The acceleration of ecommerce and the surging demand in technological innovation

Retail: Shopping goes even more online as grocery joins the e-commerce ranks

Between disruptions to the global supply chain, widespread store closures, lingering economic uncertainty, and rapidly declining consumer confidence, retailers are justifiably anxious about how their businesses will survive.

However, some believe that the pandemic has merely accelerated trends that were already well underway. For example, online grocery services had already been gaining steam, while lockdown and shelter-in-place orders made them a necessity for millions of people.

Covid-19 may have revealed the weaknesses inherent in the just-in-time logistics favored by many supermarket retailers, but it has also created new opportunities for companies to shore up those vulnerabilities.

Online grocery

SURGING DEMAND DRIVES TECHNOLOGICAL INNOVATIONS IN THE SPACE AND CREATES JOBS

Prior to Covid-19, the online grocery market was a high-growth sector dominated by major retailers, such as Amazon and Walmart.

But it only accounted for about 6% of the wider grocery retail market.

Source: OneSpace

The pandemic has driven unprecedented demand for online grocery services, including many consumers trying online grocery delivery for the first time. Independent retailers and nationwide chains alike have struggled to keep up. Orders that once took hours to fulfill are being delayed by weeks in areas hit particularly hard by Covid-19, such as New York City.

Larger players with significant spending power, like Amazon and Walmart, have invested in emerging technologies, such as automated fulfillment. Meanwhile, many smaller grocers that lack the resources to invest in automation have turned to third-party services like Instacart.

Instacart experienced a 150% increase in orders in March 2020. The company is reportedly seeking to hire an additional 300,000 personal shoppers to accommodate the demand. FreshDirect, an online grocer serving the New York City metropolitan area, saw a 60% increase in online activity in March 2020 compared to the same period in 2019.

While some retailers have struggled to fulfill orders, the sudden increase in demand has created opportunities for others, such as UK-based e-grocer Ocado. The company has no retail stores, instead shipping groceries directly to customers from warehouses across Great Britain.

While Ocado’s customer fulfillment centers do employ human workers, the facilities are extensively automated with sophisticated robotics. The company has licensed its technologies to other retailers such as Kroger in the US.

Source: Supermarket News

Prior to Covid-19, even larger retailers had little incentive to make significant investments in automation technologies. But the vulnerabilities revealed by the pandemic are likely to accelerate investment in this kind of tech, as grocery retailers seek to insulate themselves and protect their employees from future public health emergencies.

Takeoff Technologies, an automation specialist that works with grocers to build automated fulfillment centers, has seen a double-digit increase in orders, suggesting that current trends may continue in the long term.

Going forward, larger retailers such as Amazon and Walmart will likely increase their share of the online grocery market by augmenting their online grocery shopping experience with technological innovations, such as 3D renderings of items, as well as customer service improvements and faster delivery times.

Enhanced e-commerce

AS PHYSICAL STORES HAVE BEEN FORCED TO CLOSE, AR/VR TECH HELPS CUSTOMERS TRY PRODUCTS BEFORE PURCHASING

While AR and VR technologies for e-commerce have gained traction in furniture, fashion, and beauty industries, they have largely been a fringe experience for the majority of customers and categories.

However, as brick-and-mortar stores have been forced to temporarily close during the pandemic, customers need ways to replicate the physical shopping experience at home in order to try and purchase products. Many retailers have turned to AR/VR tech to make this possible.

Ikea, Wayfair, Target, and Lowe’s have been rolling out AR and VR features that let customers view pieces of furniture in their homes or in virtual showrooms. Beauty companies from L’Oreal to Sephora have also embraced the technology, using apps to help customers virtually try on makeup before purchasing.

Meanwhile, the fashion industry is adapting by turning to livestreams, virtual catwalks, and digitized collections. Joor, which helps high-end designers create virtual showrooms, said that activity on its platform during the Paris Fashion Week this year was 2.5x higher than average.

Eventually, viewers could be able to use an “exhibition mode” in livestream shows, allowing them to swipe through designer information, save items they like, and instantly access an order form. To further enhance the experience, technologies such as haptic gloves could help prospective customers get the feel of a garment.

The pandemic has forced retailers and brands to go all in on their online operations, and the momentum virtual commerce is gaining seems likely to carry over to a post-virus world.

Some experts, however, aren’t so sure. Dan McCarthy, assistant professor of marketing at Emory University, has noted that, because only 14% of total furniture sales in the US were previously made online, it would make sense that this segment would grow tremendously during the pandemic. But “to the extent that the pandemic is a short-lived phenomenon, when those stores reopen, that will bring that 86% of the [brick-and-mortar furniture] supply back on the market.”

This article was first published by CB Insights