Avoid Getting Shelved: Why Grocery Innovation is Vital
| Retail
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Grocery is a high-volume, low-margin business. Profit margins are sub-3%. Winning strategies often depend on two factors: price and differentiation.
Two of the most successful grocers in recent times are Lidl and Walmart.
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They compete in different ways. Lidl on price and Walmart by differentiation.
Being a discount retailer requires optimizing supply chains, stores, inventory, and everything else so prices remain low.
But to differentiate, you need to innovate by offering new products, services, or customer experiences.
Innovation can come at a price. For this reason, grocers have traditionally been more risk-averse to adopting new technology and initiatives early.
This factor has paved the way for tech-focused companies to bring about grocery innovation by focusing on a particular pain point. Take Instacart, for example, which has made it easier for grocers to offer quick delivery and pick-up services without heavy investment in an e-commerce platform.
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The right time for grocery innovation
Many factors can initiate innovation:
- Declining business results: Poor performance can cause grocers to take action.
- Leadership changes: New people bring new ideas and an appetite for change.
- New regulations: Such as food waste legislation, require process adjustments.
- Changes in consumer behavior: Product preferences and shopping habits adapt over time.
- Advances in technology: Such as the AI era, present new opportunities.
Some of these factors force change and others bring it to the forefront of the minds of those that can enact it.
In Spain, for example, new legislation is set to reduce the amount of food discarded by supermarkets and restaurants. Grocers must have waste management plans that identify what happens to unsold food. Breaches could cost grocers up to $500,000.
Waste eats into small margins and fines further still. Sustainable store operations are a must.
These trigger points can dictate where grocers must focus their efforts and the timescale on which actions must be taken.
External environment
Economic conditions can also significantly impact grocery innovation. Influencing both the resources available and the urgency for change.
The below table summarises how a boom or a downturn can affect innovation efforts.
Boom | Downturn | |
Resources | Higher profits and revenue allow more R&D and employee talent investment. | Tighter budgets and reduced profits can limit the ability to invest in R&D and innovative projects. |
Focus | An environment that encourages exploring new ideas to help differentiate and promote growth. | Focus shifts to cost-cutting and efficiency, prioritizing proven investments. |
Consumer risk | Consumers with more disposable income are more open to trying new products and services. | Consumers tend to be more cautious with their spending. Making it challenging for retailers to introduce innovative products |
How to innovate?
There are two main categories of innovation:
Disruptive innovation involves big-ticket items and tearing up and reinventing processes or launching new services and technologies.
Progressive innovation involves a step-by-step process and looking for results more cost-consciously by targeting underused existing processes and retail technology investments.
Both are crucial to progression and the timing and external factors highlighted above often dictate which strategy gets adopted.
To start, identifying the pain point to address is a vital step. And canvassing the views of frontline workers and store associates is a must.
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Adopting new technologies needs to serve the business and have a clearly defined purpose – such as process efficiency or customer satisfaction.
For grocers focused on operational excellence, innovative solutions like those that revolutionize retail order fulfillment or power shelf intelligence can make a significant impact by streamlining workflows and enhancing customer service.
For large grocers, innovation teams are embedded with technical and architecture teams to sell ideas better internally. Others rely on vendors with particular expertise to bring ideas and identify areas for improvement.
A better way to work and shop
Add smart data capture to your existing devices and apps
How Scandit innovates
Scandit is a trusted advisor in the grocery industry. Eight of the top ten US grocers rely on our smart data capture technology to improve store operations and customer experiences.
At the core of all our innovations is user experience (UX). Our commitment to developing intuitive products was recently recognized by winning the IF design award.
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The winning entry was MatrixScan Find – an augmented reality-assisted search experience that instantly helps workers find any item. It beat 11,000 other entries to take the top spot and was selected for its ease of use and flexibility to suit various employee and customer use cases – such as order picking.
Out-of-the-box user interface
Part of what makes MatrixScan Find so appealing is its pre-built (or out-of-the-box) user interface (UI) that can be integrated into any application with just a few lines of code. From a developer’s point of view, they can save a lot of time by not having to design the UX or implementing UI elements from scratch.
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Several smart data capture products share this pre-built UI design, including MatrixScan Count for inventory counting and SparkScan for scanning barcodes quickly and ergonomically at scale.
We believe that better user experience improves the everyday lives of millions of frontline workers and is an untapped source of value for retailers. We’ll continue to bring to market innovative solutions rooted in the knowledge they tackle frontline pain points with a measurable ROI.
Learn more about how we innovate with leading grocery retailers here.