Darwin Visits the Grocery Store

Retail Apocalypse? Armageddon?

Nonsense. We’re in an era of ever-accelerating Darwinian evolution. (For more, read this.)

Natural selection among the retail species.

It’s unfolding right before our eyes, and is as remarkable as the transition from gills to lungs and all-fours to upright.

And it’s perhaps most evident in the grocery-mass merchandise segment of the industry.

Long-time industry tech savant Joe Skorupa hailed the grocery segment as “retail’s new technology leader” in his late 2017 RIS News/Progressive Grocer study of grocery tech trends.

No surprise.

Because technology investment is a key tactic for those will survive and thrive.

What are the big market transitions here?

Of course, there’s Amazon. And Prime and Go and Alexa and Whole Foods. And the stable of aggressive innovators in Seattle and now around the world.

It’s not just Amazon. Say hello to Lidl and Aldi.

But there are also the brilliant German discounters Schwarz Group (Lidl, and other brands) and Aldi, which in 2018 will be the number one and number two grocers (by revenue) in Europe according to London-based analysts LZ Retailytics.

Discounters which, in 2018, continue their transition to fuller-line grocers, with more categories, new services, and brighter stores.

Discounters which continue their expansion into the rich US market – even to the point, with Aldi, of sharing space in ten Kohl’s stores.

There’s also the digitization of grocery and packaged goods consumption.

25% e-com in 5 years?

A 2017 forecast from eMarketer suggested that US digital grocery e-commerce sales will be north of $175 billion by 2022. Do the math, and that would mean that more than 25% of all grocery revenue would be transacted online.

In five years.

A more recent study (published last month) by Nielsen and the Food Marketing Institute (FMI) estimates a more conservative figure of $100 billion for US e-commerce grocery between the years 2021-2023.

Which would be, at current industry growth rates, still 15% of the total.

Now let’s add in the demographic shift, with multi-ethnic, digital native Millennials becoming the largest age cohort in the United States.

They shop differently.

If current trends continue, they will push the move to e-commerce even faster.

They’ll shop with mobile devices or through conversational commerce. (A recent Capgemini study found that 45% of voice assistant users were interested in purchasing groceries through a smart speaker or voice-enabled assistant.)

They will expect home delivery (preferred by 69% of respondents in the Nielsen-FMI study), but may truly prefer click ‘n collect (a very interest data point from Nielsen and FMI.)

What’s before us?

Reasons for fear, or golden opportunity?

Tell me what you think.


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Jon Stine

About Jon Stine

Global Director Retail Sales at Intel. Jon Stine leads Intel’s global sales and strategy for the retail, hospitality, and consumer goods industry sectors. His CV includes leadership of North American retail consulting practice for Cisco Systems, and a prior stint at Intel, where he founded the company’s sales and marketing focus on the retail industry. His perspective on technology’s value in the industry has been shaped by advisory and project engagements in the United States, across the European Union, and in India, Australia, and the People’s Republic of China, and from 15 years of executive sales and marketing experience in the U.S. apparel industry, working with the nation’s leading department and specialty stores. At Intel, his current areas of research and engagement include the future of the store in this new digital age; how and where retailers turn data into competitive advantage; the role of technology within the new cross-channel shopper journey, and, the critical business and IT capabilities that industry success will demand going forward.