It's that time of year again! Last year, we introduced a new yearly report that focused on the state of the retail industry, and this year, we're back and kicking it off with Food and Grocery. While many of the priorities and trends from last year have rolled over into this year, we have seen some definite shifts. Perhaps the three biggest shifts are the gap between growth and capability, the acceptance of the "grocerant" concept, and the continued shift towards artificial intelligence (A.I.).
The Gap Between Growth and Capability
In 2023, growth is still the ultimate priority of Grocery retailers. However, in this year's State of the Industry report from Toshiba and Incisiv, there's still a gap between achieving that goal and having the capability to do it. When asked about their top business goals for growth, 82% of respondents said offering unified experiences across digital and physical channels is a key to their business growth, but 60% aren't satisfied with their current ability. So, in a world where online and in-store shopping is blending together, being able to unify experiences is a big deal.
But it's not just about big goals; it's about how these goals match up with what grocery retailers can actually pull off.
- Improving Profitability of Online Order Fulfillment (93%): With 93% of grocery retailers emphasizing the need to improve the profitability of online order fulfillment, it's clear that the online shopping experience is a top priority. But despite the enthusiasm, 62% of businesses aren't quite satisfied with their current ability to make online orders profitable.
- Offering Unified Experiences Across Digital and Physical Channels (100%): Despite the unanimous agreement on its importance, 63% of respondents admit that they're not quite nailing the unified experience just yet. That's a real challenge because customers expect consistency, and failing to deliver can lead to dissatisfaction.
- Improving Efficiency Across Digital, Stores, and Customer Service (82%): When 82% of businesses say they want to improve efficiency across digital platforms, physical stores, and customer service, you know it's a big deal. But here's where it gets interesting – 60% are feeling a bit frustrated with their current efficiency levels. Streamlining operations across multiple channels is easier said than done. It requires integrating systems, training staff, and optimizing processes.
- Pursuing New Revenue Streams (83%): Grocery stores aren't just about groceries anymore. They're thinking outside the box with ventures like subscriptions, meal kits, and in-store events. It's all about diversifying revenue streams. But 54% are struggling with the challenge of exploring these new avenues.
So, while grocery retailers have their sights set on some impressive goals, they're also grappling with some very real challenges. The gap between what they want to achieve and what they can currently deliver is a reminder that the grocery industry is in a state of transition. It's evolving to meet the demands of tech-savvy consumers while trying to overcome the operational hurdles that come with that evolution.
The Acceptance of the Grocerant Concept
In a rapidly evolving grocery landscape, the concept of the "Grocerant" (grocery and restaurant combined) is gaining widespread acceptance. A substantial 67% of retailers agree that grocers must embrace the "Grocerant" concept to enhance customer value in an increasingly competitive environment. Why? Well, it's all about staying competitive in an increasingly competitive industry.
As shopper preferences evolve, grocery stores realize they need to do more than offer groceries to keep shoppers coming back for more. The line between grocery shopping and dining is blurring, so to stay ahead, grocers need to create a seamless, convenient experience that combines both. It's not just about picking up your weekly groceries; it's about enjoying a meal right there at the store. It adds an entirely new dimension to the shopping journey, turning it into a destination rather than a chore.
The Continued Shift Towards A.I.
Artificial Intelligence (A.I.) continues to play a pivotal role in shaping the grocery industry's future. Grocery retailers are prioritizing A.I. to revamp their in-store experiences in the next 1-2 years, and this isn't just a passing trend; it's a full-blown movement. Consider these stats:
- Computer Vision for Inventory and Store Management (96%): Nearly all respondents, a whopping 96%, are on board with using computer vision to keep a watchful eye on their inventory and manage their stores more efficiently. This isn't just about making sure the shelves are stocked; it's about minimizing wastage, optimizing supply chains, and ensuring customers can find their favorite items in stock whenever needed.
- Computer Vision for Customer Behavior Analytics (97%): It's like having a super-smart observer in the store, understanding how customers move, what interests them, and how they make decisions. With 97% of respondents eager to utilize computer vision, shoppers can expect a more personalized and tailored shopping experience. No more generic recommendations – you will know what shoppers want before they do.
- A.I. for Real-time Personalized In-store Offers (90%): Imagine walking through the aisles, and your smartphone pings with an offer for your favorite cereal or a discount on that coffee brand you adore. A.I. can analyze shopping habits and preferences on the spot and serve up deals that customers can't resist. 90% of the industry is on board with this game-changing approach.
In a nutshell, A.I. isn't some far-off technology; it's right here, right now, transforming how people shop for groceries. From optimizing inventory to creating personalized shopping experiences, A.I. is the secret sauce for making your grocery trips more innovative, efficient, and tailored just for you.
Overall, while the goals for growth are clear and compelling, there's work to be done in bridging the gap between these aspirations and current capabilities. Embracing innovative concepts like "grocerants" and harnessing the power of A.I. will be key drivers of success in this ever-evolving landscape. As grocery retailers adapt and innovate, shoppers can look forward to an era of enhanced convenience and personalized shopping experiences.