Think about major developments in the grocery retail industry between 1940 and 2015, and by major I’m talking about advances that are truly transformational in nature.
When I went through this exercise I came up with only three: The development of self-shopping, the development of UPC barcode scanning, and the development of capturing customer identified transaction data via loyalty programs.
Now consider major developments in just the past three years: Amazon Go self-shopping, automated distribution centers, self-driving vehicles, robots in store, robotic food preparation, drone deliveries, artificial intelligence everywhere, voice-based shopping, and more.
That explosive growth in just the past few years makes it obvious that we’ve hit the inflection point on the exponential growth curve of technology and that change is only going to happen faster and be increasingly noticeable.
Now alongside this explosive growth of technology put recent forecasts of store closings: Coresight Research states that 5,864 stores closed in 2018 and projects 12,000 store closing this year (2019). Tom Blischok, a long-time industry observer, estimates 30% of traditional supermarket chains will be gone by 2025, five short years from now. And UBS Securities projects a whopping 75,000 stores will close across all retail sectors by 2026 if eCommerce continues to grow from today’s 16% to 25%.
A crisis of disruption is bearing down on grocery retail, driven by fast-changing consumer expectations fueled by new tech-driven capabilities. How are traditional brick & mortar retailers to keep up?
I believe traditional retailers that survive the next three years will have increased their odds of longer-term survival. I believe there are three things - imperatives - that retailers need to focus on in the next three years:
Innovation as a Process: Too many retailers treat new capabilities as one-off projects, not understanding that transformative capabilities are flowing into retail at an ever-faster pace. In this world innovation needs to be viewed - and operationalized - as a process. Something very much at odds with the slow-moving historical change. CART’s Innovation Program is designed to help regional and national retailers drive discovery and awareness of meaningful innovation as part of a process.
Transform into a Nimble Organization: Though many retailers are moving faster than they have historically it is still not fast enough to keep pace with Amazon and the flood of new capabilities transforming retail. Traditional retail organizations need to embrace innovation, become more nimble, and evaluate, pilot, and deploy appropriate capabilities faster.
Prepare for the Age of ‘i’: As I wrote about in my latest book, Retail in the Age of ‘i’, the world is increasingly tailored to each of us individually and there are significant implications for retailers. Consumers today expect contextual relevancy, not only online but increasingly in the physical world, and retailers need to deliver that. Delivering a true customer-first shopping experience requires an overhaul of the systems, processes, and practices that have become institutionalized in the product-first world of retail.