5 ways Covid-19 will bring tech changes to the grocery sector

28 May 2020

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While the grocery sector has faced major changes already, there are a number of technological shifts that look set to come in the future retail landscape.

Since the beginning of the Covid-19 crisis, grocery retailers have had to adapt to surges in traffic, both in physical and online stores. Scaling up operations while also putting precautions in place to protect staff and customers has forced them to act quickly and now that the short-term solutions are in place, it’s time to look to the future.

Artem Bielozorov is a PhD student at the School of Business at Maynooth University and Lero, the Science Foundation Ireland research centre for software research. He also investigates organisational capabilities and key success factors required for implementation and reuse of cross-channel delivery processes in the digital retail context.

Bielozorov said the current situation has clearly demonstrated the need for technologies to adapt to rapid changes in customer behaviour.

“Companies are investing substantial funds in order to change and improve retail operations with buy online, pick in store and curb-side pickup services, digital store maps, optimised routing for shelf stacking and in-store inventory management systems to track stock levels in real time,” he said.

Looking ahead, he added that there are five ways tech will likely continue to play a role in your weekly grocery shop.

1. Online grocery shopping will grow

Bielozorov said that while online grocery shopping adoption has been relatively slow worldwide, the current coronavirus pandemic will accelerate this dramatically.

“According to a recent survey by CivicScience, 47pc of [US] customers said they were shopping for online groceries during the week of 22 March 2020 compared to 11pc just three weeks before.”

2. Buy online, pick up in store

With social distancing in place, many retailers have converted to click-and-collect offerings. In the US and Canada, Starbucks announced plans to open drive-thru locations and ‘to-go only’ stores, while Walgreens rolled out a new digital ‘order ahead’ drive-thru pharmacy service.

Bielozorov said for retailers, this approach comes with both pros and cons. “In-store foot traffic drives planned and impulse purchases and helps them utilise the square footage they are already paying for, which increases profitability. On the other hand, retailers will save on labour and shipping costs,” he said.

3. Checkout-free retail will be the new norm

Checkout-free retail has already been in place in many different ways, from mobile scan-and-go setups to the completely checkout-free Amazon Go experience.

“Amazon is planning to open 3,000 cashier-less stores by 2021 and it is not saving this technology for itself,” said Bielozorov. “Since March, a ‘Just Walk Out’ technology used in Amazon Go stores and accompanying software has been offered to other retailers, enabling them to provide the same fast and convenient self-checkout experience to their own customers.”

4. Contactless payments as a necessity

The current pandemic means customers are aiming to touch as few surfaces as possible when they’re shopping, making contactless payment a welcome necessity. It has led to an increase to the contactless limit in Ireland.

“Contactless payment is not a brand-new topic and it has been around for the last decade already. However, the Covid-19 outbreak has pushed people to contactless payment, especially in supermarkets and shopping malls where the demand for cashless and online payments raised sharply as some shops refused accepting notes and coins as the pandemic intensified,” said Bielozorov.

“Even in ‘cash-loving’ Germany, the amount of contactless bank card transactions has increased from 35pc to more than 50pc since the start of the year.”

5. The growth of automation

The current crisis has led to many discussions around digital transformation and increased automation, but how does this affect the grocery sector?

Bielozorov said even before Covid-19, the adoption of robotics, automated stock handling machines, artificial intelligence and other advanced technologies in distribution centres was a hot topic.

“Assuming that sales volumes are not going to drop after the Covid-19 pandemic is over and that retail executives will not be increasing the number of warehouses workers, managers need to start planning short- and long-term strategies to improve and sustain efficient stock replenishment through automation of operations.

“Many of the retail managers are making steps towards increasing automation and robotics in warehouses and distribution centres as this will help reduce bottlenecks and threats of operations’ shutdowns that arise when workforces are removed from ongoing business operations due to various contingencies like the Covid-19 crisis,” he said.

Future-proofing the grocery sector

With these tech trends accelerated and likely here to stay, Bielozorov said there will be important lessons learned as retailers start evaluating their sales data collected during the pandemic.

“The crisis has shown how fragile the balance between demand and supply can be and how incapability to sustain a proper balance leaves the entire sales cycle at the risk of collapse,” he said.

“Maintaining an adequate inventory level is only possible with an efficient inventory management system. The system should be able to tracks items’ flows across all retail channels, providing online customers with real-time stock levels so they can select alternative options if inventory level is low or an item is out of stock.”

He said AI-based agile forecasting technology will also be an important component for future-proofing retail. “[This] would be able to analyse historical data and generate accurate inventory planning and relevant product recommendations to customers.”

Jenny Darmody is the deputy editor of Silicon Republic