UPDATES: COVID-19
By john rousseau and rob girling6 minute Read
Carts. Dense aisles of fresh and packaged goods. Checkouts.
Beginning with the first self-service market over 100 years ago, the mechanics of grocery shopping have remained largely unchanged. A time traveler from 1920 would surely be amazed by the sheer decadence and scale of today’s stores but would have little trouble understanding the model.
More than any technological disruption, the coronavirus pandemic has placed significant pressure on the longstanding norms of grocery in terms of how retailers must ensure safe conditions for both shoppers and workers, meet customer expectations, and generate revenue in a stubbornly low-margin business. For customers, pandemic shopping has compromised much of what makes in-person experiences meaningful, from discovery and spontaneity to human connection. What was once a mundane and unremarkable facet of daily life now feels fraught with peril.
Meanwhile, the surge in online shopping has stressed even Amazon’s ability to deliver and exposed the stark inequities of the gig economy, while the need to create more sustainable systems looms in the background
Toilet paper and avocados
The future of grocery may come down to how we buy things like toilet paper and avocados—or the difference between transactional and experiential purchases. From the beginning, the supermarket’s appeal has been the convenience of everything under one roof. Looking ahead—and in light of COVID-19—that model is ripe for disruption.
For toilet paper—and the many functional things we buy—online, subscription, and delivery services will likely continue to grow. The more shopping becomes a chore due to the lasting effects of the pandemic, the more people will take the path of least resistance. Add low price, convenience, sustainability, and the eventual help of artificial intelligence, and delivery remains compelling so long as the system itself doesn’t break down.
For avocados—and the smaller number of things we buy based on direct experience, expertise, and emotion—in person is superior. We may see the growth of specialty retailers, farmer’s markets, and smaller markets focused exclusively on grocery, and new hybrid service models that blend the best of all worlds.
Here’s how this might play out:
Short-medium term (1-5 years)
COVID-related restrictions will remain in place for the near term and possibly stay that way long enough to force an initial flurry of innovation as current systems are adapted to the new normal.
Over the next year or two, changes we see now will become more sophisticated and more permanent: things like one-way aisles, physical barriers, mask policies, and the like. Even so, safer stores—even when well designed—may not be good experiences. This could drive continued innovation in delivery/subscriptions and further fragmentation of the marketplace.
Players like Amazon and Walmart are likely to lead in packaged commodities. Simultaneously, both old-fashioned and innovative delivery services could experience increased demand—particularly when it comes to fresh food like dairy, bread, meat, and produce.
To compete, conventional supermarkets may need to introduce new models that shift the emphasis toward experiential value without compromising convenience or safety. We might look to the past for inspiration, where shoppers visited specialty stores like butchers or bakers separately. In a grocery environment, such specialized services might take center stage while packaged goods are retrieved and bagged from the back of the house. This would reduce traffic throughout the store and could facilitate social distancing through a combination of physical design and technology.
Early efforts at controlling store navigation, such as one-way signage that shoppers often ignore, may be replaced by more efficient and responsive technology. Augmented reality presents an opportunity for stores to consider smart way-finding that directs traffic and indicates proper social distancing in real time.
Long-term (5-10 years)
Assuming that COVID-19 will eventually be brought under control, we may see a reversion to previous norms. It’s also possible that new shopping habits may prove durable and will lead to lasting change. Meanwhile, advances in technology and supply chain innovation will set the stage for more disruptive challenges to the current paradigm.
A More Circular Future
Can you imagine a world without plastic? What about a world without single-use packaging? Will increased usage of delivery services be good for the environment, or cause more harm? While the pandemic is top of mind now, sustainability is the long-term issue that may matter more, particularly as consumers demand responsible solutions that use fewer resources and generate less waste.
If packaging was designed primarily for delivery and reuse rather than branding and visual merchandising, entire systems could be made more sustainable. For example, products like laundry detergent could be delivered in universal containers designed for multiple refill cycles—lessening the impact of 420 million containers each year in the U.S. alone. Products like dried pasta or rice could be delivered in minimalist packaging made from sustainable materials and designed for composting. This sort of thinking would effect change up and down the supply chain, particularly when combined with more efficient automated fulfillment and autonomous delivery vehicles capable of integrating multiple providers or specialty stores.
Personalized Wellness
By 2030, 25% of the U.S. population will be 65 or older. Many will be living with chronic conditions, while others will see diet as the key to long-term vitality. If today’s store is designed to foster poor choices, the store of the future may be the opposite—where systems are optimized for both individual and societal wellness, while also maintaining consumer privacy.
To start, retailers can influence positive health outcomes by using the same behavioral economics tactics in play today. This begins with the mechanics of shopping—both online and in-person. In both contexts, there is an opportunity to nudge shoppers toward healthier choices via changes to shelf placement, user flow, or algorithm.
Taken farther, new services could provide highly personalized guidance aligned with specific goals or health conditions. For example, someone at risk for diabetes could receive a prescription shopping list tailored to their preferences, budget, and lifestyle. In-store, a smart shopping cart might remind them about a missing ingredient or automatically order an item that happens to be out of stock. The system would be enabled by personal health data, adapting over time as key markers change, and might even be integrated with a future health care provider.
Very long-term (10+ years)
Beyond 2030, advances in automation, artificial intelligence, and delivery will likely lead to very different grocery experiences. While much is in flux, it seems reasonable to think that the current supermarket paradigm will be subject to more disruption over the next 10-15 years than in the previous 100 years.
Imagine fleets of autonomous vehicles that provide a mix of on-demand and scheduled services—where the store is less a destination and more a service. As audiovisual technology and AI systems mature, expect mobile stores to show up with your order sourced from multiple vendors as a form of last-mile delivery. These services would effectively eliminate food deserts by making fresh food available almost anywhere.
Meanwhile, new online options may emerge to rival in-store experiences. We may see the emergence of simulated store environments that deliver the next best thing to being there. Imagine shopping in virtual reality without the bulky headset—where you can select a ripe avocado or browse the fresh baguettes without leaving home and receive exactly those items a short time later via autonomous delivery.
This is a high bar, to be sure. For now and for some time, the best path to avocado toast is likely the local market.
John Rousseau is a partner at Artefact; Rob Girling is the CEO at Artefact.