This past week, our team at Invafresh attended the Groceryshop event in Las Vegas, Nevada. Groceryshop covers the evolution of grocery retailers and the rapid changes in the production and distribution of in-store consumer products. This year, Groceryshop addressed the evolution of how consumers discover, shop, and buy these products in the digital age – including the latest technologies, trends, and business models.
Common recurring themes we noticed at the show were:
- Macroeconomic shifts continue to drive change throughout the grocery supply chain.
- The appetite for grocers to evolve digitally continues to grow.
- Grocery delivery is here to stay, but the physical store still plays a critical role during this digital shift.
Macroeconomic Shifts Continue to Drive Change
We’ve all heard of the current macroeconomic challenges in today’s world. The pandemic, supply chain disruptions, and inflation are only a few issues out of many. In our eyes, the most crucial issues we face include four categories that we’ll call SLIC:
Supply Chain Constraints
Logistics operations have become costly due to high energy prices and labor shortages.
A shortage of experienced workers to manage increased tasks and management has resulted in undervalued and disconnected employees.
The pricing of goods has increased, creating margin pressure on grocers.
Changing Customer Behaviours
Unpredictable post-pandemic customer behavior coupled with decreased store demand and reduced spending means excess in-store inventory and increased ordering and inventory management costs.
Fortunately, many grocers have systems in place – or have already started to implement them – that will tackle these problems.
- Grocers have widened their product assortments to provide a greater variety of items and price ranges.
- Companies like Kroger are combatting high inflationary and environmental costs through procurement and merchandising tools.
- Studies have shown that grocers are focused on reducing their days-on-hand inventory and running programs to match pre-pandemic inventory levels.
- Grocers are expanding their network of distribution centers to allow alternate shipping routes and increase flexibility over labor and the supply chain.
- Grocers are connecting “frontline” workers by adopting new tools to empower two-way communication between them and the rest of the team.
The Digital Evolution of Grocers
Sunil Kumar, GM, Walmart Commerce Technologies, stated that “the role of the physical store is evolving and playing a more critical role in the digital shift.”
We wholeheartedly agree, as the above issues have developed a bigger appetite for grocers to evolve alongside the digital era. More and more grocery retailers are looking for technologically progressive ways to combat these macroeconomic issues.
In the case of supply chain constraints, grocers are implementing supply chain modernization programs to transition to fully automated distribution centers. These investments will enable additional capacity and increase productivity while benefiting the bottom line by lowering operating expenses.
Task management and productivity tools are all about doing more with less to combat labor shortages. The idea isn’t to take what’s on paper and simply digitize it, but instead, think creatively and develop smart solutions to make these tools work.
The concept of inflation and margin erosion is not new, but it’s quickly becoming a critical issue that will impact the entire industry, from retailers to customers. Therefore, we must first understand the changing nature and needs of the customer to create a technological solution.
The Fresh category is where grocers most often see an influx in margins, so they’re looking to utilize forecasting and analytics tools to expand their fresh product programs and maintain their fresh stock in-store and offline. Grocers are also looking into local fresh programs that will provide more attractive pricing and satisfy the needs of customers looking to buy local and sustainable items.
Physical Stores at the Digital Center
During his keynote, Whole Foods CEO Jason Buechel stated that the company is looking to “bring back the theatre of retail,” suggesting that their consumers “look to come to Whole Foods, not only for the amazing in-store experience provided, but for the expertise.”
Though the pandemic accelerated the growth of grocery delivery, it’s important to note that 9 of the top 10 eCommerce websites are run by retailers with large brick-and-mortar presences. In fact, the NRT State of Retail report suggests that twice as many stores have opened in the US in 2022 versus closings announced in 2021.
However, some consumers just aren’t ready to let go of the in-store experience. This leads to a new concept of simultaneously picking up dinner and groceries for the week. The rising popularity of prepared meals in-store shows no sign of letting up, with many grocers located in prime pick-up locations and with underutilized spaces already set up to meet this demand.
The grocery retail industry is finding itself in a unique position. Socioeconomic changes are being met with the open arms of technological innovation, and the results to prove it. Data, AI, and ML technology are meeting changing customer habits, needs, and demands by providing solutions to issues before they occur, and in real-time.
As we’re seeing now, human capital (the workforce), the largest investment in the industry, is not meant to be replaced by technology but to be helped by it. It will take the collaboration of industry experts, producers, distributors, and workers – essentially, the entire supply chain – to make this happen.
Invafresh would like to thank the team at Groceryshop for a job well done organizing this event.
We’d also like to thank all the visitors and customers who took the time to meet, brainstorm, and collaborate with us at our booth and during different sessions.
We had a great time. As the saying goes: “Vegas is always a good idea!”