Throughout a year of uncertainty with rapid adjustments made for the coronavirus pandemic, implementation of digital technologies has been vital to grocery operations in 2020. With automation and online orders, grocery retailers have been able to better provide for their customers, especially as people evaluate health risks and seek out safe shopping options. This has highlighted the importance of the customer experience, as grocery retailers attempt to make more of an effort to connect with consumer needs through use of analytics. Overall, the customer will continue to be the most important driver for grocery industry trends as we move into 2021.
2021 Grocery Trends
Trend #1: Automation is Enabling a Different Way of Shopping
In a digital world, automation is being more and more rapidly implemented across many industries, including grocery. Many grocery retailers are considering automation as a strategic imperative to improve store performance and brand loyalty. Automation is enabling opportunities for a new shopping experience for consumers in the form of services like subscriptions, kiosks, and sensor-based payments.
The Amazon Go app has been increasingly indicative of the future of automation in grocery, since this automated technology allows customers to conduct their shopping without the need to wait in a long checkout line. Similarly, stores that implement automated kiosks can provide convenience by reducing the time that customers must spend at a grocery retailer, as employees pre-prepare grocery orders for customers to pick up. This automated kiosk technology has recently been tested by Walmart and Amazon.
Subscription services also continue to demonstrate a rise in popularity. These services provide flexibility and facilitate easy shopping experiences for customers while also benefitting grocery retailers, since staple items can be shipped on a schedule that works best for the consumer which provides consistency for the grocery retailer. Additionally, subscribers tend to spend more after starting a subscription service compared to other consumers who do not participate in a subscription service.
Trend #2: Online Ordering Will Remain a Focus Post-COVID
After months of lifestyle adjustments due to COVID-19, online orders for grocery retailers are expected to stick around. Online order sales have been relatively stable, even as overall grocery sales are lowered compared to the surge at the earlier stages of the pandemic in March 2020. Online grocery shopping is expected to continue to rise in 2021.
Online orders can present major opportunities for grocery retailers to acquire new customers as omnichannel strategies become more and more popular. Giving consumers the choice to receive their groceries through options like delivery and curbside pickup can make shopping easier for them, however, the costs of fulfilling these online orders can present a challenge for the grocery retailer. Complexities and time inefficiencies in selecting baskets for customers makes online ordering more difficult for grocery compared to other retailers, but these logistical issues can be mitigated.
In the case of online order deliveries, some grocery retailers are able to lower logistical costs through things like temperature-regulated lockers. Additionally, grocery retailers are utilizing micro-fulfillment warehouses to improve online demand for services, while also enabling stores to remain fully stocked. Micro-fulfillment warehouses can combine the efficiency of warehouse picking with faster delivery speeds due to better proximity to customers. Robotic solutions are another option that many businesses are exploring. While online orders can provide many benefits for customers and help grocery retailers increase business, there are still issues to be resolved in 2021, such as lowering order error in late deliveries, reducing the number of missing products, and managing substitutions to avoid fault.
Amazon and Walmart are expected to lead the growth in online shopping in 2021, with sales expected to reach 29.7 billion.
Contributions by Courtney Loughran