What Will the Future of Grocery Shopping Look Like?
About 70 years ago Dutch supermarkets were going through fundamental changes (CBL, 2017). Back in the 1940’s, the entire grocery shopping process was different. You would walk into a small store only to find a large counter. Here, a member of staff would ask you what you were looking for. To hereafter, get these items from shelves behind the counter, while you would wait in front of the counter. This process was inefficient, slow and labor intensive.
This changed in 1948, when the first self-service grocery store of the Netherlands was opened in Nijmegen (Kruideniers Museum, 2017). Long stretched out shelves with all the products neatly in place for the consumer to grab. Staff was only needed to replenish the products and to help the consumer checkout. This revolutionized the grocery industry. This self-service system disrupted the entire industry, and in the years to follow most supermarkets adopted this concept. The grocery store as we know it today was born.
Well… at least how we have known it until now. We might be at the verge of a similar shift in how we do our groceries. Slowly e-grocery shopping is gaining traction and the competition is fierce. The total online food revenue in the Netherlands already exceeded half a billion euros in 2017, which is equivalent to 3% of the entire grocery industry (Schutijser, 2017). Industry giants Albert Hein and Jumbo are well invested in the market and are market leaders with 400 million and 100 million in turnover respectively. However, a smaller player in this industry is catching the eye of investors, media and their competitors: Pic Nic.
The 2015 start up, does not have a single brick store, it does not even have an internet web store. The only place where consumers can buy groceries is using their mobile app. All items are bought online and will be home delivered the next day by a sustainable electric vehicle. Due to the absence of physical stores Pic Nic does not have high costs of rent and other related expenses. Because of this, they can offer free delivery and claim to guaranty the lowest prices on the market (Pic Nic, 2017).
Laurens Sloot (2017), professor in retail marketing at Groningen University, claims that the consumer is the ultimate winner in this new e-grocery market. The traditional supermarkets do not want their consumers to shop online. Home delivery brings along a lot of additional costs and logistic and operational challenges. However, Sloot claims, supermarket firms are forced to join this battle in the online industry because of changes in the consumer preferences and startups like Pic Nic.
Sloot (2016) also predicts that two hundred to four hundred supermarkets will disappear in the next ten years, as more and more people will start to do their shopping’s online. Sloot (2016) is confident this sector will experience growth of about 30% per year, and will become a multi-billion-euro industry by 2025. Nevertheless, this is only based on speculation. No one exactly knows how supermarkets will adapt in the future. Perhaps the e-grocery market might be nothing more than a niche market, but it might as well cause an industry disruption like the self-service grocery concept changed the way we did our shopping in 1948.
Hey fellow BIMers! I am very interested who you envision the future of supermarkets. If you have a particular view on it, I would love to read it in the commitments!
References
CBL. (2017). Historie zelfbediening. Retreived from: http://www.cbl.nl/de-supermarktbranche/historie- zelfbediening/
Kruideniers Museum. (2017). In het verleden ligt het heden. Retrieved from: http://www.kruideniersmuseum.nl/historie
Pic Nic. (2017). De online supermarket. Retrieved from: https://www.picnic.nl/
Sloot, L. (2017). Boodschappen online bestellen wordt serieuze business. Retrieved from: https://nos.nl/artikel/2194239-boodschappen-online-bestellen-wordt-serieuze-business.html
Sloot, L. (2016). Laurens Sloot in Nieuwsuur: ‘Online market share of supermarkets may grow 20 to 30 percent per year’. Retreived from: http://www.rug.nl/news/2016/04/laurens-sloot-in- nieuwsuur_-_online-market-share-of-supermarkets-may-grow-to-20-to-30-percent-per-year
Hi Willem, thank you for this interesting read on the future of grocery shopping. I would love to share my thoughts on this topic and particularly on the industry disruption debate.
First of all, I do not think that the e-grocery market is a niche market within the holistic market of grocery shopping. Instead, I believe we will see similar disruption to the industry as the introduction of the first self-service grocery store caused. E-grocery fully complements the increasingly busy lifestyle standards that the average person lives by these days. Therefore, I can only envision it to become bigger in the upcoming years.
On top of this, I can see new business models unfolding in the e-grocery market as well. Instead of paying for every delivery separately, such as services that Albert Heijn offers (AH, 2017), new business models might involve monthly subscription fees that vary based on the number of deliveries each week. Also, these models might involve monthly bills to pay, replacing the traditional payment system in grocery stores. This will shift the relationship between firm and customer away from a one-stop purchase and more towards a long-term connection of mutual commitment.
All in all, these are just some of my thoughts on the future of grocery shopping and more specifically, the e-grocery market. It will be very interesting to see how the market unfolds over the next years and what new business models will emerge.
Source used: AH. (2017). Bezorgservice. Retrieved September 28, 2017, from https://www.ah.nl/over-ah/online-bestellen/bezorgservice.
Hi Willem,
Grocery shopping is indeed an industry that has not experienced a lot of change yet. Personally, I believe that especially with fresh products many people would like to see and feel the products in order to decide whether it is the right quality they want and if they need it that day, or in the future in order to assess the freshness. Therefore, I do believe that it make take some time before we have solved this problem. However, interesting transitions are opening up in order to combine the advantages of technology with physical grocery stores. Last year, Amazon confirmed that they are working on a grocery store in which there are no queues and no check-out. Customers only need to scan their phone when they step into a store, and based on a combination of AI, computer vision and data pulled from multiple sensors they can determine which products you picked. As soon as you walk out of the store, the total price of the products will be charged on your Amazon account. This would save a lot of time, and the customer is still able to get a sense of the freshness and quality of a product. Furthermore, this would also be very useful at busy to-go grocery stores, such as the ones we find at train stations. You should check out this video (https://www.youtube.com/watch?v=NrmMk1Myrxc) in which Amazon explains it. I am curious how this will evolve over the next period!
References:
Amazon. (2016). Introducing Amazon Go and the world’s most advanced shopping technology. Retrieved from https://www.youtube.com/watch?v=NrmMk1Myrxc
del Rey, J. (2016). Amazon’s new grocery store will let you pick items off shelves and walk out without paying. Recode. Retrieved 12 October 2017, from https://www.recode.net/2016/12/5/13842892/amazon-go-grocery-store-no-lines-cashier-paying