As we predicted in our 8 tech in Grocery predictions for 2016, Amazon is going brick and plans to break into grocery in a new way. The online retail giant presented just its first and revolutionary supermarket without cashier, which is baptized Amazon Go.
• This convenient store has no cashier and checkout lines
• Connected store with RFID and mobile friendly
• Amazon might opens 2000 stores across the U.S
• Proximity Groceries need to focus on digital if they don’t want to lose market share[/mks_pullquote]
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The store is located in Seattle and is characterized primarily by the absence of cashier employees. Indeed, Amazon wants to offer shoppers the option “just grab and go!” with a quick purchase, selecting the product and paying automatically thanks to RFID sensors that can identify when a product is added to your cart, so you don’t have to do it yourself. When you leave the store, Amazon automatically charges your smartphone with you Amazon account.
A convenient store with no checkout lines
The grocery store will sell ready-made food, snacking, staples like bread, milk, chocolates, beverages and other grocery products including their own private labels (Yes Amazon got their own products now). Amazon grocery stores are about 1,800 square feet, so they are relatively small compared with big supermarkets.
Amazon had already started working with a physical store with its bookstore in Seattle. Now, Amazon Go complements these initiatives. It is a new generation of grocery store where cashier no longer exist. There is also no need to scan a product. The eCommerce giant has equipped its store with artificial sensors, cameras, and intelligences to detect when a product movement from the shelf. So it’s very convenient for the shopper but also for the supply chain.
For the moment, this first beta grocery store can only be used by company employees. If the experiment works, it could be used by any consumer from 2017 and with the idea of opening more similar stores in other cities. In fact, Amazon internal plans show it could build 2,000 grocery stores across the US in the next decade.
A vision of what the future of physical retail can be.
RFID is used in retail, but its presence is all but invisible to the customer, and most stores today still have a traditional checkout. We’ll see in 2017 if the new technologies that power Amazon Go can finally bring Techingrocery’s vision of a “smart store” to reality.
Finally, if we could say that Uber had uberized the taxis by disrupting the market, today we can replace uberization for amazonation in grocery.
The wind of novelty blew very strongly in September. Three convenience store concepts, in Europe, have just decided to start on a new basis: Picard just opened its first convenience store concept and Carrefour officially inaugurated a new supermarket format in Barcelona, while Auchan invested in Paris, With its organic store “Cœur de Nature” in a very small format.
Picard is constantly changing its model; they now intend to become an important player in proximity format. The frozen food grocery store developed a specific range called “Picard snack bar”. Located in France (Vaugirard) it’s a real revolution for the frozen food world as shopper can now consume directly in the store. The store offers microwaves for reheating, TV connected to Breaking News for ambient noise and Malongo coffee machine to finish the meal.
Carrefour works its banner with concepts finally quite distinct from each other according to the vocation of the store that is interesting to follow. After revealing the “Carrefour Urbano” concept in Milan, direction now to La Rambla in Barcelona for the Spanish version of the ultra-urban outlet. As you can see in the pictures, it’s a Carrefour Market premium (or “Gourmet” as it would say in Italy) where the shopping experience is much more focused into local fresh products. We can also notice that they are quite similar to thefood market “Time Out” in Lisboa which we consider in our Ebook as the future of grocery stores.
Auchan inaugurated their convenience store concepts “Coeur de Nature” in Paris. Inevitably, the offer is more compacted with 3,800 references. Particularity here: the place of the bulk is proportionally more important, especially with the hundred silos and 50 bins implanted in the heart of the store, around fruits and vegetables. Not far away, other “spots” bulk with olive oils and detergents. Aesthetically, the store is successful, skillfully surfing between the codes of urban proximity (and modern) and the reinsurance elements that an organic firm must address to its customers. However, like Carrefour Market the non-food area is suffering from this change as the area is smaller and dark
Each of these convenience store concepts show a willingness to fit into the disruption and to take advantage of the proximity dynamic.
Drive thru stores are expected to expand in rural areas
Competition in retailer market is constantly increasing. On one side big solid players fear agile smaller ones, on the other side brick and mortar are getting slowly disrupted by online ones. Keeping market share is difficult and improving it is even more than a challenge. In a world where customer loyalty is becoming price loyalty, grocery retailers are starting to adopt diversification strategies in order keep a growing customer basis.
We have talked already about Click & Collect, Direct to Consumer and Virtual Reality. Drive thru stores is another successful strategy adopted in the grocery market. Started firstly by Fast Food companies to target specifically a customer range with very little time available to shop, now drive thru is being launched by several pioneer retailers. This practice offers great convenience both for consumers who get what they want in few minutes and for retailers who can drive down costs.
How does it work?
Consumers drive to their closest drive thru store. There are usually two ways to order grocery items. the first option is to do it directly once arrived, ordering in a drive thru window of the store. The second option is doing it online before arriving in the store and then selecting the point of delivery.
Once the order is placed, a grocery worker collect all items desired through a sophisticated belt system. In few minutes the grocery is collected and the driver pay & collect it in a second drive thru window. This process is fast. Indeed it is estimated to be completed in only about 10-15 minutes, compared to the fastest 1 hour Amazon delivery option.
The main players
Walmart was the first retailers who launched this concept. For 70% of the US population there is a Walmart store every 5 kilometers. Leveraging this strategy, they have decided to launch drive thru stores in smaller markets where online grocery competition is not present. Indeed, due to the lower economies of scales of cities with a low population density fast online delivery cannot be present. For example, Amazon has 1 hour delivery only in denser urban markets. Drive thru grocery then is a big opportunity for brick & mortar players to counterbalance the aggressive strategy that online delivery businesses are playing.
Amazon itself has sensed the big opportunity drive thru stores can bring to its business. Business Insider recently reported an opening of an Amazon Brick & Mortar drive thru stores. Consumers place usual orders online and then can pick up them at the closest drive thru window. Why a traditional online company want to enter a non core area of his business? The answer relies partly in Amazon culture principles “customers first”. Market researches show that consumers shopping with Amazon are missing an important in-store experience. Mainly for ordinary fresh grocery products where it is essential to evaluate their quality before putting them in the basket. At the same time, it is shown a big winning area if put together Amazon online convenience with in-store experience.
Sainsbury is the second largest chain of supermarkets in the United Kingdom. They first started opening an online shop, establishing a delivery system. Their strategy is to focus on customer satisfaction in order to win market shares. However, the initial results were not so good as expected. The first main reason is that customers doesn’t like to wait too long for their grocery to be delivered. Secondly the delivery could happen at an inconvenient time for the consumers. For all those argumentations they are the first chain in UK who have opened drive thru stores, as the DailyMail reported. In this way they are hoping to leverage online convenience together with consumer delivery flexibility
Farm Stores is a US drive thru stores chain. They focus only on drive thru concepts in order to reach high economies of scales. Structured as a franchise offers a high rural growth potential. With more than 60 years of experience they now are planning to become a global company, exporting this concept oversea.
The Bio drive thru is a new short circuit allowing consumers to buy local and seasonal products while saving time. This new french concept is similar to the modern trade Drive Thru format (or Click&Drive) but includes essentially organics products.
Both Drive Thru formats and bio products are growing in developed markets
Expanding in France and later in Europe
3 models:The farmers coop, the bio store, the startup
A defensiveresponse to Amazon Fresh [/mks_pullquote]
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The concept is simple: Consumers can order fresh products online; the list of available item is updated every week. Then they pick up their purchases – often updated and fixed time – in a withdrawal point. For the logistic several farmers are grouped and switch directly on the delivery point otherwise a contractor does this work for them. And it works. The number of farms drive thru continues to rise in France, proving that there is a true consumer needs.
The cooperative “Bienvenue à la Ferme” and the French chambers of agriculture invented in 2012 the bio drive thru store in France. There is now 70 withdrawal points and a website: drive-fermier.fr, which brings together all the interdependent members. They support the producers in their project by providing an e-commerce platform. Each farmer creates its own website, relayed on the portal meaning that each entity has its independent management.This concept has the advantage of flexibility: neither binding subscription or minimum price, consumers can order when they want, in quantities suited to their needs. In addition to providing cities as seasonal products, this short circuit contributes to local economic development and permits direct to consumer opportunities.
Techingrocery identified 3 different Bio drive thru business models:
The farmers’ Coop
The Bio groceries
The Farmers’ Cooperative: Bet on partnership
Independents local producers gathered their strength to create a large withdrawal’s network across France. Consumers can order online and pick up the products in the farm, school or even neighborhood bank. Indeed the farmers cooperative is implementing this year partnership with the bank Crédit Agricole to attract millennials consumers. The difference is that with this model, there is more local products but less assortment: Vegetables, dairy products sunflower oil, apple cider vinegar or local wine, poultry, etc. The online sales site is managed by “Bienvenue à la ferme” and consumers can even look for local restaurants, hotels or tourism destinations.
Le Drive Fermier
The Startup: Bet on digital
Generally, more digital oriented with mobile app and e-grocery platform, most of them are quite news and independents. Recently the start up Alternoo in France get funded thanks to the crowdfunding platform Ulule. We also analyzed Coursesetsaveurs.coman e-grocery pure player with a delivery option and Bio Frais Drive in Switzerland.
Bio Frais Drive
The Bio grocery: Bet on the large assortment
Existing bio stores or wholesales are extending their services with the drive thru format. Basically shoppers buy online and go to pick up in store. With sales up 17% last year and a store park that will exceeds the current 400 units in 2016 Biocoop doesn’t know the crisis. Although a few Biocoop has the drive thru service, they target to open more by the end of the year. Crocmonbio is a cash and carry format offering drive thru for professional and consumers. Bio retailers have better supply chain efficiency and a larger assortment because of their experience.
Boundaries with the business model
Although there is a significant rise, some of them couldn’t be profitable and had to shut down: The main problem is in building the business model. Some producers supported logistics costs with the cooperative during two years while being helped by the French Chamber of Agriculture but it gets complicated. They couldn’t make any profit to supplant the costs so the price wasn’t competitive and the demand plunged.
A defensive response to Amazon
The Drive thru format is also an answer to the pervasive pure player Amazon, omnipresent in the United States, where he offers food delivery to a much more developed scale in Europe, including fresh produce in some areas. Online commerce is putting sacred battering physical trade. Moreover – and this is no coincidence – several iconic chains like Walmart, Macy’s and Sears / Kmart remain announcing closures of hundreds unprofitable stores. The drive thru appears as a forced march to try to counter e-commerce. The format is really popular with consumers – especially families with children – who appreciate not having to leave the car during their shopping.
Although The drive thru format remains largely concentrated in France, the U.S are finally taking the road with Walmart Grocery, Kroger Clicklist and even (maybe) Amazon with the mysterious Project x in Seattle.
Opportunity in USA as the format is emerging:
United States: 323 million people for 300 food drives: 1 for 1 070 000 inhabitants
France: 66.8 million people for 3150 food drives: 1 for 21 200 inhabitants
We think that on the condition that Bio Drive thru concept is well-managed and marketed with a robustbusiness model, we may see a similar growth than the modern trade Drive thru formats in Europe. Although in USA is mainly for fast food, there is an increasing number of retailers exploring innovation for this format to counter-attack giant Amazon and Google in the future.
After numerous store concept opening this year in Italy like “Eat&Shop” and “Gourmet”, Carrefour developed a new type of urban supermarket called Carrefour Urbano, which incorporate immediate assistance services in its offer.
• Incorporating Immediate professional service 7/7 24H
• Is possible to order Lunchbox
• Deploying digital assets in store
• Carrefour plans to open more in Italy
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Located in the center of Turin, the renovated store covers an area of 785 m² for 8,500 references and is open 24 hours a day, 7 days 7, as many Carrefour in Italy. thanks to a dedicated remodeling,
The supermarket presents spaces designed for every kind of need
As “Carrefour Market Gourmet” the supermarket selected a trendy urban offer with a wide range of organic products that are free off (ex. Gluten-free, lactose-free, unsweetened…). We can also find a space targeted to wellness with the typical sushi, ethnic, bio area and one dedicated to tea and infusions. Concerning the non-food area, Carrefour Urbano remains developing personal care category with the “shop in shop” square for cosmetics, fragrance and makeup. But the big news of this concept it’s the different services offered to consumers:
Impressive panel of professional services available
In a practical and fast way shopper can in fact request the immediate assistance for many home management services such as electrician, plumber, tailor, shoemaker, taxi and many others besides the well-established laundry facilities… The goal is to offer “everything under one roof” in order to make life easier by gathering all daily needs into one convenient place.
For this new concept Carrefour Urbano is working with Europ Assistance and in the future they plan to add other original services there, including a nursery.
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Strong food services with Lunchbox
In the morning consumers can order through the website the lunchbox of their choice that they can withdraw instore later on. Among the departments served, next to gastronomy and rotisserie, consumers can use the takeaway service with the “ready to eat it” corner serving fresh meat, fish and even French fries. Other good initiative is the Coffee “made in store” service along with pastry and fresh juice corner. The store introduced also its latest “convenience” innovation with the dried fruit distributors designed for wellbeing lovers.
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Carrefour Urbano upgrades digital services
Carrefour enhances the concept with ‘Blue Box‘: Allowing consumers to print their photos, scan, fax or photocopy documents directly in the store along with a photomaton and a postal machine near the entrance.In addition is it possible to recharge smartphones and use tablet made available, with free internet connection.
►Through this concept, Carrefour Urbano wants to be a true service platform with a concrete response to customer daily needs, especially single urban habitant. This year they plan to open other supermarkets of this type, including in Milan.
This move is part of Carrefour global strategy in supermarket format: Meet local daily needs.
2016 is promising a huge change for the virtual reality and will totally modify the market. According to the Super Data Research, the benefit from VR will reach more than 860 million of dollars during the year. Possibilities for the brands are multiples and some of these have already begun to benefiting from it.
Carrefour – Using the virtual reality to enhance the experience in-store
Carrefour is running an immersive experience across 228 hypermarkets in France, from 6 September until 3 October, making virtual reality widely accessible to its customers.
For the price of EUR3, customers can buy a cardboard virtual reality viewer. Using Carrefour’s virtual reality smartphone app, they will be taken on a journey through Russian mountains aboard a shopping trolley. The ride passes through five worlds filled with products. It includes an ice cave of fresh produce, an enchanted forest full of grocery and a futuristic world of high-tech. This is a fun initiative which should encourage positive interaction with shoppers, at an affordable price.
Oreo – Using Creativity and Imagination
Engage readers through integrating imagination and fiction into your VR experience. For example, Oreo created a 360-degree video that welcomes viewers inside the “Oreo Wonder Vault.” Once inside the vault, the video explains the magical origins of the company’s cupcake-flavored Oreo cookies. In the B2B marketplace, you may not be able to welcome viewers into “imaginary vaults”. Yet, you can use some fictional elements (and even humorous themes) to keep viewers engaged and entertained by your brand.
Merrell Shoes — Launching a New Product
When launching a new product, whether it’s shoes or new software, spreading awareness and getting the word out is key. Potential customers must know not only that your offering exists, but also how it solves their largest problems. Merrell Shoes leveraged VR when launching its new hiking boot, the Capra.
The company’s agency designed a VR experience called “Trailscape,” that took viewers on a challenging, dangerous hike in the Dolomites, in Italy, complete with an avalanche. The audience (virtually) travels to a set that is specifically mapped to the virtual experience. Finally, the campaign was successful in spreading awareness, capturing 12,396 YouTube views.
Everything is possible with the virtual reality and the future will be incredible! Innovation is everywhere and VR will help the brands to highly develop the experiential marketing in to the stores.