COVID-19 could revolutionize the in-store experience, too
The COVID-19 pandemic rapidly accelerated consumer interest in e-commerce and has made clear that the shift towards online grocery retail has staying power. The vast sums of capital that leading grocery retailers are pouring into investments in technology, fulfillment centres and omnichannel strategies are evidence enough; Walmart Canada plans to invest $3.5 billion over the next five years. Loblaw accelerated the opening of its micro-fulfillment centre in Toronto and expanded capabilities for its PC Express delivery service. Empire, owner of Sobeys and associated brands, launched Voilà, its online grocery delivery service ahead of schedule.
While these investments indicate substantial commitments to the evolution of online grocery retail, the ways in which the pandemic accelerated what will be lasting changes to the in-store experience is less obvious. But this does not mean that Plexiglass barriers and abundant hand sanitizer stations will necessarily become permanent fixtures. More important than these stop-gap measures are the underlying trends that are pushing grocery retailers towards developing a quicker, more efficient and (especially now) more contactless in-store shopping experience.
What are the trends driving grocery retailers to revamp the in-store shopping experience? Transitioning to digital payments has been building for several years now, all in an effort to limit human-to-human contact. According to the latest consumer finance data from Euromonitor International, cash transactions in Canada have declined by 58% in 2020. In comparison, last year these transactions declined just 9.7%. As a result, grocery retailers have made self-checkout lanes more accessible and have encouraged contactless payments. Grocery retailers have also sought to make the in-store experience more efficient and enjoyable for consumers through next-generation technology.
In 2019, Sobeys began a pilot of smart carts that allow customers to shop, pay, apply coupons and even weigh produce right at the cart—no need to visit the checkout line. While Sobeys’ pilot is limited in scope, smart cart creator Caper claims that since the pandemic started, consumers are utilizing smart carts more than ever. With the traditional in-store shopping experience being hampered by necessary safety precautions, retailers need to innovate in ways in which consumers are already expressing interest.
Enhancing the in-store shopping experience does not just benefit consumers. Grocery retailers have as much, if not more, to gain from upgrading their infrastructure with smarter technology. With online grocery retail taking off, and particularly with the rise of third-party grocery delivery services, consumer data is now top of mind for retailers. The same type of information war has already been playing out for several years now in the foodservice industry between third-party players and restaurant operators. Retailers want the same ability to compile and analyze consumer shopping data that third-party services are privy to when consumers order groceries online. Doing so would allow retailers to better craft personalized advertising, offers and deals that are likely to attract and retain customers.
Grocery retailers have made substantial progress towards this goal due, in part, to direct-to-store online grocery ordering as well as expanded loyalty programs. However, there is still ground to gain through the in-store shopping experience by leveraging technology, such as smart carts and systems like Amazon Go’s cashierless checkout. Again, the pilot programs for such technology have been limited in scope, and there are many naysayers within the industry who feel high costs and potential theft are barriers too steep to overcome.
The acceleration of consumer trends, the rise of data-driven marketing and the financial strength of grocery retailers as a result of the pandemic is a perfect storm causing a major shakeup in grocery. The implications for the growth and success of online grocery retail are already clear. While the specifics of a fully reimagined in-store experience are somewhat less clear and could develop more gradually, the investments being made by grocery retailers and the growing consumer interest in new technologies are a sure sign that they are on the way.
