How Connected Devices are Influencing the Future of Grocery Shopping

The grocery business has faced a number of challenges over the last several decades. High fixed costs, slim profit margins, perishable products with diverse handling requirements, and the need to manage distribution with a growing network of suppliers have all made it difficult to turn a profit, and even so, competition is at an all-time high. Discounters who specialize in minimizing costs are eating up larger and larger portions of the market, squeezing margins even thinner for stores offering higher-end service and more product selection.

Connected devices are poised to play a significant role as grocery store CEOs search for innovations that can bolster profits in such a difficult environment. With the recent purchase of the Whole Foods brand by Amazon, it's clear that at least one big technology player will be entering the grocery business and leveraging connected devices in a big way.

Let's look at some of the ways that connected devices are influencing the future of grocery shopping.

 

Trending in Europe - Online Grocery on the Rise

Online grocery shopping was one of the earliest innovations that changed the way we shop for groceries. There are hundreds of grocery delivery services operating around the world, and while they haven't caught on everywhere, the industry has grown steadily in France and the United Kingdom by 10-12% annually.

It's clear that online grocers are doing something right, but with online deliveries on the rise, connected devices are likely to play a role in streamlining delivery and addressing some of the most common consumer gripes with online delivery - high prices, prohibitively expensive delivery fees, and unpredictable service.

Connected devices are already enabling people to skip the checkout lines at their local grocer, but they'll have to be leveraged even more to provide the standards of service and reliability that consumers expect, and at the right price. For example, grocery delivery services can integrate real-time route tracking to add transparency to their delivery process and better estimate delivery times. Connected devices can be used to optimize delivery routes and save on gas, helping to drive down delivery costs.

 

Redefining the Network - Connected Devices in Transportation

If you're envisioning a future where you can have your groceries delivered each week according to your own preferences, all without having to leave your home, you're certainly not alone. In a 2017 survey, just 15% of consumers reported that they enjoyed shopping for groceries - but we know they all loved eating them! If that's the case, why isn't grocery delivery even more popular?

The main challenge for online grocery delivery services is economizing the process of picking the groceries for each customer, managing them according to their unique handling and storage requirements, and transporting them to the customer at a predetermined time. In a business where food prices are highly competitive, it's difficult to turn a profit while charging a delivery fee that the customer can afford and maintaining a reasonable standard of service.

Using connected devices in transportation could play a major role in reducing delivery costs. Customers of Uber love the interactive platform that lets you watch as your Uber car navigates to your location, what if grocery delivery worked the same way? Connected devices can be used to estimate traffic and manage delivery routes, increasing transparency and customer satisfaction, and generating more accurate estimated delivery times to improve customer convenience.

Amazon Grocery is already applying Amazon's existing warehousing system to support next-day delivery of groceries to certain locations, but the service offers only non-perishables, making it impractical as a sole provider of grocery for most consumers despite offering shorter turnaround times than its competitors.

 

Driver-less Distribution on the Horizon

The annual cost of global delivery is currently in excess of $70 billion, with growth constantly driven by e-commerce, and with the rise of online grocery shopping, that's not likely to change. What will change, however, is how those products reach their destinations.

Driverless cars are the end-game of distribution automation for the grocery delivery business. In the future, these autonomous vehicles will use information from billions of connected devices to optimize the delivery of goods. With minimal labor costs, grocery suppliers will pick orders automatically using robots, fill refrigerated parcel lockers on automated vehicles, and send them off on optimized routes to residences of consumers.

Consumers will receive regular updates and tracking on their orders, along with an electronic code that enables them to access their goods when the vehicle arrives. Transactions will be processed electronically in advance, streamlining the entire process.

By reducing labor costs and enhancing logistics with connected devices, we'll be able to get groceries and other items delivered for cheaper than ever before, and with better customer service.

 

Amazon Go - A Grocery Revolution

Connected devices are already revolutionizing another area of industry - payment processing. While its competitors look to enhance the shopping experience by shaving seconds off of their check-out times to save on labor, Amazon is taking a totally different approach with Amazon Go, its own innovative approach to making grocery shopping a tenable experience again.

The new business model will allow consumers to simply walk into a grocery store, take whatever items they'd like to purchase and walk out - no waiting in check-out lines, no payment processing, and no hassle.

The secret is using connected devices to track what items leave the store with each shopper. Shoppers interface the Amazon Go app on their connected devices with special turnstiles when they enter the store, and from then on, their purchases are automatically tracked in the app's digital shopping cart - it can even tell when the shopper returns items to shelves.

When shoppers finish in the store, they simply walk out with the purchased items and the transaction is completed automatically.

 

Conclusion

With 10 billion connected devices already present in the world, and up to 40 billion more expected to exist by 2020, businesses that leverage the Internet of Everything to enhance their processes and improve customer service stand to benefit significantly over the next decade.

In the grocery business, connected devices will continue to support the growth of home grocery delivery services, and enhance the in-person shopping experience, through improvements to transportation, inventory management, and payment processing.