The need for contactless shopping inspires creative tech
Supermarket store visits in the last six months in Southern California, a Chicago suburb, North Carolina’s capital and New York City and its surrounding commuter towns have revealed you don’t have to talk to or make eye contact with another human being — let alone touch them — to have a full produce-shopping experience.
Kinda sad, isn’t it, in a way?
This is the decade we live in. We must march forward with vigor, making personal connections in new ways, while retaining the old ways that still work for us.
Now that self-checkout lanes are commonplace, retailers are coming up with other ways to make the in-store experience as quick and convenient as possible, using the least amount of precious human labor. Enter the mobile price gun to scan groceries as you drop them in your cart, with weigh stations and sticker machines in the produce department, for example.
And while e-commerce produce sales have lost some of that momentum seen in the first year of the pandemic, it’s not going away: Total U.S. online grocery sales for July jumped 17% year over year to $7.8 billion, driven by inflationary pressures and strong demand for delivery and pickup services triggered by ongoing COVID-19 concerns, according to the Brick Meets Click/Mercatus Grocery Shopping Survey fielded July 29-30.
Online sales, whether completed through delivery or curbside pickup, are growing in popularity with shoppers at Sprouts Farmers Market, Phoenix.
“I think our clientele is very business-savvy, so they work long hours, and they also care about what they consume. So, they’re very fresh-forward,” says Caitlin Tierney, senior director of produce for local and innovation at Sprouts. The retailer partners with Instacart.
Smart carts
To satisfy a craving to try the newest contactless method, I tried the Dash Cart at an Amazon Fresh store in Schaumburg, Ill. Think of it as a smart cart compared to a regular shopping cart, like a smart phone is to a … rotary, corded phone.
The Dash Cart uses computer vision algorithms and sensor fusion to help identify items placed in the cart so shoppers can grab an item, scan it on one of the Dash Cart cameras and place it in the cart’s open, waiting brown paper bags.
This is how it actually works: A shopper walks into the store, and at the front is a Dash Cart sign, plus a stack of the smart carts, with directions on the cart. You open your Amazon app on your phone to scan the QR code on the sign, so that your Amazon account is then assigned to your shopping cart.
Then, shop. When you stroll by the bulk and packaged produce, the computer screen on the cart suggests the items that are nearby, which makes weighing, scanning and entering the price somewhat simple and quick. When you drop the produce in the cart, it can weigh it, and cameras also catch what it is.
Once you’ve gathered all the produce that you and your loved ones can eat in your cart, you head to the Dash Cart checkout line, where you just sail right through (although an employee could do a quick security check). Sensors will log that you’re finished shopping and the bill will be paid by the credit card that’s on your Amazon account. A receipt comes by email.
Creative app solutions
Contactless solutions need to factor in the consumer demands of Generation Z, the oldest of which are 25 now. They’re digital natives concerned with sustainability — forecasted to have more spending money than millennials and Generation X, but to be thrifty with it.
“A few years from now, all transactions will be on apps. Ten-plus years from now, it will only be faster. Venture capitalists have poured billions and billions of dollars into this industry,” says Joshua Noonan, director of delivered sales at C.H. Robinson’s Robinson Fresh division, based in Eden Prairie, Minn. Robinson Fresh specializes in sourcing and transporting fresh produce. He mentioned big tech companies such as Google and Meta, the latter of which owns Instagram and Facebook.
“We have to become more tech-savvy, more efficient, because it’s coming,” Noonan says.
Several retailers are trying new ways to shop with the future in mind.
For example, Cleveland-based Giant Eagle announced in July the expansion of its Flashfood app to 140 more stores after diverting 430,000 pounds of food and saving shoppers thousands of dollars in its first year of the program.
The Flashfood app enables people to browse deals — directly from their phone or computer — on fresh food, including produce boxes, as well as center-store foods, that are nearing best-by dates. Purchases are made directly through the app and consumers then pick up their orders from the Flashfood zone located inside their participating Giant Eagle or Market District location.
The expansion should roll out through Ohio and Pennsylvania, and be complete at all its stores by October.
Flashfood also works with The Giant Co., Meijer, Tops Friendly Markets, SpartanNash, Giant Eagle, Price Rite, Giant Food and Stop & Shop.
Williamsville, N.Y.-based Tops provided another recent example by expanding its Shop + Scan app service to four more New York stores in July, as customers continue to seek contactless options for their shopping experience while COVID-19 pandemic remains a part of the environment.
To use the app, shoppers can scan and then bag their items as they shop. While shopping, the user will see a running total and watch their savings and rewards automatically apply. When finished, they visit any pay station for an expedited checkout.
“The expansion of this innovative new technology is essential to continue to keep our communities safe,” Tops Digital Marketing Manager Jill Sirica says. “It’s so easy to use. All you need to do is download the Tops Shop + Scan app, connect to our free, in-store Wi-Fi, enter your Tops BonusPlus card number and you are ready to shop.”
By the end of summer, the offering was available in 28 of Tops’ 150 locations, which are in New York, Pennsylvania and Vermont, including five that are run by franchisees. Sirica says she hopes to continue adding more stores to the app.
Online shopping
Online grocery orders are increasing rapidly, with online sales expected to reach 20% of total grocery sales by 2025, according to the 2022 Future Trends Report from the International Fresh Produce Association.
“COVID-19 has changed the way we live and work, which has changed consumers’ relationships with e-commerce significantly,” the report says. But fresh produce still lags behind other groceries bought online.
While consumers are purchasing more fresh produce and eating meals at home more, there may be a decline in fresh produce purchases, as consumers feel they have a smaller and lower-quality fresh produce selection when shopping online, the Future Trends report shows.
When Tierney worked for FreshDirect when it was the largest online grocer for New York City, before Amazon, a star system for produce quality helped manage shopper expectations. Sometimes, a product has imperfections due to weather, and if it’s made transparent with a star system when the shopper selects it — because they need the item regardless — they won’t have any unfortunate surprises upon delivery.
“I’m trying to adapt that into the Sprouts model, as well,” Tierney says.
Before the pandemic, perishable and nonperishable food made up 26% of online grocery; that share increased to 37% in October 2021, according to an August 8 report from market research firms IRI and Forrrester. However, IRI’s May 2022 data shows that food has plateaued at 37% market share.
Still, consumer lives are now dependent on digital services.
Besides e-commerce, demand for digitally enabled product and service bundles have increased, as well as the output of valuable consumer data.
“Omnichannel is moving from industry buzzword to a basic need,” the Future Trends report says. “Physical and digital integration has accelerated in line with the rapid growth of services like curbside pickup and dark kitchens. New ways of working are changing gravitational centers.”
Dive into this
Two factors helped to slow (although there’s still a healthy forecasted growth of 45% between 2021 and 2023) the grocery e-commerce boom that the industry experienced in 2020, IRI says:
- Higher food prices. Inflation is currently one of the most significant factors affecting consumer attitudes and politics. Prices for the “food at home” category have increased 10% from May 2021 to May 2022, while consumers have increased spending at grocery stores by 9% from March 2021 to March 2022. This data suggests that any growth in the category is entirely due to higher prices. If prices continue to rise, we expect shoppers to trade down even more and that inflation will outpace growth in the category, which ultimately means fewer units purchased. Online grocery merchants are likely to experience even higher inflation challenges because they must contend with gas prices for delivery vehicles, in addition to expensive hourly workers.
- A challenged grocery delivery model. In general, online delivery models in the U.S. have failed to be profitable, and even click-and-collect tactics challenge the thin margins of grocers. Several food-delivery companies, including Instacart, have been challenged financially. Instacart, for instance, underwent a devaluation of nearly 40% in early 2022, suggesting that current demand hasn’t kept pace with initial pandemic volume. Although micro fulfillment centers appear to be the one solution that can make grocery click-and-collect profitable at scale, few grocers have invested the billions required to execute micro fulfillment centers across their entire supply chains. A few grocers such as Kroger and Publix are experimenting with micro fulfillment, but the capability is currently only in a few select stores.
