Imagine how much time it would save you if you could just walk into the supermarket, grab the groceries you need, go your own way again. No check-out line, no need for paying on the spot, no packing from your basket into your bag. Sounds too futuristic? Such supermarkets already exist! Amazon introduced the Amazon Go supermarkets, where there are no cashiers and consumers just take the products they need and walk out (Alba, 2016). The consumers are charged through their amazon account after they leave the store (Alba, 2016).
It seems that more and more businesses are moving to a digitally driven environment. If you thought Amazon Go was too futuristic, you will be thunderstruck by Moby, a Japanese 24-hour grocery store with no staff, check-out register, or even fixed location (Peters, 2017). That is right, the grocery store moves itself around and even is designed to visit the warehouse to restock – all by itself (Peters, 2017).
With these technological developments, everyday supermarkets may face serious problems if they do not invest in similar practices. It is too big of a step to implement all the artificial intelligence and machine learning systems Amazon has installed in their Amazon Go shops at once. However, supermarkets are starting to introduce more and more digital driven practices in their environment. An example of a supermarket that started doing so is Albert Heijn, a Dutch supermarket chain that exists for over a century already. They already have a website and mobile application where consumers can, among other things, order products and receive personal discounts, based on their prior buying behavior (Albert Heijn, 2017). They were also the first in The Netherlands to introduce digital shopping lists, meaning consumers can save either spoken or written messages to the list – which has the form of a fridge magnet – or scan barcodes of products, which would then appear on their shopping list in the Albert Heijn App (ESM, 2017).
The above examples are excellent illustrations that artificial intelligence and machine learning are not just fancy technologies used in fancy businesses. They also illustrate that if everyday grocery stores choose to complete disregard these developments, they might end up in big trouble. The ‘new way of grocery shopping’ is much more efficient and time-saving.
No worries – unless you really enjoy spending time in the grocery store, then do worry – better times are coming. Maybe in a few years we will be visited by the grocery stores themselves, instead of the other way around. What do you think?
Sources:
ESM (2017). Albert Heijn Trials Hiku Smart Shopping Gadget. Accessed online through: https://www.esmmagazine.com/albert-heijn-trials-smart-shopping-list-gadget-hiku/41736
Alba, D. (2016). Only Amazon Could Make a Checkout-Free Grocery Store a Reality. Accessed online through: https://www.wired.com/2016/12/amazon-go-grocery-store/
Albert Heijn (2017). Appie App: Alles over de vernieuwede Appie App. Accessed online through: https://www.ah.nl/appie-app
Peters, A. (2017). The Grocery Store Of The Future Is Mobile, Self-Driving, and Run By AI. Accessed online through: https://www.fastcompany.com/40429419/this-tiny-grocery-store-is-mobile-self-driving-and-run-by-ai.
I agree with you that it is super interesting to see how digital technologies are being implemented in industries that we engage with in our daily lives, such as the supermarket retail. The examples you give are clear examples of this. Regarding Amazon, I would like to add that I find it very interesting and promising that the company is going from online to offline, instead of the other way around like most supermarkets are doing. Amazon is now investing both in implementation of digital technologies, while at the same time acquiring brick-and-mortar stores, e.g. the recent Whole Foods takeover. This will enable Amazon to collect loads of data about their customers, while giving them both an online and offline experience. Regarding Amazon’s size this will be a severe threat to existing grocery stores. I believe that within several years, our grocery shopping experience will be totally revolutionised, partly due to Amazon and related smaller online entrants (such as Picnic in the Netherlands), partly due to existing grocery stores implementing digital technologies, e.g. the Albert Heijn example you gave. I consider Albert Heijn a market leader in implementation of digital technologies in the Dutch retail landscape. It was the first Dutch supermarket to implement a webshop. Many supermarkets, such as Jumbo, Dirk, and Plus followed, but are currently not on par regarding the efficiency, size and use of their online operations. The same happened with product scanners and self-service checkout. I believe that other technologies that Albert Heijn introduces, such as the digital shopping list and augmented reality scanner will also soon be copied by other supermarkets, although some supermarkets might not be able to digitalise, may lose market share, and eventually may get out of business. I expect the future grocery market to be dominated by a hand full of players, that did not necessarily start as a physical supermarket store.
Dear Rosanne,
Thank you for your comment. I completely agree with you. I definitely think that huge companies such as Amazon have a big advantage over the mainstream supermarkets due to their ability to gather information on a bigger scale and probably in a much more efficient way. However, I do think that Amazon is not an immediate threat for the grocery market in The Netherlands (yet), because they currently just have one store (I believe) in Seattle. This does give companies such as Albert Heijn the time to come up with strategies to make sure Amazon does not steal their customers if they do become active on the Dutch market as well (or any other company with the same properties as Amazon). Maybe Bol.com – which like amazon started out selling completely other things than groceries – could start selling groceries, that would be a comparable example for The Netherlands. But again, I agree with you that the companies other than Albert Heijn should start coming up with a better digital strategy, because they could be swept off the market eventually if they don’t.
Hi Aleksandra, nice blog it was an interesting post. I do think ‘regular’ supermarkets might put up a good fight. Like you said Albert Heijn is already trying to defend their market with many new technological efforts. Other initiatives from Albert Heijn for example like delivery of groceries and self scanning in supermarkets (to avoid waiting in line) are great ways of tempting customers that don’t want to spend too much time at the store to stay. One of the important criteria for vulnerable markets are that it has to be hard to defend for incumbents. Albert Heijn is making it harder for these newer players to successfully attack,. So while I agree that supermarkets definetely need to keep improving, the supermarkets do seem to do a decent job of mounting a defense so far.
Do you think the market for people who absolutely hate being in supermarkets will be large enough for other companies like Amazon Go to stay attractive?
Dear Daniel,
Thank you for your comment. I agree with you and (like I said in another reply) I think it will take a long time before players like Amazon Go will enter the Dutch market. However, this does give mainstream supermarkets the time to react to this upcoming phenomenon. I cannot say with a 100% certainty that the market is big enough of course, but companies like Amazon (or even Albert Heijn if they decide to implement a new concept) could create a market for it. If they show how much more efficient it is to shop in those stores, people may want to switch from a regular store to one like Amazon Go. I just think it is important for mainstream supermarkets to not disregard this upcoming phenomenon, because it might blow up all of a sudden and if supermarkets do not respond now, they might not get the chance to respond at all.
Interesting read, Aleksandra. I am really excited to see where the future of this will go, especially in the Netherlands. Actually, and this is relatively new, Albert Heijn is now the first company in the Netherlands attempting to launch a similar concept to the Amazon Go stores. It’s testing a pilot concept at its HQ for several months, and only employees of Albert Heijn can test it. Their aim is to launched several of these stores in 2020/21. I strongly believe that as other supermarkets in the Netherlands are finally adopting some of the technology advancements AH introduced years ago, AH is steadily becoming a market leader by a huge gap. It already was market leader, but now its taking more and more consumer paint points away and making shopping almost a ‘fun’ experience again. I already love walking in and out of a supermarket not having to wait in line or talk to anyone because of the self-scanners and I can pay with my phone (because ApplePay finally made it here), but I’m even more excited to walk in and out without having to physically scan my products or pay for them.
Whether the supermarket will come to me in the future? I don’t know. Picnic tried and I don’t really like it, because you have to be home, you have to schedule them, and it just takes too much effort in my opinion. I also feel like the infrastructure in this country is not right for a supermarket to come to me, but perhaps I don’t know enough about that to have a proper argument! That’s just my two cents on the topic 🙂