Dealing With Digital Disruption

Some of the more popular buzzwords nowadays are "digital disruption" and "digital transformation." What exactly do they mean, and how do they apply to grocery? 

Digital disruption occurs when new technologies disrupt the traditional ways of doing business. To be successful, companies are motivated to move on to digital transformation. Stamford, Conn.-based research and advisory firm Gartner describes the latter as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities.”

I look at it in two ways: one, shopper connections, and two, a company’s infrastructure and method of operation. Both involve operating in a digital world. 

Several technologies have created disruption as it relates to shoppers. While FSIs still dominate distribution and redemption, up-and-coming paperless coupons are favored by Millennials. Grocers such as Publix and Meijer have enhanced their connections with shoppers through vigorous social media programs. Forward-thinking grocers are digitizing the supermarket setting with video screens and at-shelf electronic prices, both of which are replacing cardboard signs and labels. 

The biggest change agents in grocery have been e-commerce and the smartphone. To say e-commerce has disrupted grocery shopping is an understatement. Online grocery ordering and delivery is a shopping option that grocers must offer customers to remain competitive and relevant.

Meanwhile, mobile is influencing shoppers before they enter the store and while they're roaming the aisles. The smartphone is being used for researching nutritional products, creating shopping lists, clicking on grocers' apps, and accessing digital coupons and other promotions via beacons. It has dramatically changed the buying process.

Some grocers are just now coming to grips with deploying predictive analytics and leveraging Big Data. The use of both today has been modest, but they should be an essential strategy in any chain’s business and growth planning.  

Digital transformation was a central theme recently at SAP’s second annual conference on Best Practices for Consumer Products. Among the topics presented and discussed at Chicago conference by grocers’ trading partners were hyperconductivity, cloud computing, robotics, artificial intelligence and Big Data. Those are among the macro-disruptive trends in technology that are dramatically reshaping the global economy.  

“The digital economy is now, and growing rapidly,” said Marcel Vollmer, COO of Palo Alto, Calif.-based SAP Ariba, in a keynote presentation. “The connectedness of everything allows companies to interact in real time with their customers, products, employees, assets and partners in ways that they never did before, offering the opportunity to expand and fully digitize their value chain.”

Want more? Here are some of the factoids and predictions from the SAP conference:

• 90 percent of the world’s data has been generated in the past two years (per Science Daily)
• By 2018, 30 percent of our interactions with technology will be through “conversations” with smart machines (Gartner).
• There will be 50 billion connected devices by 2030 (Cisco, Morgan Stanley)

Is your company prepared and taking advantage of the changes that digital technology is bringing? If so, congratulations. If not, perhaps a digital readiness assessment is in order as a first step. Either way, welcome to the future.