Attending this year’s Groceryshop conference in Las Vegas was surprisingly normal, despite being my first in-person event for over a year, not to mention my first time in Vegas. Per Nevada’s Covid rules, all attendees were required to wear masks indoors when not eating or drinking – but beyond that, it felt very much like business as usual.
While the atmosphere may not have been affected by Covid, it was clear from the presentations, as well as the overall tone (no pun intended) of the conference, that the grocery industry as a whole has been fundamentally transformed by the pandemic.
Here are some of the biggest trends the grocery industry is facing, according to this year’s panelists and presenters:
1. Customer behaviors have changed drastically – and for good
Our demands as shoppers have really changed. Google’s Carrie Tharp revealed that the company’s research shows it takes 66 days to form a new habit, which explains why formerly niche services like same-day delivery and click-and-collect have come to be expected by shoppers. Even people who never used to order groceries online, like myself, have become die-hard devotees of Instacart, Amazon Fresh, or GoPuff.
There’s also been an explosion in the number of services promising to deliver groceries in ever shorter periods of time, from next day to same day, and now thirty minutes to fifteen minutes!
2. Retailers are taking the lead on digital transformation…
People may have wholeheartedly embraced grocery delivery, but it wouldn’t have been possible if retailers hadn’t accelerated their digital transformations early on in the pandemic. Essentially, the pandemic forced retailers to accelerate 3-5 year of digital capabilities in less than a year, with the effect being that they’re now especially well-equipped to offer shoppers the kinds of personalization and convenience they’ve come to expect from other brand experiences.
With more people ordering groceries online this past year, retailers suddenly have a lot more insight into how people shop – and they’ve gotten a lot smarter about how they use this data. For example, Albertsons built its loyalty program into its mobile shopping app, enabling the company to offer personalized coupons based on shopping behavior. Other retailers are using this data to anticipate demand and improve logistical operations, as well as lower the cost of customer acquisition and increase lifetime value.
3. … while CPG brands struggle to keep up
As retailers accelerate their digital transformation and in doing so become media networks themselves, CPG brands are having to play catch-up. Unfortunately for them, the pandemic widened the gap between what CPG brands know about their customers and what retailers know – which in turn has allowed retailers to own the consumer.
CPG companies are becoming increasingly disconnected from their customers, which makes it more difficult for them to gather data on shopper behavior. This issue can be circumvented by cultivating partnerships with companies that have access to large-scale shopper data, like Cognitiv. Without access to this information, brands will be forced to rely even more heavily on retail partners to provide those insights, putting them at a further disadvantage.
CPG brands also have to start specializing in retail media network practices in order to drive sales at key retailers like Walmart, Kroger, Amazon, and so on. As retailers become their own media networks, brands will have to find ways to cultivate mutually beneficial relationships (ie. spending a significant amount of money with each network) to get prioritization in retail stores.
4. Early adopters of AI and automation have a significant head start
Gary Hawkins, the founder and CEO of the Center for Advancing Retail and Technology (CART) noted during the conference that when it comes to AI and personalization, there are three categories: dabblers, devotees and disciples. The dabblers may have dipped a toe in the waters of automation but are largely cautious about implementing AI, whereas the devotees have a more in-depth process – albeit one that’s still largely manual. The third group, the disciples, are the ones using AI for each step in the journey – for example, by using customer data and AI to create custom cohorts from first-party data, and then understanding where they can offer value from personalized coupons, advertising, and even in-store experiences.
As Groceryshop’s own VP of content, Joe Laszlo, points out, “It’s not about the robots replacing the humans – it’s about the robots helping the humans do their jobs better.”
It’s clear that the disciples have a significant competitive advantage over the rest. They’re better prepared to meet the needs of their consumers, and more efficient at acquiring new ones. Their operations run more smoothly and efficiently because they rely on AI to optimize their processes, and reduce waste wherever necessary. So if you’re not using AI or automation at this point, whether in your marketing or day-to-day operations, you’re only going to fall further behind while your competitors get smarter.
Cole Tone is Cognitiv’s Strategic Partnerships Director
