Innovation in Grocery Retail: Lessons From Leaders
For most consumers, the process of grocery shopping has remained largely the same over the last few decades. There are exceptions of course, like the implementation of card readers and self-checkout kiosks aimed at improving the point of sale or the introduction of mobile phone loyalty apps, but widespread advancements have been scarce.
While other consumer-facing industries have been swept up in waves of technological innovation, on the whole retail grocery has remained rather traditional and utilitarian. That is, until recently.
As companies like Amazon get into the grocery business and meal kit services emerged to deliver exactly what customers need straight to their door, a new frontier of competition is taking shape.
These disruptions are propelling the industry into transformation, which will require grocers to get creative, to make adjustments, and to embrace change.
We’re already seeing this play out for physical retail through the introduction of new services like online ordering, with curbside pickup or local delivery. But there is so much more that can be done to make the in-store experience compelling and attractive, and to give customers a reason to come inside their local store.
Lesson 1: Don’t Just Innovate - Innovate with A Purpose
Let’s start with Target. While not a traditional grocer, it is a major retailer with a growing grocery business. Target has taken a goal that many believed would be cost prohibitive —reducing its carbon footprint — and used it to improve both its bottom line and the quality of customers’ lives. In 2017, Target introduced its Chemical Policy; a strategy which now encompasses its entire value chain, from operations to the products it carries.
Target now seeks to increase ingredient transparency and reduce unwanted chemicals in the foods and products used by millions of customers. In addition, Target has invested in putting more sustainable products across its shelves.
The company has continued to debut eco-friendly programs and initiatives at unprecedented scale. Freshwater stewardship, reduction of plastic waste, in-store recycling, using Energy Star products to keep groceries cold, installing LED lights in stores, installing solar roofs and much more. Target is also working with its partners to reduce its environmental impact from “source to shelf.” Boldly, Target has accomplished all of this by designing and implementing its own plans, policies and products, rather than just joining existing initiatives.
As an increasing amount of attention is paid to global warming and the state of the environment, Target has differentiated itself as a true leader that cares not only about the people who walk through its doors, but the larger planet around them. It has innovated with a purpose far beyond the walls of its stores.
Lesson 2: Propel Your Customers’ Priorities
Raley’s has identified and acted on ways to provide customers with options to help them lead healthier lives, including initiatives like revamping its private label — Purely Made and Knob Hill Trading Co. brands — to use healthier ingredients. These foods are now free of 101+ preservatives and artificial ingredients.
Raley’s also developed an unacceptable ingredients list to help customers make informed decisions about what they choose to eat and created a Shelf Guide labeling program to give customers a better understanding of what products contain right at the moment of product selection.
And Raley’s didn’t stop at the shelf. The check lane represents the final food frontier before leaving the store. It’s easy to grab a candy bar, a bag of chips, or a sugary soda. The Raley’s team understood this all-too-familiar temptation and reduced it, introducing “better for you” snack options to the checklane assortment. Similarly, it reimagined the cereal aisle, calling out when products contain added sugar.
Raley’s also developed its Raley’s Food for Families program, which has provided over 40 million meals to local families in need through a partnership with Feeding America. Raley’s has raised more than $36 million for the program (and absorbs all of its administrative costs) so that customers know that when they give to Raley’s Food for Families, 100% goes to help members of their local community.
Lesson 3: No Waiting Required
In a comparison between the consumer experiences of online versus in-store grocery shopping, one significant strike against the physical store is the ‘waiting’; whether it’s in long checkout queues or crowded aisles. While retailers have made moves to minimize the in-store wait with technologies designed to make the checkout process faster, a Wegmans' service is one that stands out from the pack.
This year, Wegmans launched Wegmans SCAN, a free mobile app customers can use to scan and bag their groceries while they shop. The app tracks a running total for the order, so consumers know how much they’re spending, and automatically applies any available coupons or discounts. When customers finish their shopping, they simply walk up to a kiosk or register to pay.
Wegman’s has always prioritized incredible service, and it was in this vein that it decided to invest in mobile technology to help customers save even more time and shop the way they want. In this dynamic digital age, it’s innovations like Wegman’s SCAN that will lead physical retail into the future.
Lesson 4: Leverage Liabilities Like Assets
Perhaps no company has been pushed to innovate more than Walmart. Locked in stiff competition with Amazon, Walmart is persistently looking for ways to prove that shopping in-store can be just as efficient, and potentially more rewarding, than purchasing from an online retailer.
Through its Intelligent Retail Lab (IRL), Walmart is testing ways to digitize brick-and-mortar stores to provide a more enjoyable shopping experience for shoppers, while controlling costs for operators. As such, it is conducting one of the first explorations of AI applications in physical stores.
With sensors, cameras, and processors placed throughout its pilot store, teams can easily monitor product inventory and availability, and the overall state of the store. For example, associates can be notified as the stock level for a particular product begins to dip or when spills occur so that they can react quickly to customer needs. As machines handle some of the more mundane tasks, associates are freed up to spend more of their time helping customers or creating eye-catching displays.
Walmart hopes to roll out its new technologies to an increasing number of stores, putting physical store locations at the source of their advancements — instead of viewing them as anchors or liabilities in the innovation process.
The Next Stage
As demonstrated by these initiatives, incredible innovation is now taking place in the retail industry. As the landscape continues to evolve, and online and offline worlds converge, physical grocery retailers will need to do more to attract and retain customers.
But that’s where it gets exciting — real opportunity is open for retailers to elevate what it means to go grocery shopping, to be a food consumer, and to be a responsible consumer. With a little creativity, and a little more investment, retail grocery will not only transform; it will thrive.
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