Food businesses will have to change to stay competitive – online, in-store, and at sorting and processing plants too.
Technologies and Trends shaping the Supermarket of the Future
Bjorn Thumas, Director Business Development Food at TOMRA Food, looks at what we can expect.
Technical innovations online and in-store and shifting consumer demands will re-shape the supermarket of the future.
And that future is approaching fast.
Proof that we are on the brink of a supermarket revolution came last year when e-commerce giant Amazon invested $13.7 (€11.7) billion in acquiring supermarket chain Whole Foods Market. This promises to be a game-changer in food retailing.
And it is not only in funky-looking offices in Seattle where the supermarket is being re-imagined: other specialized enterprises already fulfill online grocery orders by delivering directly to customers’ front doors, and more businesses will jump on the bandwagon.
It is true that Whole Foods Market has stores only in the USA and the UK, and that today’s online innovators such as Instacart are mostly US-based - but the shift to selling more food online will quickly sweep through developed nations.
During the next decade the global grocery e-commerce market is forecast to expand at a compound annual growth rate of 13.5%, from an annual value of €43 billion today to €135 billion by 2025.
Business analysts note that although e-commerce players are making efforts to establish a foothold in the USA and Europe, they face serious challenges here because the existing grocery market is saturated and margins are low. This means global growth in food e-commerce will be driven by Asia, where there is highest consumer willingness to purchase groceries online, combined with rapid urbanization, low labor costs, and a relatively undeveloped retail market.
To give just one example of growth potential, in China, the world’s most populous nation, the e-commerce share of the grocery market is currently only 4.2%. To put this into perspective, in nearby Japan the share is 7.2% and in South Korea it is already 16.6%. This is a sure indicator that businesses such as the Chinese multinational conglomerate Alibaba Group, owner of Alibaba.com, will be at the vanguard of big changes.
Consumers’ expectations will rise
Widespread food shopping online and fast deliveries to customers’ front doors will be just the beginning of this brave new world. Computer codes and algorithms will also enable supermarkets to personalize their offering to customers, using data gathered about shoppers’ individual habits and preferences.
The “Recommended for you” web-page so familiar to buyers of products such as books and electrical goods can also direct shoppers towards the foods they like.
Discerning ‘foodies’ will even be able to check information about the origins and nutritional value of produce, and to see suggestions for recipes and food pairings. This will attract and addict greater numbers of customers while cleverly making each one feel as if they are being treated individually.
The ad-hoc demand created through these online ‘nudges’ will challenge the traditional food supply change. Processing lines will need to know in precise detail what is coming-in from the field and what is in storage in order to meet demand.
And quality and safety standards will have to be higher than ever. In the past consumers might have ignored a defect or made a complaint only seen by the grocery chain or food manufacturer, but social media will change that. A photo of something like a frog in a bag of lettuce can quickly go viral and global, reaching enough people to cause brand damage.
Technology to ensure quality and safety
These opportunities and threats mean that machines produced by TOMRA, the leading provider of optical food sorting and peeling equipment, will play an increasing role in meeting customers’ expectations and protecting suppliers’ reputations.
Today's grading and inspection equipment is able to sort food products at incredible speed and characterize individual items in great detail
In readiness for these needs, the sorting machines made by TOMRA Group are being enabled to share data to ensure the highest standards of quality and safety. These machines are also being fine-tuned in data-gathering and application to help processors pick the correct incoming material, to get to the final product in the most efficient way.
Traditional supermarkets fight back against the online disruptors – and information about shoppers’ preferences and habits will be an important weapon. Consumer-facing technologies, such as shopping-cart-mounted devices or smartphone apps, will steer shoppers towards the aisles and shelves where they are more likely to make purchases. Sensors in the store’s shelves will keep track of the items customers put in their carts and bill their mobile payment system as they exit the store.
The Amazon Go promise: no lines, no checkout - just grab and go. Sensors and AI, combined with an app on your phone do all the work.
Six Amazon Go shops have been opened so far
Supermarkets and specialized grocery stores will have the option of reducing on-site running costs by becoming smaller, while dedicating a larger proportion of their shelves to displaying fresh produce.
These changes align with the forecast growth in consumer demand for healthier, high-quality produce, more choice, and greater convenience – a demand which will increase massively as household incomes rise in developing nations, bringing 70 million more people globally into the middle-class every year.