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The Grocer’s Guide to Tech

Progressive Grocer identifies the biggest tech trends for the savvy grocer by having creators of various cutting-edge solutions weigh in

Food retailers and wholesalers interested in streamlining different aspects of their business have many technology solutions to choose from, but which will be most essential in the coming year and beyond? Progressive Grocer wanted to know on behalf of our readers, so we want straight to the sources: the developers of some of the most exciting grocery technology offerings around.

Across grocery order fulfillment, retail media, price optimization, digital marketing and more, the experts PG asked weighed in with thoughtful takes on what retailers can expect from a range of technologies adapted to the grocery sector, and why it’s in their interest to implement them.

Read on to find out what solutions might be the right fit for your operations. 

Mike Pane 84.51

Mike Pane VP, Data Science, 84.51°

The most important upcoming technology that grocers will need to have in their stores/facilities is maximizing the use of prescriptive decision-making, driven by data science and artificial intelligence (AI).

Just a few examples of this in action are:

  • Directing an associate to take the most optimal next task in your store/warehouse.
  • Optimizing assortment by balancing variety where it matters to the customer while minimizing costs to keep the shelf full.  
  • Automated warehouse ordering so a retailer can order the appropriate amount of products from suppliers to meet demand while being as operationally efficient as possible.

By allowing prescriptive data science and AI to take over the predictable tasks, you are able to free up an associate’s time to work on the problems that data science and AI can’t solve. In the end, embedding data science and AI-driven prescriptive decision-making will deliver a stronger customer experience leading to customers rewarding you with a higher share of their wallet and

A simple solution with access to the appropriate data embedded within business systems is more impactful than a complex machine-learning model not embedded within the processes that the associates leverage. A fancy model disconnected from the associate’s day-to-day operations is likely to be blind to constraints and ultimately underused to make decisions. To avoid this common pitfall, grocers must do two things: 

  1. Invest in the appropriate business systems. To do this successfully, it will take the cross-section of technology and business teams coming together to ensure that they make the appropriate technology decisions to enable the day-to-day execution of the business while setting up for the future. Too many times, technology decisions are made that are not compatible with where data science and AI can take and enable the business. 
  2. Understand the problem you are trying to solve. Allow your data scientists and technologists to spend ample time with the business experts to truly understand their problems and constraints. Data scientists themselves must bring humility to this discussion. The associates in stores and warehouses, the merchandising and supply chain leaders, all know their business the best. They are the experts, and the data scientists and technologists should spend time learning from them and truly understanding the business. Collectively, they should be looking for ways to help them do their jobs more efficiently.  

The grocers that embrace leveraging technology, driven by prescriptive data science and AI, will get the right product to the right place at the right time, cost and quantity, all while delivering a superior customer experience. Given the broader economic and competitive pressures facing grocers, they have to be more efficient than ever, and the winners will be those that integrate prescriptive data science and technology with people. This will allow them to anticipate the customer’s ever-changing needs and deliver upon the most personalized experiences as
efficiently as possible.  

Grocer’s Guide to Tech

Carlos Fernández, Chief Product Officer, AutoStore

Users demand faster delivery of products, with a few moving from same-day to two-hour delivery in some urban areas. Technology is a necessity for retailers seeking to meet evolving consumer demands, especially in today's fluctuating marketplace.

  • First, grocers need to go from manual to automated fulfillment systems. We know that only 15% of the total addressable market for warehousing is automated, so the opportunity is tremendous. We believe that systems offering ultra-density will succeed.
  • Second, micro-fulfillment centers (MFCs) will be key to tackling delivery demands in an effective manner and to succeed in an industry with low margins.
  • Third, warehouse management software is crucial to get a solid overview of inventory in real time and to ensure 24/7 operations. Owning and tracking data will also separate companies that handle issues reactively and proactively, resulting in better uptime for the latter.

A public-facing port can allow customers to shop online and pick up their orders directly from the in-store system. Grocery retailers can implement this as a solution for adapting a buy-online, pick-up-in-store strategy that will increase store visits, possibly upsell in stores and result in a lower carbon footprint compared with home delivery.

A multi-temperature zone grid enabling frozen food to be included in automatic storage solutions will completely change the grocer’s supply chain.

The change from manual to automated fulfillment systems is the first step. By adopting such technology, grocers will get the necessary density to accommodate large amounts of inventory close to consumers, reducing last-mile costs.

An important thing to mention is that it’s possible to grow while running. If a solution is modular, it can be expanded over time without shutting down operations and can be scaled.

Grocers that do not embrace technology to meet customer demands will certainly lag behind and struggle to increase their e-commerce activity.

James Stark Axis

James Stark, Retail Segment Development Manager for The Americas, Axis Communications

Over the next year, technology will be vital in the future landscape and success of retailers as they continue to struggle with widespread challenges like staffing issues, which will force them into full or hybrid forms of automation. Video and audio solutions can be leveraged as an all-in-one alarm system, a theft deterrent and aggression detection, while internet protocol (IP) audio solutions can enable canned messaging and/or two-way audio interaction. Devices can also be integrated to provide real-time notifications to customer support or a security operation center. Additionally, retailers can leverage solutions to create a virtual attendant for customer service needs at self-checkout for customers needing specialized assistance, and as a physical security deterrent. In 2023, these and other solutions like computer vision will continue to provide transactional integrity, improved inventory accuracy and a better understanding of customer shopping patterns to maximize store optimization and marketing, improving the overall customer experience.   

When it comes to navigating today’s fast-growing technology ecosystem, retailers should maintain an innovative mindset backed by a cohesive strategy in every aspect of their business. Open-source platforms, for one, provide a foundational base for future technology integrations, ensuring that retailers are properly positioned to take full advantage of new solutions as soon as they’re up and running.

With the massive increase of devices being placed on networks across industries, it’s important that retailers are mindful of the impact these devices have on their organization’s overall network, as well as how each device will provide useful, actionable intelligence by ingesting, aggregating and normalizing all collected data. With that said, in 2023 they should consider cloud or hybrid computing solutions; surveillance cameras with edge computing power that supports third-party analytics (virtually eliminating the need for on-premises servers); and modular surveillance cameras to reduce back-of-house network density (aka network cabling and switches). These solutions not only provide a wealth of information to retailers, but they also provide opportunities for short- and long-term cost savings.

Lastly, partner selection is very important in the retail world. Retailers should ensure that they are selecting agile partners that are stable and will continue to provide innovative solutions, support their organizational growth strategies, and collaborate on future store designs and concepts.

Teresa Aprile, Brandcrush

Teresa Aprile, Co-Founder and CEO, Brandcrush

Grocery retailers will need to employ omnichannel retail media technologies to manage their entire 360-degree retail media ecosystem to maximize their revenue potential.

The focus to identify and align marketing efforts that drive the greatest conversion, in-store, out-of-store and online, is driving a need for a complete 360-degree view of the shopper. Retailers also seek a consolidated approach to retail media across the entire ecosystem to drive efficiency and scale.

On-site and off-site platforms have driven scalable transparency and execution. By contrast, in-store, out-of-store and other online media channels have not been so scalable and seamless. Managing omnichannel media involves multiple stakeholders, disparate processes and systems, many of which are still manual. These complexities, inefficiencies and silos have limited retailers’ ability to scale.

Omnichannel retail media technology will drive transparency both internally and externally. This technology removes many silos across the merchandising, e-commerce and shopper marketing teams, which unlocks further scalability and revenue maximization.

The digital management of all owned media assets, in-store, out-of-store and online, can drive significant margin point gains for retailers, and boost control and ownership of their media ecosystem.

The right omnichannel retail media technology can empower retailers to grow their top and bottom lines by maximizing their media opportunities and efficiencies by:

  • Efficiently connecting omnichannel media buyers and sellers across the retailer ecosystem, including merchandising, marketing and retail media teams.
  • Powering long-tail supplier monetization, allowing retailers to service small and medium enterprises and mid-market brands, along with larger players with self-serve and scalable solutions.
  • Adopting an end-to-end approach to owned media across the ecosystem and integrating partners to drive a single centralized solution.
  • Powering retailers to better serve their suppliers and collaboratively develop investment strategies that yield high returns with closed-loop reporting.

Retailers have a sizable retail media opportunity ahead of them, but the fragmentation that exists in their media ecosystem limits their revenue potential.

According to Forrester, on-site and off-site retail media is worth around $50 billion. Estimates say that this area of retail media will grow by 25% per year to $100 billion over the next five years and will represent more than 25% of digital media spend.

This estimate, however, excludes all other forms of shopper marketing media available by retailers to endemic and non-endemic brands, including in-store, out-of-store and other online assets. With the digitization of assets across all channels, the staying power of some traditional forms of media, and a need for CPG brands to drive marketing dollars closer to the point of purchase, we estimate the total omnichannel owned media market opportunity to upwards of $300 million.

Retailers need to focus efforts to counter global inflation forces, rising costs and an overall decline in margin. An omnichannel retail media strategy can yield high margin returns for retailers.

With brands actively moving marketing budgets as close to the point of purchase as possible, any retailer that is not actively planning for a 360-degree approach to their retail media opportunity will miss out on an extremely lucrative opportunity.

It’s no longer a matter of why or when, but how and what are the best technology partners for retailers to scale with to fuel retail media growth.

Grocer’s Guide to Tech

Guy Bloch, CEO, Bringg

In 2023, grocers will have to crack the profitability conundrum in delivery.  A tech solution that centralizes all of the different aspects of last-mile delivery management will be crucial to ensuring that customer expectations are met in a way that is also sustainable for the grocer.

With operational efficiency and cost reduction as their top priorities, grocers can leverage the power of a delivery management platform (DMP) to gain full visibility and control of their delivery ordering and fulfillment operations. By doing so, they will save resources and time, reduce the operational costs, and improve the customer experience along the way.

Customers today care about convenience and control. They want to choose where, when and how their goods are delivered, and at what cost. A DMP is the most effective way to provide an omnichannel experience and meet these increasing customer demands.

Without a DMP, grocers will inevitably have to compromise between profitability and customer loyalty. This situation will prevent grocers from remaining competitive and will make it hard for them to survive and grow in today’s highly challenging market.

Grocer’s Guide to Tech

Andrea Pongolini, EVP Sales, E80 Group

Laser-guided vehicles (LGVs) are growing in usage in grocery warehouse facilities handling packaged food products. When compared to forklifts, LGVs provide more consistent throughput of pallets, less damage to racking and merchandise, reduced labor requirements, and lower cost of operation.

The latest high-performance LGVs for pallet movement in grocery warehouses pack extreme improvements in battery performance, energy usage, vehicle uptime and CO2 reduction. They enable a more integrated and space-optimized facility, making LGVs extremely efficient automated systems for grocery distribution. A key factor in LGV operation is battery performance, which directly influences energy usage.

Battery technology is continuing to improve, and the latest lithium battery technologies deliver low toxicity, well-defined performance and long-term stability. Having a very constant discharge voltage, they provide virtually full power until the battery is completely discharged.

LGVs have the potential of being a game-changing technology for grocery in 2023.

Alan O'Herlihy Everseen

Alan O’Herlihy, Founder and CEO, Everseen

ArtificiaI intelligence (AI) should be a strategic investment for every leading grocer. It has the potential to transform the entire retail business –– from supply chain to inventory and self-checkout. Several major grocers are leading the way, using visual AI to manage inventory, create a better shopping experience and minimize shrink.

Visual AI gives retailers the ability to see across the entire retail footprint (front, middle and back of store); identify issues; and solve problems. The payoff is significant, from huge cost savings to dramatically improved shopper satisfaction.

Grocers should think big when it comes to AI –– about how they can tackle large-scale business problems and pioneer new territory. A smart strategy for getting started with AI is to focus on one aspect of the store, and tackling shrink/loss prevention is a great first step before tackling other challenges. Starting with systems that can integrate with existing hardware and software can generate significant ROI quickly, with measurable impact reducing loss and increasing profit margins within weeks.

From tackling shrink, grocers can extend their use of visual AI to other aspects of the business, using the intelligence and actionable insights already generated. The power of AI, and what sets it apart from other technologies, is that it learns and learns and improves over time and can evolve to support the evolving needs of the business.

Without visual AI for loss prevention, grocers remain in the dark trying to grapple with the retail industry’s annual $100 billion shrink problem. From honest mistakes in the stockroom to organized theft at checkout, it’s nearly impossible for retailers to put their finger on exact figures and cause without the ability to see everything everywhere. That’s an even more unwelcome dynamic in the coming year as grocers face the triple threat of tight margins, inflation and an economic downturn. And, with global shrink projected to grow at 20% annually, it’s not a problem grocers can afford to ignore.

Grocer’s Guide to Tech

Yariv Bash, CEO and Co-founder, Flytrex

Recent years have seen the growing trend of rapid home delivery vastly accelerate. Yet many companies offering such “instant gratification,” especially to those in the suburbs, are struggling to make a profit due to inefficient and unsustainable methods of delivery. Until now, on-demand delivery has largely been seen as economically impractical in suburban and rural areas, where traditional on-demand couriers are able to make only around two deliveries per hour.

Grocers are on a quest to be more accessible to consumers, and those that incorporate autonomous, end-to-end delivery services, can increase efficiency and slash the typical cost of delivery. Such automation can also serve as a way for retailers to win some of the small-basket trips consumers go to local convenient stores for.

Consumers are leaning more than ever toward convenient shopping options as many continue to spend more time at home. In the current economic climate, grocers must use technology to turn a profit while simultaneously fulfilling consumer expectations. Autonomous services provide a complete end-to-end logistic and technological service to their partners and allow businesses to integrate faster, safer, greener, more economical and sustainable last-mile fulfillment than ever before – allowing grocers to focus on their in-store operations and customers while an autonomous solution handles the rest.

While speed, convenience and price are all top of mind for consumers, demand for high-quality, sustainable services has also never been higher. Consumers are increasingly conscientious of the products and services they purchase, placing higher value on a brand’s environmental and societal impact. Consumers shouldn’t have to pay more to make conscientious choices, and grocers shouldn’t have to lose out on a sale as they strive to elevate the meaning of convenience for consumers. Rather, they must embrace more innovative and sustainable methods of delivery, both environmentally and economically, to maintain and generate business revenue.

Grocer's Guide to Tech

David Lind, Director of Business Development, Modula

For grocery retailers, space and labor use is at a premium. Whether on the retail floor, at the back of the store or in an off-site fulfillment center, staging of e-commerce orders is a big and growing problem for grocers.

A smart solution is vertical lift modules (VLMs). To ensure storage density is maximized, VLMs accommodate the product, not the other way around. VLMs can be installed to just 6 inches below the ceiling on a footprint that is a fraction of the space occupied by shelving or racking. Goods-to-person technology means fewer footsteps, less time and fewer errors. It also means better ergonomics.

VLMs can handle hundreds of totes and thousands of SKUs, and with simple visual picking aids such as laser pointers, grocery operators can quickly and easily identify the items needed to be picked or replenished. This allows inventory to be staged with a very high level of efficiency, optimized labor usage and minimized operational costs, while their low energy requirements support sustainability.

An affordable capital investment with a fast ROI, VLMs are one of the smartest and least disruptive technology investments grocers can make in 2023 for supporting and growing their e-commerce fulfillment orders.

Larissa Russell Pod Foods

Larissa Russell, CEO and Co-Founder, Pod Foods

Ultimately, retailers must procure the products that their customers want at the right price, place and time.  Given macroeconomic challenges and price sensitivity, retailers should focus on supply chain management. There is an immense amount of data within the food tech space coming from suppliers and inventory systems, as well as point-of-sale tools, which can all help inform retailers about where issues may arise in their supply chain before they occur. However, data only goes so far if retailers cannot take action on the insights that they’re able to glean and get the right products to the shelf quickly.

A built-in recommendation engine can help retailers discover new products that their customers want and optimize their shelves. This is one example of a tool that can help grocery stores not only with innovation, but also with backfilling supply chain challenges and out-of-stocks that might happen due to global supply issues.

The retailers that can source the products at the right price, place and time will win. An emerging trend important for grocers to keep an eye on is shifting consumer loyalty as consumers are trying new products. Whether it means stocking new brands or ensuring customer favorites are always in stock, grocers that don’t use supply chain technology to stay ahead of trends and keep shelves stocked will quickly become obsolete.

Grocer Tech Guide

Pam Dillon, Co-Founder and CEO, Preferabli

Most important is using software to create omnichannel experiences for each shopper, on a one-to-one basis, at scale.  Truly personalized shopping across ecommerce and physical environments will no longer be aspirational in 2023 – it will be table stakes, especially in the wine, beer and spirits category.

Grocery retailers that place shoppers at the center of each personalized experience will win. They’ll win by using the right customer data and the right product data at just the right moment. Retailers that don’t create these shopping experiences will simply become irrelevant.

Grocers Guide to Tech

Matt Pavich, Senior Director of Retail Innovation, Revionics, an Aptos Company

The past three years should have taught retailers that disruption is the new norm. Not only have retailers had to deal with COVID, supply chain challenges, labor issues and inflation, they have also had to deal with those issues simultaneously during a period of massive consumer shopping shifts at the product, brand and channel levels.  The retailers that have best weathered the storm while growing share and profits are the ones who had previously invested in more dynamic artificial intelligence (AI) pricing capabilities. By investing in dynamic AI pricing capabilities, those retailers were not only able to respond faster to emerging trends and shifts in demand, but also with smarter outcomes that created better value propositions for their customers while achieving top- and bottom-line objectives. The upcoming year will be no different, as numerous challenges and disruptions (including hints of recession) are on the horizon. Having a sophisticated, flexible platform that allows you to price for any situation and do so faster than your competition will remain a winning investment for retailers. Retailers are moving faster and smarter than ever before, and tomorrow’s winners are continuing to invest in the capabilities that will enable them to adapt and compete in an increasingly disruptive environment.

There are numerous ways that grocers can leverage sophisticated pricing solutions to drive results. Let’s examine two of them – AI and optimization. Optimization considers numerous inputs such as competitive positioning, demand shifts, cost increases, pricing rules, ending number strategies, margin objectives, affinity and cannibalization, and arrives at an optimal pricing recommendation. While powerful for one product, it becomes even more valuable across an entire assortment and numerous pricing channels and zones. AI enables the system to “learn” from new data and every pricing action so that it gets smarter and evolves over time to make even better pricing recommendations with even more accurate forecasted impacts. This leads to a virtuous value cycle and enables retail organizations to solve complex pricing challenges holistically. From a consumer perspective, sophisticated pricing solutions allow retailers to offer better prices on the products shoppers care most about.

Grocers that choose not to adopt a sophisticated, dynamic AI pricing platform will lose customers, profits, revenue and share over time. Merchants already have a lot of responsibilities to deal with, and it is nearly impossible for them to understand the exact right price for every item in every location without help from the best analytics available. Not only do the best pricing platforms offer better outcomes, but they also enable more efficient processes, which also free up merchants to spend more time on other initiatives to drive more value.

Retailers that don’t invest in the best technologies will also be unable to evolve their processes to become more efficient, which will lead to even more challenges. They will eventually be unable to compete in a very tough grocery industry as they will be too slow, too inefficient and too out of touch with their customers.

Grocer's Guide to Tech

Sean Turner, Co-Founder and CTO, Swiftly

The grocery/retail industry has experienced significant challenges over the past year, creating a high degree of market uncertainty and impacting consumer behavior. When we look at the issues of inflation and supply chain, coupled with looming consolidations, it becomes clear that independent retailers will need to compete even harder to capture their share of sales, retail media dollars and customer loyalty.

To compete with today’s popular grocery e-commerce giants and third-party delivery service providers, brick-and-mortar grocers must recognize and leverage their strengths, specifically their ability to be nimble and to move quickly. With their physical location and community of customers, regional retailers already have a strong home court advantage. By choosing to modernize and embrace new digital capabilities, they can significantly accelerate growth and secure full ownership of their customer relationships, as well as the first-party data that comes with them. In short, there’s no better time to get in the game and to solidify their presence than now.

As far as the specific retail technology solutions retailers should look to integrate immediately, No. 1 would be a strategic retail media program, which can earn them their share of the $100 billion in margin-rich revenue that’s out there. When coupled with a robust mobile app and an engaging loyalty program, the impact can be immediate, and the results exciting.

Getting to market quickly opens up new revenue streams and gives retailers a strong competitive edge to grow and maintain their customer base.

Retail technology provides grocers with the ability to meet customers where they are. With the popularity of mobile apps, and customers’ dependence on their smartphones to inform every aspect of their lives, the adoption of technology that provides convenience and savings is a necessary step. When it comes to shopper loyalty, a seamless digital-to-in-store experience is key, and the ability to constantly respond and adapt to their changing behavior and preferences positions retailers to retain their business no matter how the trends change.

The exciting thing about retail technology is the fact that it’s always evolving. With that evolution comes the opportunity for retailers to offer new features that cultivate engagement (like loyalty programs), open new revenue streams (enter retail media) and capture the valuable first-party data needed to make smart, informed decisions to evolve successful programs and solutions.

Retail technology is evolving faster than ever, and a failure to adopt and implement it as soon as possible directly impacts retailers’ ability to compete with e-commerce, third-party delivery services and large retail players.

Missing out on the digital trends of the commerce media movement also deprives independent grocers of several impactful factors for growth and success, including customer ownership, loyalty and growth, as well as the margin-rich revenue associated with a well-executed retail media program. Add to that the lack of first-party data all of these solutions provide, and slow-to-adopt retailers will find themselves at a marked disadvantage that will ultimately impact their bottom line.

This really isn’t a question of whether grocers should adopt this technology; the reality is, they will have to in order to stay in the game. Without it, they’ll find their customers opting for competitors that are providing them with the digital solutions they need to find exactly what they are looking for, when they want it.

Grocer’s Guide to Tech

Curt Avallone, Chief Business Officer, Takeoff Technologies

E-grocery micro-fulfillment centers (MFCs) will be one of the most important new technology additions to grocery stores in the next year and beyond. Currently, grocers spend almost an hour of labor per online customer orders, versus the 6-8 minutes to shop that same order in a MFC. Not only will MFCs allow grocers to be more profitable, but they also significantly reduce the 8% out-of-stocks that online customers are currently experiencing from many grocers shopping on the sales floor. On the sales floor, store shopping associates are competing with brick-and-mortar customers for the last strawberry yogurt on the shelf, versus the controlled inventory environment of a MFC attached to a store.

Grocers can use fast-pick MFCs to enable 30-minute delivery with various delivery service partners. This enhanced convenience not currently available with the slower sales-floor shopping process will create double-digit online sales growth. MFCs will also create cross-channel strategic partnerships via B2B alliances. Supermarket chains will be able to create branded alliances with c-stores, drug stores and quick-service restaurants, adding thousands of distribution points to create new customer experiences. This will be a game-changer for the food industry. MFCs allow grocers to create small supermarkets inside drug stores with their perishables and own brands, as well as drop off/deliver grocery orders with prescriptions directly to consumers. 

Supermarket shareholder value is currently being destroyed by unprofitable online grocery models. Chains that do not develop online profitability will not succeed as the business becomes 20% of their sales. Also, grocers who do not reinvent the consumer convenience experience with cross-channel alliances enabled by MFCs will find themselves at a huge competitive disadvantage when they are faced by retail wolfpacks made up of supermarkets, c-stores, drug stores and quick-service restaurants all working together against them.

Grocer's Guide to Tech

Jay Kulkarni, CEO, Theorem

Grocers should consider creating their own retail media networks (RMNs) to serve advertisements on sooner rather than later. RMNs are becoming essential to the modern digital marketing landscape, and advertising on these platforms is expected to grow by billions of dollars over the next year. These advertising platforms run on the digital properties of specific stores, allowing brands to reach consumers near the closest point of sale, both online and in-store. For example, a brand can leverage a grocery chain’s RMN to advertise to consumers searching for relevant products on the retailer’s website or app.

Consider following the lead of grocery chains that have already hopped on the retail media network bandwagon: They track store sales through their loyalty programs and then retarget customers via digital ads on their RMNs, based on those customers’ in-store purchases. This is just one example of how grocers can use in-store insights gathered by technology to guide digital strategy.

Not to jump on the retail media network bandwagon would be a hugely missed opportunity for grocers. In addition to providing grocers with a way to extend their reach beyond their own digital media channels — and impact shoppers right at the point of sale — RMNs make it easier for brands to target consumers with highly personalized ads powered by robust data. At the same time, grocers will benefit greatly from RMNs, because they provide the opportunity for businesses to diversify their revenue streams. As more and more major retailers launch these lucrative platforms (and report big earnings), RMNs are only expected to grow.

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