Grocery's Future Doesn't Belong to Just Amazon, Walmart, Kroger
Last week, Amazon finally went live with Amazon Go: a cashierless convenience-store concept, and several other retailers, including Kroger, announced that they are about to launch similar cashierless and other innovative store concepts.
With these developments in mind, on Jan. 27, analysts at Progressive Grocer's parent company, EnsembleIQ (EIQ), along with representatives from American Express, met a few leading retailers such as Starbucks, Price Chopper, Piggly Wiggly Midwest and a few other major food brands in Miami. The objective was to discuss the business implications related to future store customer experience, cashierless stores, checkout complexities and the role of payments.
Some key takeaways from this share group and brainstorming session are:
While both retailers and food brands agreed that Amazon Go is disruptive, they emphasized that a few key elements must be considered by all retailers in rolling out cashierless stores and other new store concepts:
1. Retailers must accept all forms of payments, including EBT within mobile wallets.
2. Training of consumers will lead to greater adoption of unique store concepts.
3. Technology uptime in cashierless stores is bound to experience periodical complexities, including, but not limited to, automated checkout; as a result, retailers should prepare a fall-back plan to prevent customer backlash.
4. New store concepts are more effective when targeted toward specific customer segments.
5. Cashierless stores could save customers time if executed properly, specifically due to the time saved in terms of scanning/bagging and customers using automated mobile wallets for payments. According to a recent EIQ and Amex survey, average mobile wallet transaction time is less than one minute, compared with an average of 2.3 minutes for credit/debit cards. Millennials and others in this research study indicated that they want a greater degree of freedom in terms of their overall shopping experience, including checkout.
On average, EIQ research shows that six in 10 consumers find the current grocery-shopping experience full of friction. More than half of those surveyed said the main source of friction is checkout-related. Our research indicates that "a half-a-minute time gain in using mobile wallets or bank cards has a huge impact on the checkout process." Retailers such as Starbucks and Price Chopper agreed with these findings. While Starbucks is an early pioneer in launching mobile contactless wallet checkout, Price Chopper said it has seen recent success with Apple Pay.
Share of mobile and digital payments in terms of total transactions has increased over the last 12 to 24 months, but it's still well below 10 percent for the majority of retailers. The share group agreed that a lot of work needs to be done by retailers and consumers in ensuring that digital attains higher consumer adoption levels that do justice to its convenience-related promise. Even as consumers lap up new digital payments, the cashiers and employees in traditional retail stores make such adoption easier for consumers by prompting usage. Price Chopper attributed effective improvements in Apple Pay transactions to suggestions made to consumers at checkout by cashiers.
Retailers are investing in new store concepts and even new brand concepts altogether, but the business justification has to be geared toward specific customer segments and addressing differentiated consumer needs. For instance, Price Chopper has its fresh-focused Market 32 stores, and others, like Sprouts Farmers Market and Natural Grocers, have invested in such concepts and seen success due to hypertargeting of products, experience and messaging.
Meeting attendees also highlighted their favorite grocery concepts, and top rankings went to Wegmans, Whole Foods, Publix, Giant Eagle, Trader Joe's and Roche Bros., among others. The share group contended that these different grocery store concepts are effective in distinct business areas such as fresh, meats, deli, overall assortment, ease of checkout, pricing, overall convenience, and friendliness of associates,.
The true impact of cashierless stores and other new store concepts powered by mobile wallets, robotics, smart barcode sensors/scanners, augmented/virtual reality and other technologies will be even more profound when all retailers can benefit from common shelf, scan, checkout and pay standards and related capabilities. In other words, future customer experience shouldn't be in the domain of just Amazon, Walmart or Kroger, but also with reach for all retailers that are willing to invest in a customer-first approach.