How the Worlds Biggest Supermarkets Are Harnessing Digital to Transform the Way We Shop

Published 4 December 2019 by Ben Drinkwater

A supermarket revolution is in full swing. As many retailers struggle to adapt to digital transformation, the grocery industry has innovated at breakneck speed. Here’s what we can learn from the digital prowess of supermarkets, and how they are seizing the opportunity to deliver digital excellence.

 

The high street is in turmoil. According to The Guardian 16 stores close their doors each day in the UK, while across the pond, major US household names such as Sears and Macy’s are predicted to closed over 3,000 stores in 2018.

In an increasingly volatile and challenging environment, experts say retailers are battling a "perfect storm”. Low consumer confidence, cuts in spending, and higher prices have all hit the sector, leading to year-on-year fall in retail spending.

It’s no surprise that many point the finger at Amazon and other e-retailers, who have continued to push the retail industry towards digital mobility and e-commerce.

However, one sector seemingly unaffected by this mass culling is the supermarket and grocery industry.

Latest figures show a 1.3% growth for the grocery market in the UK in 2019, while the US industry has had year on year growth since 1992.

 

So, what’s the secret?

Well, according to Andy Ellwood, president of grocery comparison service Basket “the death of offline grocery was greatly exaggerated”.

Instead of rolling over, supermarkets have been remarkably agile in response to digital disruptors, building upon the sturdy infrastructure at their disposal to adopt a uniquely hybrid approach to e-commerce and digital growth. 

Here’s how digital transformation is revolutionising the grocery store.

 

Technology & the user experience 

From the rise of self-service checkouts and click and collect to data driven optics, the modern supermarket has seen an unprecedented growth in digital shaping the in-store experience. 

According to The Washington Post “the grocery sector is a technology hotbed” and when used effectively, can make businesses ready to create better user experiences. 

That’s ultimately where this change is rooted. Phononic's found that 89% of shoppers “want to shop in a grocery store that understands how to make buying groceries an easier and more efficient experience”, and supermarkets see technology as a route to do this.

For example, UK supermarket Co-op, implemented data analytics tools to better understand the behaviour and priorities of its shoppers. Finding that customers in sleepy villages “make time for conversation with store colleagues” while Londoners prefer to get in, grab, and go, Co-op made changes to their in-store experiences based on this data.

Through this process, the high-street supermarket was able to create bespoke, unique shopping experiences – ultimately allowing them to breed more meaningful connections and increase efficiency.

 

Maximising efficiency

 Digital innovation can also ensure that supermarkets are maximising their waste efficiency, demonstrating a stronger commitment to sustainability.

A report from The Guardian earlier this year indicated that supermarkets in the UK are responsible for nearly one million tonnes of plastic waste.

However, digital innovation provides supermarkets with vast quantities of data that can generate accurate predictions for consumer demand, significantly reducing the amount of food waste produced.

With AI-enabled algorithms and nationwide historic sales patterns, technological advances provide Supermarkets with greater flexibility to adapt to changing market conditions’.

According to Silicon Republic “This granularity can ensure that retailers only need to order the stock that they actually need, optimising their replenishment strategy’. 

 

Walmart: redesigning the supermarket

But while in-store changes may be able to streamline the shopping experience, it’s impossible to ignore irresistible pull that online innovation has had in shaping the digital transformation of supermarket retailers.

Online grocery shopping is the fastest growing purchase channel in the UK, with sales reaching £142 million in 2016 and according to Deloitte, this has fundamentally shifted the expectations of your average shopper. 

“Ultimately” they argue “consumers want a multichannel personalised experience. This means options that range from in-store self-checkout to eCommerce and mobile applications”.

For the USA’s largest retailer, Walmart, this shift in consumer expectations has given clear impetus for them to successfully pivot towards digital transformation. 

Beginning this shift, in a move leading ‘many people scratching their heads’, Forbes reported that in a recent shareholder meeting Walmart CEO Doug McMillan had begun referring to Walmart as a “technology company”.

Answering calls for clarity, McMillan argued it was time to seize the moment through innovation to create a new ecosystem that integrates shopping with online services and marketplace e-commerce.

“Our commitment to the customer is clear” he said, “—we’ll be there when, where and how they want to shop and deliver new, convenient experiences that are uniquely Walmart.”

Next, Walmart acquired multiple worldwide multi-billion-dollar big data firms to begin the process data informed decision making.

This data is then being made sense of through the development of the world’s largest private cloud solution, which will give direct insights into user behaviour, impacting their online and offline offerings.

To solidify their strategy, Walmart has given nearly half a million associates training to keep ‘driving the tech train’. Described by Forbes as their real ‘secret weapon’, Walmart’s commitment to top-to-bottom training is ensuring that change is long term and sustainable. 

 

And, by the looks of things, it’s working…

 

Walmart’s digital transformation strategy has given it significant traction in the market, with its eCommerce sales growing 37% in 2019, while it has recently opened over 2500 new grocery pickup locations across the US.

Through the success of their digital transformation initiative, Walmart epitomises how the supermarket industry is continuing to adapt and innovate.  

This innovation is allowing supermarkets to combine an effective in-store experience with a fully realised eCommerce strategy. This has provided the industry with the arsenal to square themselves go toe-to-toe with disruptive online retailers, demonstrating that the retail industry can effectively harness the power of digital transformation, and succeed.

 

Want to learn how you can too? Get in touch with a member of our sales team, to find out how Circus Street can help you successfully embrace digital.

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