“Alexa: Turn Off the Lights when the Last Shoppers Abandon Supermarket Aisles 4 to 12”!

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It’s Winter 2030 and shrivelled, desiccated traditional supermarket companies fall like Autumn leaves from the NYSE and LSEs of our world. In only a dozen years, grocery shopping has disappeared as a drudge activity. We still shop but on our own terms and the angst associated with shopping trolley and car park rage has evaporated. Children giggle at our knees as we explain old-fashioned words to them such as groceries and ingredients and are as bemused as we were when our parents told us of escutcheons and liberty bodices. Visiting a supermarket for our basic household needs seems quaint like when we used to queue up to request our own money from supercilious bank clerks in pre-ATM days.

What do you think –  nonsense; pipe dream? Well, last year in South Korea, grocery sales via e-commerce increased by 41% year-on-year and supermarket & hypermarket sales declined by 7%. In the UK, we saw a similar but more subdued pattern and, along with Japan and China, we are in the front ranks of on-line grocery sales developments.

The moot question is why has it taken so long to get to our current baby step stage in on-line grocery shopping? After all, the internet has been up and running for close to 50 years and the world wide web is a robust millennial of 26 years. Home delivery of groceries  was the norm decades ago: David’s mum had the Hughes family’s red meat, fish, fruit and vegetables, dry groceries, milk, lemonade and coal all delivered. She had no time to shop during the week because she was teaching infants Monday to Friday. A quick phone call to the butcher and he was more than likely to recommend what meat she should have for Sunday lunch (“I’ve got a lovely leg of lamb for you this week Mrs. Hughes” – he’d know what she could afford, what she’d bought last week and, importantly, what he’d got to sell!). The relationship was based on mutual trust – something which is in relatively short supply for many customers particularly when it comes to the quality of fresh foods.

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Trust is so important for Sicilian housewives that they even send their husbands to the market to buy fresh fish!

What about in Spain? On-line grocery sales are growing but from a lower base than in the UK. Traditional independent retailers still account for around 50% of fresh food sales value. Miguel recalls that, for his grandparents, open markets were popular as in France. Women were the primary shoppers and, typically, were not working outside the home. Shopping had a strong social element – an opportunity to catch up on what was happening locally. For special occasions such as Christmas, El Corte Inglés might beckon offering Harrods-like goodies for the family. For Miguel’s working mum, food shopping for the family might be sneaked in during the lunch break and emerging supermarkets would be chosen for packaged and processed foods as outdoor and central markets became dowdy. Frankly, now, in Spain or the UK drudge grocery shopping has little social value for most shoppers (bar older pensioners seeking “free” coffee in Waitrose and a gossip!).

Way back in 1989, Peapod was launched in the USA as an on-line grocery ordering and delivery company (owned by Ahold Delhaize since 2001). Like many start-ups it struggled but has survived. Retail pundits predicted its demise largely on their view  that consumers would not pay to have their groceries delivered and the supermarket sector was so competitive and low margin that such interlopers could not survive. What time has shown us is that some consumers unequivocally will pay for such a service. Clearly, retail businesses have to keep in touch on price with competitors, particularly for a range of KVIs. But, the opportunity cost of time is not the same for all shoppers. How much do you value your time? The convenience trend is unstoppable – consumers and, particularly, younger ones want products that are convenient to buy, prepare, consume, and dispose of. Did you/are you reading your children “Charlie and the Chocolate Factory”? Remember Veruca Salt, well, she wanted Wonka’s Golden Ticket NOW – Veruca is a Millennial to a T!

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There are plenty of options in UK if you want your food to be delivered home.

What the pundits completely misread was the creativity of the grocery/restaurant meal delivery sector à la “You’ll never make any money out of delivering low margin groceries” – well, tell that to Quiqup, Convibo, Deliveroo, Uber Eats, beelivery in London. And we take delight in noting that Sainsbury’s groceries can be delivered within the hour in 2017 by a boy on a bike, as they did in 1917! Some will go bust, but a super-efficient last mile delivery service is emerging. Tesco recognises that “the man in the Tesco van” can be its front line ambassador like the milkman of yore (with all the accompanying smutty jokes). Check out FoodKick, Instacart, etc. in the USA. Will consumers pay for quick service? Of course they will – depending on occasion, location, income and age of shopper.

On-line grocery (to use the archaic term) delivery is with us and will explode. Bye bye traditional supermarkets – like tumbleweeds blown out of town and into oblivion? Don’t hold your breath – they still represent just under 50% of total UK grocery spend. But, look up and around – Amazon and Alexa, Tesco in the UK and Walmart in the USA with Google: voice-activated replenishment is coming towards us like a tsunami and in its wake automatic replenishment – those centre of the store basic items will soon be long gone from the supermarket and bricks and mortar retailers better have smaller stores or more interesting products and services in their stead. Does that mean the traditional supermarket can rest on its laurels as a trusted fresh food provider? Not so, as food retail and food service converge at an accelerated rate (what’s the difference in offer between food service Pret and retail M&S Food to Go?), watch out for the nimble food-to-go specialists with snack and meal solutions delivered wherever and whenever you want them.

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Expect rapid change in the grocery retailing business. If providers are to capture full “baskets”, then, the battle must be won on fresh foods. Those that gain the trust of the shopper will prevail. Mind you, they’ll have to show excellence in execution and a comprehensive range of click and brick shopping options. Clearly, keeping in touch with competitors on price is crucial but never underestimate the value that many consumers put on their own time. For many, they’re often short of money but they’re always short of time! Automatic replenishment of the routine purchases will be pervasive. Alexa, turn off the lights as the last shoppers leave supermarket aisles 4 through 12!

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New range of Sushi in the food to go section of Marks & Spencer. Ready to challenge the specialists and the supermarkets that prepare the product within the store.

 

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About the authors
Prof David Hughes: Around the world, David speaks to senior agribusiness and food industry managers about global food industry developments that are and will affect their businesses and industry. Energetic, engaging, humorous and insightful, David gains the very highest evaluations at seminars, conferences and Board level discussions in every continent he visits. Miguel Flavián: works for several Spanish organisations and companies to help them to learn from the developments of the British grocery market and improve their business back home.
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