FoodTech: the future players in retail

translated from the original article (in French) in Cap Digital Issue #39: FoodTech.

Cap Digital Editorial

The food industry represents 18% of total revenue in France’s industry, over 500,000 jobs and around 16,000 companies, clearly making the French food sector a force to be reckoned with. The 2008 crisis weakened and put pressure on the entire sector, both producers and retailers; this tense context indicates the scale of the challenges and potentials for transformation and innovation that are at play.

Digital technology is transforming the entire food sector, including the remote control of greenhouses, the use of drones, the robotisation of the most labour-intensive tasks and the use of data at every stage in the life of a product, from production to shipping and distribution. The foodtech sector has been born, is finding its way and is taking shape.

Our relationship with food is changing, retail needs to be more agile and personalised, and spending habits are changing: food delivery is a dynamic market that is building its structure as we speak; will home meal deliveries make the ritual of supermarket shopping obsolete, or even call into question the very existence of supermarkets? Product innovation is also on the move, combining food science, which is seeking out healthier and more environmentally friendly foods, and the trend of less processed, more local and even micro-produced food. The main motive driving this is the greater focus on the link between food and health: according to ObSoCo, the French society and consumption observatory, 82% of French people say they are more attentive to how their diet affects their health, three out of four try to buy from small producers and 10% visit supermarkets increasingly less. The attention paid to short channels, small producers and their remuneration, mistrust of the food industry and the desire to return to local buying has implications for mass-market retailing, which needs to reinvent itself. As with retail in the broader sense, personalisation and a focus on the customer experience are the tools to achieve this.

The future players of retail

The traditional participants in mass-market retailing are facing a crisis of confidence that is forcing them to reinvent their models. What are consumers’ expectations and how can they be met? What experiences can be devised to continue attracting consumers to store?

Retail in the food sector has begun its digital transformation, from the digitalisation of points of sale to food deliveries, plus the use of big data enabling the provision of better information to the end consumer and the personalisation of the product offering.

In short, the food sector is extremely dynamic and has started its digital transformation. This is a response to three key challenges that span the entire sector, from farm to fork: an ecological challenge, a societal challenge and lastly, for the food sector as a whole, the emerging structures of foodtech, including an examination of its business models.

From the field to the plate, how is digital transforming our eating habits and bringing changes to the production, distribution and consumption of food? We decided to explore each stage in the life of a product in-depth: firstly, agricultural production and its gradual reinvention. Next, distribution and the movement of supply chain fluidity afforded by digital. Lastly, our consumption habits — how is digital changing our relationship with food? These questions take us to the heart of a transformation that is affecting the very core of our identities.

Key figures

€170 billion

The food industry’s revenue in 2015, generated from 440,926 jobs (ANIA)

8%

France’s share of global food industry GDP; also the fifth-largest exporting country (AGRESTE)

70%

Growth in the number of food delivery orders in France since 2009, with 290 million registered in 2016 (NPD Group)

8 of 10

French consumers browse online before choosing a restaurant (Connected Consumer Observatory of the French e-commerce and distance selling federation (FEVAD) 2015)

$38 billion

The amount invested in foodtech start-ups by over 1,000 investors during the last three years (Shake Up Factory)

0.45%

French start-ups’ share of global investments in foodtech over the last three years

Big data and retail — Antoine Durieux, founder and CEO of Alkemics

“With growing numbers of products on the market and more channels and information to manage, brands and retailers need to share accurate, comprehensive and continually up-to-date data in their ecosystem.”

The relationship between retailers and manufacturers is also impacted by digital, which is improving collaboration and intelligence between these two participants by facilitating the sharing of information. The role of the French expert Alkemics is to act as an intermediary an facilitator between these two participants using data, a project that has the backing of investors. Antoine Durieux, founder and CEO of Alkemics, gives us his view on retail.

Alkemics brings mass-market brands and retailers together. The collaborative SaaS platform helps brands and retailers collect, enrich, and share the data produced within their ecosystems. The platform simplifies the management of product data (ingredients, images, labels, marketing information, rich content), extracts and structures the metadata for optimal quality and use, and automates synchronisation between brands, retailers and their service providers.

Digital at the heart of the brand — retailer relationship

Fundamentally, the relationship between retailer and manufacturer is simple — manufacturers supply products for retailers to sell on their behalf to wholesalers or individuals. As such, they are required to collaborate at different stages in the life of a product: retailers discover new products before negotiating with manufacturers the terms on which a product will be listed for sale, retailers manage promotions and showcases designed to generate sales, and suppliers manage orders to meet customer demand.

We feel that collaboration through digital technology is at the heart of the mass market’s future. With growing numbers of products on the market and more channels and information to manage, brands and retailers need to share accurate, comprehensive and continually up-to-date data in their ecosystem. The organisational silos and the tools in place can no longer satisfy this need for agility, are slowing down this evolution and are directly impacting their commercial and operational effectiveness, as well as the quality of the consumer experience.

“By collaborating more effectively, our customers can bring their products to market more quickly, improve the identification and listing of innovations, and circulate richer and more uniform information to customers”

The SaaS platform provided by Alkemics makes it easier to collect and share the data produced, thereby making internal processes and the collaboration between commercial partners more fluid. By collaborating more effectively, our customers can bring their products to market more quickly, improve the identification and listing of innovations, and circulate richer and more uniform information to customers.

Exceptional fundraising of €20 million

In September 2016, Alkemics conducted a €20 million series B round of fundraising. This round was led by Cathay Innovation and Serena Capital, in collaboration with Index Ventures, Partech Ventures and SEB Alliance. These investors reiterated their confidence in Alkemics following an initial €5 million round at the beginning of 2015. This round is cited as one of the 10 largest in the French IT sector in 2016.

This new fundraising will enable Alkemics to accelerate the roll-out of this platform in Europe and internationally, and bolster its sales, marketing and technical teams to continue assisting mass-market businesses with their digital transformation. We will continue to improve and digitise the collaboration between suppliers and retailers by targeting all phases in the life of a product, from discovery to order.

“The supermarket of the future will be smaller and smarter”

The supermarket of the future will be smaller and smarter; smaller in physical terms, with less storage space and a gradual restocking system, and smaller in terms of customer intimacy. The products and product assortment will be far more personalised to the consumer, with a move towards product assortment especially suited to each customer’s specific needs. The store of the future will also be smarter than ever, adapting technology to deliver a truly omni-channel customer experience through all the channels provided by the retailer — store, mobile or web — and all points of contact throughout the customer journey.

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