The Future is here: Innovations in grocery

by | Jan 24, 2017

If you’re of a certain age, you may remember the drive up grocery and convenience store. These were little buildings, a bit smaller than a two-car garage, filled with food staples like milk, eggs and bread. You would drive up, tell them what you need, they would fill your order, and you would hand them your money, all while you waited in your car.

While the drive-up convenience stores may be mostly gone, the concept may be making a comeback.

What’s old is new, what’s new is very new

Grocery stores and supermarkets are experiencing some of the most rapid changes they’ve had in years. After decades of status quo, we’re seeing the grocery field starting to incorporate some dramatic innovations, just like non-food retailers.

Some grocery stores have begun carrying merchandise from local sports teams — pro, college, and high school — and seasonal goods. Many of them are even carrying kitchen items like cookware and table settings, even mini fridges and chest freezers.

The Amazon effect on grocery

One of the big pushes has been from Amazon and its Prime Pantry service, which can deliver fresh and packaged foods in one or two days, and even on the same day in select cities. This is on top of its free 2-day delivery for Amazon Prime members.

Amazon upped the ante again at the end of 2016 and early 2017. Not only did they launch their first checkout-free grocery store with Amazon Go, they also made their very first drone delivery. Those are two huge developments that will impact the future of grocery, even if both concepts evolve into something a bit different.

Grocery stores, retailers must respond

Of course, retailers weren’t going to take that lying down, and they began offering some of their own options, such as free delivery, as well as a buy online, pick up in store (BOPIS) service. BOPIS for grocery basically involves a customer placing their order online or via an app, an associate pulling the items off the shelf, bagging them up and holding the order behind the customer service desk until the customer can pick it up, usually the same day. Customers can even set what time they want the order ready, to accommodate for frozen goods, dairy and other perishables that may be included in the order.

This is convenient for customers who don’t want to wait two whole days for their shipment, but also don’t want to drive all the way to the store only to find the item isn’t in stock. That’s not even taking into account the many customers who simply want to minimize the hassle and interaction with people that is part of the in-store experience. The popularity of self-checkouts is one testament to that.

Walmart has already begun doing it in a few select locations, and Sam’s Club and Costco have begun providing this BOPIS service as well. And we may even see a day when self-driving robots can deliver groceries as well, or self-driving Uber and Lyft cars will deliver your groceries to your home.

More than just a convenience

This was actually a service that some health departments were recommending about ten years ago, during the whole bird flu pandemic fears. They were telling people that if the flu pandemic ever came to the US, people should take shelter in their homes and not gather in public. But staying in one place, you could run out of needed supplies – which presented a prime opportunity for BOPIS grocery shopping or grocery delivery.

And as winter roars into Minneapolis-St. Paul, bringing single digit temperatures with it, we’re more enthusiastic about the idea than ever. It could also be an extremely beneficial for the elderly, people with limited mobility, those who are sick or have health issues, etc.

Ultimately, it will be the consumers who drive the re-adoption of this concept, but rather than wait for customers to tell you what they want, it’s important to pay attention with what organizations like Amazon, Best Buy, Target and Walmart are all doing, with their various delivery and pick up options. They’re experimenting with new ways to satisfy today’s consumers, trying to anticipate where shopping’s rapid evolution is heading.

Evolving with consumer expectations

Maybe you can’t offer free shipping, but there are other things you can do to entice customers. For example, gathering the items on a customer’s list for them before they arrive, delivering grocery orders placed by customers or even a grocery truck, where you prepackage a few of the basics to “food deserts” and underserved areas. Perhaps a Blue Apron style subscription model would work for grocery, too.

Just keep in mind that many of these pilot programs we’re seeing in the news are still tests to see how they work. But even if they fail or are discontinued, we can’t put that genie back in the bottle. Innovation is coming to the grocery industry, and the forward-thinking stores and companies will embrace the new grocery delivery options sooner rather than later.

While grocers and retailers don’t need to start hiring drone pilots just yet, it is important to keep up with these developments, because as they become more popular, consumers will start expecting it from everyone. Just ask the click-and-mortar retailers who are now offering free shipping “because Amazon does it.”

SPS Commerce already works with many grocers, retailers, and suppliers who have begun testing out new delivery methods and store models. If you’re interested in learning more about bringing some of these innovations to your own stores, please contact an SPS representative.

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Scott Bolduc

Scott Bolduc

Director of Supply Chain Strategy at SPS Commerce
Scott Bolduc is a multi-time winner of the Supply & Demand Chain Executive Pros to Know. He has worked with e-commerce retailers on their growth strategies and helped retailers transform their freight spending strategies to maximize efficiencies.
Scott Bolduc

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