating in user experience and product development? Is it possible to reinvigorate the in-store experience for customers while also reimagining how we can serve customers going forward, both online and physical?

To transform product development in existing organizations

is to first introduce product management to begin with. CoopX is a newly formed department in Coop Norge, and we have yet to gather all our principles and ways of working and communicate these both internally and externally across Coop. But how can we introduce product management in retail, known to focus on the supply chain, store optimization and to build stores and concepts to cater to all our shopping needs? Do we need product management when digital products are merely seen as tools to drive more traffic to the physical stores?

Are you customer centric or customer focused?

Like in similar industries, such as media where I come from, product management is still in its infancy. As Espen Sundve superbly explained, media is divided in what the product actually is. Is it the content inside the product, or is the technology that delivers the content to each user that is the product? Which person knows the user best, the editor with his/her years of experience and traffic analysis to which stories is read/clicked the most, or the young(er) product manager that actively is trying to understand the user and solve their problems? Does it exist a similar separation in retail?

Products you consume and media content
Until recently, product managers in retail focused on the (food) products for sale, the selection and the variety of assortment and optimizing this. This will by many be considered the primary value proposition for grocery stores. The products you purchase every day to consume, can in many ways be considered as a parallel to the content you consume from your favorite news destinations. The technology surrounding the products for sale, mainly exists to simplify or enhance the shopping experience in the physical stores.

Technologists, or better the digital product builders for customers, is on the path to understand that the end goal of each user/customer is to prepare and eat great food or, in many cases, simply be fed and move on.

The technology that enables every customer to explore, prepare and consume the fresh goods is considered to be the product, and the technology that powers this is constantly evolving.

I believe that the two worlds of

  • the products the customers purchase (the merchandise or grocery items)
  • and the technology that surrounds them

needs to closer align to better suit our future customers in solving their core needs.

To adapt a more customer centric approach, we need to consider the journey grocery retail has gone through the last decades. Many consumper products companies are used to focus on design, manufacturing and logistics. Before, when products on the shelves could achieve a clear product difference and value proposition that was clear, differentiated and instantly helpful to the target group, a product-centric or customer focused approach made sense. Today the situation is more complex. Customers are informed, global competition is everywhere and product benefits are increasingly difficult to communicate.
Consider each tactic that are in use today to fuel customer focused activities. A/B testing, programmatic advertising and feedback forms are all customer focused. Great tools, but based on an inside-out point of view to try to see the world from the customer’s point of view. Focused on wants, and based on the notion that we already know the answer, we just need the data to support it.

How can we focus on needs, not wants? Skipping hypotheses and debating about hygiene factors to what customers want, is one of the main symptoms from organizations that have a customer focused approach. Co-creation, qualitative research and to understand the underlying motivation are examples of customer centric approaches. To understanding the needs and explore options to what the customer actually would like to achieve. This is often mistaken and used as an argument against customer centric, arguing you can’t always understand user’s problems and needs and thus you should explore the wants. How can we leap forward when we don’t understand what the customer ultimately wants to achieve, and instead consider the existing value chain and try to improve parts of it based on wants? This is a complex question and one that deserves a broad discussion but parts of it can be related to culture and building strong product management practices within the organization.

The future of (grocery) retail

Let’s imagine what the future will look like (list not exhaustive):

  • Services that aid customers in planning and purchasing their groceries (we already have many services like this today, such as voice assistants and apps like Wunderlist combined with ecommerce solutions to Kolonial and Meny)
  • Combination of traditional grocery shopping, together with in-store pickup powered by the above bullet point + delivery services
  • The grocery shopping experience is fundamentally changed, in the shape that customers can choose to:
  1. shop in their traditional way with little change in their shopping experience, only with incremental changes in such as the checkout process
  2. technologically aided shopping experience, such as suggested recipes to your shopping cart, your favorite pre-made meals available for pickup, products pre-packaged and automatic checkout or delivery services, catered to your needs
  3. fundamentally changed shopping experience, based on customer needs and frictionless experience, reducing the need for physical shopping to a minimum/non-existent and everything is delivered within walking distance or door step

To understand point 2 and 3, we need to investigate how we can develop products and services that can help people explore, prepare and consume food in the way they prefer. And to do so we need to challenge today’s solutions.

Challenge #1 — Disconnect from physical
To truly understand and develop products and services that solve the previously mentioned points, we need to free ourselves from our existing value chain and infrastructure, and add those existing layers once we gain a deeper understanding of which pieces of the process we are able to move and perhaps change. The point is that in the many years to come we won’t and can’t, especially in Norway because of its cost structure, distance ourselves from physical store locations and solely focus on online shopping. Not to mention we are far to accustomed of having a store just around the next corner → convenience is just a quick walk around the corner. Physical stores play a huge part in retail’s future. In total it just doesn’t make sense at this point to talk about a future where we don’t have physical stores, but what we can do is to re-imagine how our customers use them and which part they play in specific customer’s lives. Nonetheless, to start the problem-solving journey from the store’s perspective, is both too narrow and won’t lead to the innovation this industry is in need of to stay competitive. Do we believe that going to your local grocery store is the only and optimal, or most desirable, solution for every customer out there to explore, prepare and consume food? If no, then we need to disconnect from today’s situation and start over.

Challenge #2—User experience
To be able to at a constant pace rethink and strive to achieve a better user experience, we need to be able to work with a broader scope than today’s retail. Imagine this: If you consider the entire value chain of retail, from producing oranges to picking them up in the grocery aisle, not much have changed from the customer’s point of view. Most of it has been improved from the parts before you pick it up in the aisle, not until and after. The stores sell fresh goods, it hasn’t fundamentally changed since shopping carts were introduced other than the assortment are broader, and the quality of goods has improved. The user experience to how customers explore, prepare and consume the food products are in constant change. We now are influenced by bloggers and content marketing, we can order food in many areas online, you can order meal-kits services, or even book a chef. How can grocery retail solve its customers’ needs and be the “bicycle” to reduce customer’s friction in experiencing great food?

We need to work on changing the retail experience for customers from without memory and learning, to a constant learning and personal experience. Meaning:

  • Reimagine how each piece of the retail value chain can aid us to improve or fundamentally change the customer experience
  • Embrace how technology can fundamentally change how customers explore, prepare and consume food, even if it means cannibalizing physical shops in the short term
  • Focus on customer centric teams that can focus on merging technology with physical experiences

The ever changing user experience

Consider this example from Ben Thompson:

If we constantly focus on delivering the best possible user experience for our customers, then we will never achieve that goal — because the user experience is always improving by ways we don’t have complete control of. But we can always try to leverage the ever-changing tools available to improve it. The era of shopping trips without memory or state should needs to change — and the answer isn’t necessarily ultra-personal but to some extent an experience that offers less friction and leverages the potential new technology and user insight can create. Customers expects to be seen, like the unique individuals they are.

So, where do we go from here?

If you’re in meetings where the discussion falls down to :

When can we see a deadline to the next feature department XYZ is waiting on?

then your organization needs to fundamentally change their approach. There are myriads of articles describing how to tackle this culture and the challenges questions such as the question above brings. Start with Matt LeMay’s excellent article on The Part and Future of Product Management — and begin to understand your customers and which pieces you might need to explore. And be sincere about creating quality products and services, your customers will thank you.

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Interested in learning more to what we’re working on at Coop? Send us an email here if you want to learn more.

Henrik Valstad

Written by

Head of Strategy & Projects @CoopX, ex @Schibsted & @EY, dad, surfer 🏄‍♂️ (used to)

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