High-Tech Grocery MARCH / 2O19
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1 1 MARCH / 2O19 High-Tech Grocery From AI to facial recognition, digital technology is transforming how and where we shop for food with important implications for grocery real estate.
2 2 Supermarket automatic doors open for me; therefore, I am. Craig Bruce Businessperson, Entrepreneur
3 3 Industry Context INDUSTRY IMPLICATIONS The $5.6 trillion global grocery industry is undergoing rapid transformation. This is being driven by changing consumer demand, rising costs, and new competitive pressures. 1 With the global market expected to grow at an average rate of 4.7 percent over the next five years, grocery retailers are increasing their investments in both on and offline channels to rethink, and in many cases, reinvent the shopping experience. Much of this investment is focused on technology, which is being used to lower costs, increase efficiency, and grow market share. As the shopping experience evolves, so too does the location, size, and format of grocery stores. 1 Source: Forrester Research CHANGING CONSUMER DEMAND RISING COSTS COMPETITIVE PRESSURES TECH INNOVATION --- Artificial Intelligence Big Data Automation Omnichannel Dynamic Pricing Digital Payments Biometrics Robots Crowdsourcing Predictive Algorithms Drones Size requirements will diversify: Grocers will continue to diversify their store footprints, leveraging a mix of formats to meet different market needs (leveraging small-format and high-tech convenience locations in urban areas vs. larger formats for pickup and distribution in suburban markets, for example). Use of space will change: As the checkout process automates, more store space is freed up for merchandise, distribution, experience retail, or services, such as pickup. Increased demand for distribution and warehousing space: Increased online ordering will mean more store space is needed for storing and distribution. In large-format grocery suburban stores in particular, a greater proportion of the footprint will go toward logistics and storage. Access needs will change: In-store and curbside pickup will be the dominant form of omnichannel grocery in suburban locations, so grocers will require dedicated spaces at the front of stores for more pickup parking and curbside pickup.
4 Index: Industry Shifts 5 Hand-Held Shopping Your phone now holds the key to bridging online and offline in grocery stores. 9 Smart Shelves Grocer giant Kroger is reinventing the grocery shelf. 6 Connected Carts Need a personal shopping assistant? How about your shopping cart. 10 Robot Revolution More robots are helping us get things done, like stocking shelves and cleaning up the grocery store. 7 Shopping with DNA Paying with your phone is old news how about paying with your face? 11 Crowdsourcing Just like Waze, Basket helps consumers shop smarter and save cash. Welcome to Innovation Watch, a collaboration between CBRE and Streetsense thought leaders. The series highlights key trends across the consumer and retail sectors, current examples of industry innovation, and forward-looking predictions for what s next. 8 No-Line Shopping Companies around the globe are spearheading the movement of extreme convenience shopping. 12 Appliances Go AI Home appliances are getting smarter, connecting consumer needs directly to the store.
5 5 Hand-Held Shopping Smartphones are becoming a critical tool for shopping both online and in-store. HEMA At Alibaba s new concept, Hema, the smartphone is a vital tool, not only allowing consumers to shop at home, but also to scan and check out items in-store. The rise of digital payment methods is helping to drive this trend. Similarly, Costco, Aldi, and Publix apps allow customers to do everything from check product information and compare prices to promote brand loyalty.
6 6 Connected Carts Grocery carts are getting smarter and using digital technology and sensors to facilitate shopping. Today, supermarkets are equipped with smart carts that guide shoppers through the store to find grocery items. In some cases the smart carts double as checkouts. Companies like Caper have developed self-shopping checkout carts with a built-in barcode scanner and credit card swiper.
7 7 Shopping with DNA Not only is the smartphone replacing the wallet, but now, retina scans and facial recognition are a new way to pay. Carrefour s first smart supermarket allows customers to pay with WeChat Pay and with Tencent s facial recognition technology. Self-checkout never looked so easy. Simply take a picture or scan your retina in store and your details are stored with your profile, making future checkouts quick and easy.
8 8 No-Line Shopping Tech companies are powering shop-and-walk technology. Hate waiting in line? Simply pick up an item and walk out of the store, essentially skipping the checkout line altogether. From established players like Microsoft to start-ups like Zippin, companies are dedicating time, money, and resources in platforms that enable cashier-less checkout.
9 9 Smart Shelves Kroger s EDGE Shelf is the future of shelf appeal, mixing in-store analytics and customer satisfaction. Kroger s purpose is to Feed the Human Spirit. In collaboration with Microsoft, and leveraging their Azure technology, Kroger s app connects to the EDGE (Enhanced Display for Grocery Environment) Shelf technology, a digital display system that updates everything from prices and promotions to nutritional and dietary information. Azure will also help store associates identify and address out-of-stocks to ensure customers can locate products on their shopping list.
10 10 Robot Revolution Robots detect out-of-stock items, pricing errors, and hazards by scanning the aisles and reporting back to the store s stocking mainframe. Major chain Giant Food recently released Marty, a robot who scans shelves for out-of-stock items and detects hazards for store staff to clean up. The bot connects to the PA system, paging employees and directing them to spills. Robots like Marty also eliminate human error in orders and restocking, helping to streamline operations. This frees up time for in-store associates to handle more important, customer-facing tasks.
11 11 Crowdsourcing Similar to Waze, Basket is an app that uses crowdsourcing to gather information about product prices in different stores. New websites and apps are using data tools and crowdsourcing to increase consumer access to information on products and pricing. Basket is one such company that helps consumers comparison shop for groceries, allowing them to find the lowest prices.
12 12 Appliances Go AI Not only is tech innovation found in-store, but inhome technology is also connecting our household needs to the store. Samsung s new technology called the Family Hub allows the fridge to run the household, connecting to calendars, grocery lists, and music, and even orders directly from Instacart.
13 13 In the future, technology will begin to play a greater role in informing the consumers as to the ingredients and provenance of their food. Customers will soon be able to accurately know where their tuna was caught, when it came out of the ocean, and how long it has been in the display case. Jay Coldren Managing Director, Eat + Drink Streetsense
14 CBRE and Streetsense s joint venture helps unlock value for brands and their customers; reimagine environments where people live, work, and play; drive demand for clients; and foster community and sense of place. Together, we strengthen our ability to connect with end users across industries and geographies. For more on our partnership, please visit us at cbre.us/streetsense. Melina Cordero Global Sr. Director, Retail Research CBRE melina.cordero@cbre.com Jamie Sabat Director of Trend + Consumer Forecasting Streetsense jsabat@streetsense.com
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