AI, Innovation, and Experiences Dominate the Conversation at GroceryshopNovember 07, 2018 - by Taylor Getler
The inaugural Groceryshop conference in Las Vegas took place from Sunday, October 28th to Wednesday, October 31st. The show was a resounding success, drawing over 2,000 attendees from brands, retailers, agencies, and grocery-related tech companies. The grocery industry is in a fascinating place right now, on the precipice of some major shifts thanks to influential macro trends. In talking about their own company trajectories and plans, the speakers at the conference revealed some interesting predictions as to what industry changes will happen over the next few short years.
Innovations in eCommerce
Advancements in technology are dramatically changing the ecommerce environment for CPG food brands. One startup, Shelf.ai, is incorporating AI into ecommerce shopping in order to learn about shopper behavior and to deliver relevant intelligence to the brand. The startup also enables shoppers to order via virtual assistants, and this mode of verbal ordering has also been shown to increase basket size and to significantly reduce rates of cart abandonment.
These qualities have also been harnessed by Touchize, which allows shoppers to use their thumb to drag products into a shopping cart that appears as a side bar. This reimagining of traditional ecommerce UI has demonstrated that online shopping is evolving to feel more natural and to more closely mimic the experience of shopping in a physical store.
Wellness beverage brand Dirty Lemon has pioneered an entirely new kind of ecommerce model with their direct-to-consumer platform. Rather than having customers order via their website, shoppers instead text in their order. It is initially handled by a bot, and if the shopper texts in a question outside of the bot’s capabilities, the conversation is immediately picked up by a human customer service representative.
eCommerce purchases in the grocery category are expected to triple, maybe even quadruple, by 2025. Kroger anticipates that their ecommerce operations will be worth $5 billion by the end of this year alone. While ecommerce makes up a very small percentage of grocery sales currently, the executives at Groceryshop made it clear that they are preparing for a massive industry shift.
Taking Notes from China
In order to compete with Amazon – whose ability to deliver is growing increasingly faster and more convenient – retailers are going to start using their physical stores as fulfillment centers. Chinese retailers have already begun doing this, allowing them to deliver in as little as thirty minutes in some circumstances, and almost always in under an hour. American pioneers in this space include Kraft Heinz, who have partnered with the AI platform Wellio to offer consumers a database of recipes and the option to order any ingredients that they don’t have from a local store, which are then delivered in as little as two hours.
The Changing Landscape of the Retail Store
As retailers come to see their stores as fulfillment centers to satisfy online purchases, the physical stores will also serve as hubs for consumers to have experiences with brands. This will lead to innovation in elements like sampling, the grocerant, and product demonstration. New technology has been developed to support the growing significance of experiences and novel merchandising tactics, such as Observa, which uses AI in store audits to help measure compliance in regards to planograms.
Paradoxically, despite demanding more convenience, young consumers are moving away from one-stop shopping and instead want to go to the best place for each item that they want. Big box stores and club stores may soon have to face unexpected challengers in the form of old-school specialized grocers, and will have to fight two very different kinds of competitors in the form of these artisanal shops and ultra-convenient online markets.
Private label brands are no longer so concerned with competing against national brands on price, and are instead more interested in competing on product attributes. As such, some private label brands like Freshdirect are developing “fresh stories” for their shelf stable products, narratives that help them compete against fresh brands. This theme of evolved storytelling was further carried through a presentation delivered by the COO of RXBar, a brand that has managed to find story inspiration from the nutrition facts panel. By bringing the ingredients list to the forefront of their packaging and making it a core aspect of the brand’s personality, RXBar saw their sales skyrocket and the company was eventually acquired by Kellogg for $600 million.
Another especially relevant and persistent topic at the conference was branded content. Marketers from many CPG food brands are finding that despite the cost savings involved in creating evergreen content, the most successful and impactful content is tailored to specific usage occasions, particularly for holidays and events. The marketing team at The Boston Beer Company, for example, found that the content that received the best rates of engagement from their base related to tailgating. This means that in this era of abundant data harvesting, marketers should prioritize data that provides significant insights into usage occasions.
Messaging also has an incredible impact on growth and sales. Harry’s, for example, has seen fantastic success in razor sales by incorporating contemporary values and perceptions into their branding, such as LGBT rights and progressive ideas about masculinity. The company introduced the Shave With Pride Set to celebrate Pride Month 2018, marking a significant detour from what shoppers usually see in the razor section. The handles were finished in an iridescent coating, and 100% of the proceeds went to LGBT causes. Consumers responded with overwhelming positivity to the risky messaging put forth by the campaign, and it did a lot of work to solidify Harry’s modern brand image.
From progressive storytelling to explosive growth in ecommerce, CPG brands have a lot of work to do to prepare for incoming industry changes. These shifts will have a strong impact on marketers in particular, as nearly all of the developing trends discussed at the conference will influence the way that consumers view and interact with brands. All in all, Groceryshop pulled off a very impressive feat for their inaugural show, and we’re excited to see what insights come out of next year’s event.