AI will soon revolutionise the online grocery shopping experience, according to research released today ahead of next month’s Consumer Goods Forum Global Summit in Singapore.
The research, compiled by IGD, is based on a survey of 223 senior industry members across 42 different markets and a series of in-depth interviews. It predicts digital transformation will reshape online food and grocery retailing. In China, already the world’s largest online shopping market, online grocery sales will grow by 286 per cent within four years and account for 11.1 per cent of the nation’s total grocery spending.
The online store of the future will contain five key features:
Personal micro stores
“Personal micro stores” will offer individualised and online-exclusive products as well as personalised promotions, recommendations, advertising and loyalty schemes. More than two-thirds of respondents (69 per cent) believe some retailers will apply personalised pricing and promotions in future. An additional 77 per cent think almost all digital communication to consumers by retailers will be personal.
“AI will help to unlock personalisation,” explains Simon Mayhew, online retail insight manager at IGD. “The store’s layout will be dynamic and able to predict the customer’s reason for shopping. So, if you need a meal for tonight, your homepage will display only the relevant solutions. When generally browsing, you will only see the products and pack sizes likely to meet your needs. Many products will only be buyable online where there is no constraint on shelf space, and in high-value categories, there will be customisable products, so you can create your own ideal shampoo or cereal.”
Smart personal assistants
Tomorrow’s online grocery stores will act as a smart personal assistant, connecting with various devices, preventing shoppers from running out of products and supporting their lifestyle goals. Nearly two thirds (60 per cent) of the experts surveyed predict that smart devices automatically re-ordering products will become a firmly established way of shopping for many people. The shopping experience will also be more inspirational, through personalised planners and sophisticated digital assistants like chatbots. Seventy-one per cent of respondents expect some retailers to provide a service to offer personalised dietary guidance.
“Smarter devices will make shopping simpler and more inspiring,” says Mayhew. “The online store will help stop you running out of products. Shoppers will subscribe to have their favourite products delivered regularly and AI will predict when you may run out and make or suggest a reorder. Household devices, such as washing machines, will connect to your store and reorder when necessary. This will lock in customer loyalty.
“The online store will offer more than just groceries, it will also help around the house. With populations urbanising and tending to live in smaller properties, businesses will offer services that prevent the need for space-hungry appliances, such as home cleaning and laundry.”
Faster and more efficient
Tomorrow’s online grocery store will be more efficient for shoppers, making it easier and quicker to order products. Login and payment will be available through facial, voice or touch recognition technology. Shoppers will incur less waste, with a greater choice of pack sizes and meal planners to help manage quantities and advise on using leftovers. A better fulfilment service will be on offer with more deliveries, on time and in full and products delivered at the right quality and freshness.
“For retailers and manufacturers, the online store of the future provides both opportunities and challenges,” says Mayhew. “Data from the online store will guide product development. Retailers will see gaps in their ranges through unfulfilled search requests and have a better understanding of product quality through ratings, reviews and feedback to chatbots.
“Fulfilment will benefit from robotics and supply chain forecasting will be more accurate. This will mean online pickers have fresher products to select, helping overcome one of the biggest barriers to shopping online. Unattended deliveries to homes, cars, and even ‘straight to the fridge’, will grow in popularity.
“Improvements in service will reduce the number of returns and make deliveries quicker. We will see greater collaboration in the supply chain, including manufacturers pooling resources to sell directly to consumers. However, there will also be new challenges and potential inefficiencies. Shoppers will expect faster deliveries, and this means smaller, more frequent orders.”
Tomorrow’s online grocery store will deliver a frictionless combined offline and online shopping experience for consumers. People will switch seamlessly from shopping online and instore with data cross-referenced between the two. This will help bring more personalisation to the physical store and help shoppers find their favourite products quickly and discover new ones. This is an opportunity that many companies need to work on with over half (53 per cent) of survey respondents saying they haven’t or have only just started to integrate their online and offline teams.
“Before visiting a physical store, you will be able to look online to check in-store, real-time availability, access product information, get product usage ideas and read reviews”, says Mayhew. “When you arrive at the physical store you will then benefit from personalised offers and recommendations. An online app will help you find products and pay for your shopping without cash.”
Tomorrow’s stores will – at times – be invisible, with shoppers buying products from shoppable digital content such as videos, photos and social media. In the future, people can be shopping at any time. There will be no limits to when you can be shopping. China has been leading the merging of media, entertainment and shopping, and Europe and North America will follow.
“You won’t even need to visit your online store to buy products,” says Mayhew. “Alongside voice ordering, the majority of digital content you see will be shoppable. You could be watching a video or see a still image and just click on it to buy the product.”
Danger in downplaying
IGD’s team says there are three primary reasons why no grocery retailer or supplier can afford to downplay online retail:
- Across most of the world, online is already a fast-growing channel.
- Online and offline are merging, with an online store vital to complement physical stores.
- The digital world evolves faster than the physical one and online stores will become increasingly compelling.
The research house says tomorrow’s shoppers will expect more choice, convenience, inspiration, personalisation and transparency and online stores will play an increasing part in meeting these needs.
“Grocery retail is seeing an unprecedented amount of change, driven by changing shopper expectations and the ability to meet these using transformative technologies,” says Joanne Denney-Finch, IGD’s CEO. “This offers great opportunities for companies of all sizes. The winners will put the needs of their shoppers first, be prepared to act decisively, maintain the highest everyday standards and exhibit tremendous agility.”
The report, free to download from IGD, will be presented in detail at the Consumer Goods Forum Global Summit from June 12-15.
Peter Freedman, the forum’s MD, says the IGD research report sets out a clear, consumer-centric vision of tomorrow’s online shopping experience.
“It gives us all something to aim towards and it ties nicely to the theme of this year’s Global Summit – Consumer Centricity in a Data-Driven World.
“And it highlights the importance of the CGF’s positive change agenda – such as using new technologies to deliver accurate product information on the digital shelf, designing out product and packaging waste, and retailer-manufacturer collaboration for growth.”