Why Supermarkets Are So 20th Century

No one likes grocery shopping — you wander the aisles, feel up produce, and dump cans of SpaghettiOs and heads of lettuce into a cart. Then you have to trudge home — or at least to your car — with bags weighing you down on both sides. Some argue that it’s easier just to eat out all the time— that’s certainly a popular mentality in New York — and others might just order in via Seamless.

The U.S. grocery market is a $538 billion industry, and only 2% of that revenue comes via the web — a share that’s far less than in the pet supply, book, baby products and cosmetics industries, according to Forrester. That means it’s an area ripe for innovation and tech integration.

Companies such as FreshDirect and Tesco are reinventing the grocery shopping experience in an effort to make procuring food a convenience, as opposed to a time-sucking errand. As it stands, grocery shopping in urban environments is a burden, but the concepts we discuss below save time, energy and money, often while reducing your carbon footprint.

Virtual Grocery Shopping

Last August, British grocer Tesco opened a “Homeplus” division in Seoul, Korea, after research showed that Koreans admire efficiency and despise spending time grocery shopping. In an effort to accomodate the culture and boost revenues in Korea, Tesco Homeplus installed virtual “aisles” at train stations that let people buy groceries via their smartphones while they waited for the train. The “aisles” featured images of food and were designed to look like grocery store shelves. Each item had a corresponding QR code that could be scanned in the Tesco Homeplus’ smartphone app to add a product to the commuter’s shopping cart. Items would be delivered later that day, potentially arriving at home just as the commuter does.

The app is now the most downloaded shopping app in South Korea, with 900,000 downloads since it launched in April 2011.

On the heels of the virtual aisles’ success, the company is expanding the trial to more than 20 bus stops in South Korea this summer (see above), giving busy commuters the opportunity to do their grocery shopping on the fly. With the first iteration, Tesco found that customers placed the majority of orders between 10 a.m. and 4 p.m. — while people are heading to and coming home from work — so investing in more commute-oriented outposts is a sound business decision.

“The growing trend in smartphones in South Korea means that virtual grocery shopping is even more accessible and convenient than ever before,” says SH Lee, CEO of Tesco Homeplus.

In the U.S., grocery delivery service Peapod tested grocery ordering signage at 15 of Philadelphia’s SEPTA transit stations earlier this year, piggybacking off Tesco’s idea. Peapod CEO Mike Brennan said, “We want to take advantage of time-shifting — it’s grocery shopping when you want.”

Online Ordering, Direct Delivery

 

On-the-fly grocery shopping not your cup of tea? You can also order groceries any time of day from the comfort of your home. Web-based grocery services are becoming more commonplace, selling everything from shrimp to sirloins to garlic salt. The businesses tend to cluster in cities, where dense populations make multiple deliveries possible and efficient.

While it may seem like a sacrifice to consumers to relinquish the power to select exactly which pieces of meat, seafood and fruit you’ll buy, grocery delivery customers seem to have embraced the market. In fact, aBain study indicates that online grocery shoppers end up buying more frequently and spending more money in each transaction as they come to rely on the service more and more over time.

The same study found that customers are more likely to come back if prices are reasonable, the order process is simple, customer service is readily available and the order is delivered correctly. Consequently, many online grocers undercut their brick-and-mortar competitors’ prices (or at least are competitive and win on convenience alone), boast sleek UIs with “one-click” options for recurring orders, offer customer service on the website and social media channels and will offer a refund in the event of an erroneous order, which lowers the risk and encourages first-time buyers to commit.

Aside from the convenience factor, online grocers are champions of sustainability and the environment — many develop relationships with local farmers, so your produce doesn’t travel hundreds of miles over a period of days to get to you. That means your food is fresher, your carbon footprint is smaller and you’re spurring the local economy.

FreshDirect launched in 2002 and has been delivering groceries next-day for 250,000 customers in the New York area — such a service is a luxury in a city where many residents live in walkup buildings and loathe trips to the Food Emporium. “FreshDirect’s delivery service helps families balance their busy schedules and still eat affordable, healthy meals,” says a rep for the company. The typical transaction amount is $120 — a sum that would fill more bags than one could comfortably carry home in Manhattan, and a fact that speaks to the service’s convenience factor.

Unlike a neighborhood grocer, FreshDirect’s warehouse has seven different climates to keep various products at optimal temperatures, helping the company purvey top-quality food. To boot, FreshDirect has proven to be quite web-savvy over the years — its quality freshness ratings highlight the day’s top produce, and a “featured recipes” function adds a recipe’s ingredients to your shopping cart in one click. Sounds a bit easier than trolling the neon-lit aisles, no?

 

On the West Coast, there’s SPUD — an acronym for “sustainable produce, urban delivery.” In 2010, SPUD pivoted to become a delivery service for fresh, organic produce, and it services 50,000 customers in its six markets, which include Los Angeles, San Francisco, Seattle and Vancouver. “The average shopping experience is 90 minutes, and you can shop at SPUD in five, without leaving your house, without using gas,” says CEO Peter van Stolk. “People are so busy, and the cost of gas is so expensive, and we’re finding that people really enjoy the service and can trust us.”

SPUD’s audience is mostly families, notably the kind of families that go to farmer’s markets on the weekend. “The whole experience of driving in a car and finding a parking lot doesn’t appeal to them Monday through Friday, so that’s where we play — when you don’t have time to enjoy shopping for fresh organic local, we want to be that bridge,” says van Stolk. He adds that inventory turns are faster for online grocers — it takes the average grocery store 28 days to turn over everything in stock, while SPUD’s turns in nine days, with items like produce and milk turning in 24 hours.

Of course, SPUD and FreshDirect aren’t the only online grocers — you may have heard of Peapod, Schwans,Amazon Fresh, Publix Direct, Greenling, NetGrocer and more in the U.S., plus plenty of analogs in Europe, including Waitrose. It’s also important to note that online ordering isn’t new — HomeGrocer launched in 1997, the early days of the web, and is still around today.

But with the proliferation of smartphones, we’ve been trained to multi-task, and people are looking to get more done in less time. Could the web render traditional grocery store obsolete? That would certainly take time — by 2014, the online grocery market is forecasted to grow to $25 billion, according to Nielsen. That’s tremendous growth, but in a $568 billion industry, it’s peanuts.

Do you order your groceries online? If not, what’s stopping you?

Source: Mashable (http://goo.gl/rSkeo)