From Shelf to Table: How Data is Transforming the Grocery Experience

Foodies around the world are rejoicing. Why? Because we are reaching a point where if you find yourself craving a healthy meal, a single candy bar, a bag of chips, or even in desperate need of laundry detergent or shampoo, there will be numerous options at your fingertips to deliver these goods within minutes. Click ‘buy’ now and by the time you finish reading this, your order could have been delivered.

Think that’s impressive? The amazing part is the immense amount of data, analysis and infrastructure that goes into the delivery of such orders shoppers expect daily.

Over the past year, the rise of app-based delivery services, promising goods within an hour or less, has brought about major disruptions in the grocery and mass merchandise segments. While supermarkets started offering online delivery over a decade ago, a global pandemic and international demand for safety and wellness has transformed the industry even more significantly. Since March 2020, there has been close to $14bn of investment globally into on-demand grocery delivery services.

So, how exactly is that candy bar making it from the shelf to your doorstep so quickly?

There’s no business like data-driven business

The answer is simple. These new grocery and mass merchandise-delivery services aren’t actually in the grocery business; they are in the data and logistics business. As we all know, the key to success in almost every field is understanding your customer. Data and analytics help these businesses know what their customer wants and when. Having the ability to meet that demand is what sets these new players apart.

Strategically located data-driven fulfillment centers, or ‘dark stores’, are the cornerstone of this model. When it comes to getting food to your door, covering the last mile is the most expensive element, due to labor and transit costs. Think about it – if something gets taken off a shelf in a supermarket, someone needs to replenish that stock, tidy the shelf edge, make sure all the containers face the same way. And in the same sense, the cost of multiple small-vehicle deliveries is costly when compared to the large-scale shipping for hundreds of miles prior.

It’s amazing how much businesses can control costs by operating out of less beautified, yet still entirely functional, fulfillment centers. And, by leveraging AI and machine learning, they can monitor and replace stock far more efficiently. Advanced data analytics also enable a quick turnaround from order to delivery. To put it simply, if you know exactly where something is going to be, you can get to it much faster.

This is essentially what happens when you place an order through one of these apps. Your delivery agent receives the order, is directed to the correct location within the fulfillment center, and your order is at your door within minutes.

The game isn’t over yet

Don’t be fooled, supermarkets aren’t sitting back and letting new, disruptive players dominate the market. In fact, they too have recognized the demand for rapid delivery of essentials forgotten from your weekly shop. Since the start of the pandemic, grocers and mass merchants in the US and beyond have been diversifying their offerings. We have seen organizations that swore they’d never step into the delivery market eagerly lining groceries up for pick-up. But that’s the nature of the business – you have to keep up with the demand.

If this pandemic has taught us anything, it’s that you never know what tomorrow’s consumer will need. Many steadfast in-store shoppers were forced to go online, so businesses had to adapt or fold. Supermarkets quickly got onto this trend and realized that data was the best way to know your consumer and meet their demands. Take Walmart as an example: the company quickly recognized it needed to scale up automation, and declared it would increase focus on stores that could serve as market fulfillment centers – recognizing the value in automated bots retrieving an order for assembly, and saving the expertise of human workers for where it matters.

This brings us to the crux – as I mentioned, labor is the most expensive aspect of any business, because people are valuable. There are misconceptions everywhere that automation, or ‘robots’, are set to replace people – but the reality is that, by automating certain aspects of a job, you’re reallocating your workers’ time, freeing them up to focus on more specialized activities.

Big supermarkets might consider taking a leaf out of disruptors’ books on this one. With less focus on marketing the storefront, investment can instead flow to analytics and data technologies. Armed with these tools, they can bring down delivery times and improve customer experience, ensuring they’ll remain competitive. The success of Kroger and Ocado’s collaboration is a great example of the partnerships I expect to see announced in coming months – and these initiatives will see grocers and mass merchants move from strength to strength.

It’s an exciting time for grocery, and I feel like we’re reaching a crucial moment for incumbents and disruptors alike. ?