Some observers see the grocery store category as a sleeping giant within the U.S. retail sector. Heavily challenged as a low margin business dependent on high volume, grocers of all sizes are faced with increasing competition. But more recently, national and regional supermarket players have awoken and are taking steps to meet the challenges. Chief among these are technology investments and logistical advancements that now enable grocers to better align with the evolving needs of the U.S. consumer. Which is why the 2nd annual Groceryshop conference, held in September at the Venetian Vegas, served as an excellent venue to see the leading trends and issues that face the industry and the opportunities that lie ahead.
The Groceryshop event comes from the same organizational roots as older sibling Shoptalk, and both use Las Vegas as their venue. In addition to an engaging agenda of speakers and topics, this being Vegas, there’s the obligatory mix of entertainment from loud music to fire spear dancers to pool deck receptions. Groceryshop attendance has grown quite rapidly and this year’s edition saw some overflowing meeting rooms and crowded corridors. Next year’s conference should be able to handle the expanding attendees as the event will be moving down the Strip to a venue with a lot more elbow room.
Issues of particular note as seen through Mercator Advisory Group’s payment focused lens included online grocery sales, grocery delivery fulfillment, and various self-checkout systems. E-commerce has brought seismic changes to the retail landscape overall. But grocery, as the largest retail vertical outside automotive, has been late to the party, as discussed in Mercator’s June 2019 report, U.S. Online Grocery Shopping Takes Off But Remains A Challenging Channel. Throughout the Groceryshop presentations and exhibit floor, it became quite apparent that grocers are now jumping headlong into the online sales channel. From warehouse robotic systems for product picking to intelligent delivery systems, order fulfillment to home or office is a major initiative for players including Ahold Delhaize, Albertsons, Amazon, Loblaw, and Target.
Online order fulfillment has evolved to become a highly tuned machine given the substantial technology investments of grocers, as well as support from delivery partners such as Deliv, Instacart, Peapod, Postmates, and Shipt. They have enlisted armies of shoppers and drivers that roam grocery aisles filling shopping baskets for delivery, usually within a 2 hour window in most metro areas. A key question grocers have is whether to enlist the services of a 3rd party firm or handle online order fulfillment with in-house resources. The jury is still out on this one, but right now both options appear to be able to co-exist.
There was no shortage of tech developers at Groceryshop, and one area of interest involved store self-checkout systems, a topic that Mercator closely follows and will be the subject of future research. There are different systems from mobile apps to AI driven autonomous checkout. They all address the consumer’s preference for convenient in-store shopping without waiting in checkout lines. Amazon Go gets a large share of the headlines, but there are several developers with operational or pilot variations of self-checkout that include Caper, FutureProof Retail, Grabango, and Zippin. We expect 2020 will be a breakout year for autonomous checkout systems, just in time for next September 2020 edition of Groceryshop. See you there!
