July 11, 2017 Opinion piece
Jim Dickson, Head of Grocery at GS1 UK, looks at the recent announcement about Amazon buying Wholefoods, and the repercussions this is already having on the UK grocery sector
Following the announcement of Amazon buying Wholefoods, the world of retail is still reeling. The impact of the news was immediately felt on the stock market. There was an astounding loss in market value as share prices dropped. 20 traditional retailers collectively lost nearly $40 billion in market value while Amazon gained an estimated 3%.
The Wholefoods deal is huge and although grocery home shopping has had its fair share of challenges, over the years, Amazon have shown us that by always understanding its shoppers, omnichannel retail is here to stay.
How the grocery retailers are fighting back
Other large retailers are competing with Amazon by improving their delivery services – and experimenting with delivery apps. Sainsbury’s have already launched their Chop Chop app, which sees them using bicycle deliveries, for the first time in 130 years. And Tesco have just launched their 60-minute app, partnering with logistics start-up, Quiqup. Both retailers are now able to quickly deliver to shoppers with London postcodes who can order up to 20 items.
But Tesco aren’t just stopping at delivery apps to keep up with the competition. Since Starship hit the streets of the UK, Germany and Switzerland with their delivery robots, Tesco have also successfully completed their first one-hour robotic delivery – a six wheeled robot to deliver goods to their shoppers’ homes which can be tracked using an app.
Although there are obvious questions about safety, these robots are in fact monitored and controlled by humans in control centres. And according to Tesco, their robots have anti-theft security systems installed which alerts the police if a human tries to tamper with the machine.
While it may be a while until our streets are full of delivery robots, Tesco are serious about the project. A spokesman said, “we are looking at new ways to improve the shopping experience for our customers. We carried out a one-off trial as part of our Tesco Now initiative in partnership with a technology company. We learnt a great deal from this trial and we’ll be reviewing feedback before deciding our next steps.”
And if all that wasn’t enough, online grocer, Ocado, has now begun trial of their new self-driving trucks in bid to provide the first UK autonomous delivery service.
The future of retail is all about convenience – but at what cost?
These latest trials and experiments from traditional grocery retailers demonstrates just how important it is for them to look at new and innovative ways to meet the needs of their customers – it’s all about offering convenience after all. However, although technology is changing the way customers shop and the way retailers work, it does come at a cost.
Shoppers are looking for more convenient delivery options, and thanks to Amazon, they’re getting just that. But of course, this is putting pressure on traditional retailers to do the same. In the past, the customer experience has been based in-store, but now the battleground for delighting the customer has moved online. As a recent report by IGD shows, it’s clear that there’s still more growth to come from online shopping. 60% of shoppers said they would be doing all their shopping online in the next 2-3 years, using more home deliveries – although 50% said they would still go in-store too.
As an industry, retailers now need to think about how much longer they can justify their home deliveries without nearby distribution centres. We already have an online channel that is fully established as a distribution channel, the challenge now is to make it profitable.
One way would be for the industry to work together – to agree a standardised process where retailers collaborate with one another to consolidate orders in the same postcode area. This would prove to be more efficient and cost-effective.
Here at GS1 UK, we’re all about helping retailers and suppliers collaborate – just look at our Digital DNA and Perfect Order programmes. So, while the future of retail is exciting for us all as shoppers, there’s going to be a lot of collaboration needed to deliver it cost-effectively.