• by Michael Wilhite , Columnist, September 21, 2017

Digital and e-commerce are surging in the grocery retail industry. We are in the fortunate position to learn from the disruption that digital has already created in other retail verticals. But we are now moving with urgency to keep pace as the forces of digital disruption within grocery retail are accelerating. 

We know that our consumers are eager to be served better. In their time-starved lives, they are looking for more convenience, less hassles, more inspiration, greater fulfillment, savings, higher quality ... and more. For most, a trip to the grocery store feels like another necessary chore that further complicates an already challenging life. 

Data availability and technology innovation will accelerate this disruption as consumers integrate the digital channel throughout the shopping cycle. Digital is both the chicken and the egg. Advances in data and technology that solve needs are driving shopper adoption of digital capabilities, and the adoption curve will subsequently drive further data and technology advancement to accelerate growth. As shoppers adopt digital, we access deeper levels of data on the life experiences of consumers and can leverage this insight to better serve them.

The CPG product innovation space reflects an upstream opportunity to bring new value to consumers. For example, Amazon is mining its detailed product review database to custom-formulate baby products under its Mama Bear private label. The next stage of innovation must tap into social media data that provide richer glimpses into people’s lives. Advances in interpretation of unstructured data for both text and visual images will drive ethnography at scale to identify unmet needs for ground-breaking product innovation such as new flavor profiles in food, or time-saving household products. Highly personal categories like cosmetics will scale individualized custom product formulations evaluated from a single image from a consumer’s iPhone.

These advancements are changing how consumers shop. Predictive algorithms already suggest typical replenishment items or complementary basket items as shoppers are building their lists online. Mobile devices, wearables, or cart devices used while shopping in-store will optimize routes to save time or send money-saving alerts using proximity location for promotions or linked digital coupons. Shopper-demand models will achieve unprecedented levels of accuracy through data feeds from smart home devices measuring actual consumption in home. The confidence in accuracy on replenishment items will embolden the retailer to finally take the risk and fulfill the order to the customer without them even asking.

While the penetration of e-commerce in the grocery retail space is a small percentage currently, this will grow and customer needs will fuel new expectations on experiences. Customers are already realizing money savings and convenience opportunities through subscription services in replenishment like pet from Chewy.com. As more shoppers engage in ClickList pick-up through Kroger for everyday items, the store needs to transform into an inspirational space for meal planning. Ultimately, start-ups will create fleets of autonomous last-mile delivery vehicles for both efficiency and ease, including on-the-fly adjustment to deliver at home, at work, or even at the soccer field.

The more data and technology advances in the grocery retail space, one might surmise that the more stale and impersonal the experience may become; however, the opposite will be true. Digital enables both the greater capture of individual consumer needs and the channels to fulfill a truly personal experience that is individualized to connect with each shopper’s need. The winners will leverage these advances to shape more complete experiences for consumers.