The Shifting Landscape of Food Retail
Building what The Wall Street Journal calls the “store of the future,” major grocers are investing in new, digitally-networked models that track consumer data and incentivize customer loyalty through cloud-based rewards programs. In fact, the same article calls technologically optimized shopping experiences “one of the most important weapons in [the] battle to keep people coming to grocery stores.” These new interfaces respond to the ubiquity of online food retailers, which threaten the viability of their brick-and-mortar counterparts. Because the cost of analytics and predictive platforms and software is currently quite high, data-driven programs tend to be concentrated among a handful of market giants. Nevertheless, local grocers are cooking up smaller-scale innovations to fortify local and regional food systems.
Major Market Innovators
For the past five years, supermarket giants have been implementing data-centric approaches to customized experiences, thereby increasing convenience and rewarding return shoppers. Sam’s Club unveiled Sam’s Club Now, a “technology lab” that integrates smart grocery lists and personalized augmented reality capabilities into a mobile-first shopping experience. Cashierless Amazon Go locations may eventually deploy image recognition to gather loyalty data and distribute rewards. CNN explains that “A store’s AI might see you, a loyal customer, standing in front of the yogurt case…and offer a 15 percent discount.” Kroger’s—the largest supermarket in the U.S.—has invested billions in the cloud-based grocery system, EDGE: Enhanced Display for Grocery Environment. The EDGE app stores customer data to highlight nutritional content tailored to individual specifications and dietary needs. Innovations like these are ushering in a new era in food retail. While AI-powered tools are currently beyond the reach of most independent grocers, these shifts in the industry are spurring innovations among regional retailers too.
The Local AI Grocer
To keep pace, independent grocery operators are adapting to the shifting retail landscape and changing customer expectations by “exploring what their e-commerce offering will look like,” from delivery to click-and-connect, according to National Grocers Association CEO Peter Larkin. Without undertaking costly overhauls of their business model, independent grocers are finding ways to engage with their consumers and nurture return clientele. Halla, an AI app that generates personalized food recommendations for shoppers, is already in use by independent grocers like Portland’s Green Zebra, helping customers shop in a more targeted, efficient manner. Companies like AppCard Inc. now provide personalized marketing and shopper analytics to over 1,400 independent grocers nationwide who are using this service to better serve their patrons. Through smaller-scale offerings and partnerships like these, local and independent grocers are digitizing their operations—when and where possible—to keep up in the internet economy.
Optimizing the Future of Food Retail
Through data-driven tactics and methodologies, independent and regional retailers are playing an important role in shaping the grocery store of the future. The Colorado-based chain Natural Grocers, for example, is loosening the grip of its larger competitors with its {N}power® customer loyalty program, which celebrated one million members this year. Without the resources of their larger-scale competitors, these local innovators are nevertheless carving out ways to adopt digital tools to enhance their relationships with shoppers and stay ahead in the competitive food retail market.