Thought Leadership

The grocery and convenience stores of the future

Written by Neeraj Gupta | 18 September 2020

Grocery and convenience stores have largely remained untouched by technology. Until now, technology has been limited to the back office, check out lanes, and rudimentary rewards programs. However, the landscape is about to change. The pandemic, advances in technology, and the launch of Amazon Go stores has resulted in renewed interest in this sector.


Brands are exploring various ways to improve customer experience and operations with reduced labor. What does the “store of the future” look like? Amazon Go stores provide us a good indication of that.

The “store of the future”

Grocery and convenience stores of the future will need to automate their operations with a view to improved customer experience. And in doing so, they also have an opportunity to improve their financial performance. It is estimated that automated stores could double store profits. Technology can create value in the following ways*:

  1. Improved customer experience: Current technologies such as scan-and-go and intelligent shopping carts are transitory in nature. The holy grail is a frictionless check-out system. It can enable check-in using an app, track all purchases using computer vision and smart shelving, and deliver the final receipt with loyalty points. Store visits and purchases can be tracked to create tailored shopping experiences. Apps and kiosks can also help customers discover and learn about products and promotions.
     

  2. Increase on-shelf availability: Smart shelving can more accurately help manage inventory and alert employees of the need to re-stock when an item runs out from the shelf, Properly stocked shelves have a tremendous impact on customer satisfaction and improve the probability of them returning to the store.

  3. Reduce checkout labor: Labor costs for stores are very significant, the largest cost-item besides product costs. Self-checkout, smart shelving, and user applications can reduce the number of staff required to serve customers. Store employees can take on more important roles as concierge, driving upsell and customer retention.

  4. Reduce shrinkage from theft: Many retailers would agree that one of their top priorities is reducing shrinkage from theft. Automated stores can track the actions of customers and employees in a store, reducing the opportunity for theft.

Several Cervin portfolio companies lead the way in retail transformation and help create the store of the future including:

  • AiFi — Delivers auto-checkout operations for retailers of various sizes.

  • Punchh — Provides an AI powered loyalty and engagement platform that guides consumers through their lifecycle from first-time customer to a superfan.

  • Bungee — Provides grocery and CPG brands with on-demand data in a highly scalable way via APIs.

Photo by Gustavo Fring from Pexels

*McKinsey report for AiFi.