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You make your way into the grocery store; you only need a few things. Ten minutes and eight aisles later, you walk past berries on the shelf. Do you have enough at home? You can’t quite remember, so you grab some just in case. When you get back home, you see that you have plenty in the fridge. Great, the ones you just bought will probably go bad.
Now, I know what you’re thinking — didn’t Samsung make a smart fridge that lets consumers see the contents with cameras? Yes, it did.
But what if you have a gallon of milk in front of those berries you care about?
Back to the drawing board.
The grocery industry is in need of a major overhaul. Whether this change will come from industry leaders, startups, or technology juggernauts is still to be seen, but there are rumblings. Here is how mobile technology, advanced logistics, and the internet of things (IoT) are likely to change the way we buy and consume food.
The Amazon Effect
By now, many of you have probably heard of or seen Amazon’s latest foray into taking over the world: the acquisition of Whole Foods. There are many reasons behind this, including the increased distribution network and the stores themselves, for example. One major implication, however, is that Amazon Go now has locations to be rolled out in.
In a nutshell, this is a cashier-free store. Consumers scan their phone to enter, grab any groceries they want, and then “just walk out.” When a customer leaves, Amazon automatically charges them. It’s simple for the customer, but not so much for the business.
On the back end, the store tracks who adds what items to their cart with IoT-enabled cameras powered by computer vision and machine-learning software. This software allows the store to make sense of video footage. The store can “see” each customer and product, and update cart and inventory information in real time. So far, Amazon Go’s first and only location in Seattle has been plagued with tracking issues. But once these kinks are worked out, this model will spread quickly. To understand why, think about ride-sharing apps.
Remember when Uber first appeared on the scene? We felt as if we got a ride without paying. Of course, we still paid, but it didn’t feel like it. It was frictionless: no cash, no credit card, no nothing. Just get in and get out. We were hooked, and that’s a big reason taxi companies are struggling so much today. That same frictionless payment shift is about to happen with grocery stores.
But the Amazon Go strategy will be hard for existing grocers to implement rapidly. There is a lot of cutting-edge technology involved. If Amazon, one of the world’s preeminent tech companies, is having problems with implementation, that means it’s tough, to make a gigantic understatement. And frankly, grocers aren’t exactly known for their technical chops. So what can they do?
A short-to-medium-term approach should leverage existing technologies. For example, grocery chains such as Kroger have been testing self-service scanners to speed up shopping. But what would be even easier? Let’s try smartphones. Smartphones cost grocers nothing, because their customers buy them. More than 75 percent of Americans have one. And the software is easily maintained and updated.
Let’s go through a hypothetical scenario.
It’s a Sunday, and the milk at a local store goes bad in a few days. Currently, if customers don’t buy it, then the grocer has to throw out the milk, taking a total loss and wasting good product. However with an investment in mobile, this store could send out mobile alerts to regular customers that milk is on sale because it’s nearing expiration. The added awareness and lower cost means the store has a far better chance to sell it. This will still lead to a loss in revenue, but a smaller one. And consumers win here, too, because they can get access to food for less money.
Continuing in this vein, once grocery chains have consumers’ attention on mobile, stores can enable other touch points. A shopping history could be leveraged to recommend associated items, special offers, or “customers who bought this also bought this” suggestions. Features to place an order for curbside pickup have also been gaining traction, albeit with mixed reviews.
But regardless, none of these are groundbreaking. These use cases are important to pursue, but only as incremental innovations. Smartphones and mobile apps with the ability to push notifications to users have been around for the better part of a decade.
In the long-term, augmented reality could be embraced for an improved in-store experience. Not sure where an item is? Customers could pull out their phones and follow an augmented-reality path through the store to an item’s location. Want to know more about a product — like what other customers are saying, actually understandable nutrition facts, pictures of meals, or how-to-cook videos? Open your phone, hold a product in front of the camera, and computer vision will identify the item and pull up relevant information. Samsung introduced this ability in mid-2017 with the Galaxy S8’s Bixby feature, as did Google with Google Lens. Partnerships between grocery chains and these two companies would elevate the technology to weekly use and increase in-store customer satisfaction.
But let’s take a step back and consider broader trends influencing eating decisions. These fall into two buckets: grocery-like services and advanced logistics. Grocery-like services cut out the middlemen (read: grocery chains). These are companies like Blue Apron, with the tagline “fresh ingredients, original recipes, delivered to you.”
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This model centers on the idea that consumers want to make their own healthy meals but don’t want or need to hassle with going to the store to buy food. Will startups dominate this space? Will grocers create their own services? Maybe both. The next five years will be telling as this market matures.
On the other end of the spectrum are logistics companies like UberEATS or DoorDash, which are mobile app restaurant-delivery services. But delivery is not limited to one-off restaurant requests. Services like AmazonFresh, Google Express, and Instacart specialize in grocery delivery, even in under an hour. Notably, Amazon, among others, is also investing in drone delivery. What might this look like? Here is a drone delivering beer on a frozen lake.
To enable advanced logistics, multiple technologies are crucial. First, warehouse logistics will become increasingly automated to increase efficiency and drive down costs. Once sorted at the warehouse, drones and vehicles transport the goods. Drones will deliver small packages to remote locations inaccessible by road or in dense urban environments. This model has been tested with healthcare. Larger packages will be shipped by vehicle. The advancement here will be in connected autonomous vehicles (CAVs).
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The bottom line: No single innovation will seamlessly integrate grocery shopping into consumers’ digital lifestyles. The solution will be a diverse combination of advanced logistics, in-store improvements, mobile app integration, and yet-to-be-created inventions. We deserve better innovation than simply putting a camera in our fridge. And that is why how we get and consume food is primed for disruption. Your customers are waiting.
Thanks to Bennett Madison.
Ex-Vagabond🏝️ Quit my job & traveled the world. Spending June & July planning what’s next. 👉 biggiand.com 👈
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