The short answer is yes. The U.S. Food Industry is in the midst of a rapidly changing competitive landscape driven by internet-enabled platforms linking customers, retailers, restaurants, and delivery firms. Instacart, Deliv, Peapod and others have helped40% of grocery stores offer home delivery. Similarly, Grubhub, UberEATS, and Caviar are among the firms helping 35% of restaurants offer home delivery. These innovative firms have permanently changed our food convenience options and expectations.

Add to the mix Amazon’s experiment with a cashier-less food store heavily reliant on in-store data capture and internet cloud service that would eliminate cashiers and checkout delays. These innovations, aimed to improve food shopping convenience, are expected to dramatically increase over the next five years.

Why are these innovations springing up at unprecedented rates?  I believe the time pressures facing households have and will continue to increase dramatically. And a significant portion of consumers can afford to pay for convenience-oriented services to alleviate that pressure. The two key drivers revolve around the impact of the internet and automation on workers:

  1. The increasing demand for convenience. The rise of white collar “knowledge workers”, and a reduction in the manufacturing workforce, has led to expanding work hours and the bleeding of work into home as emails, reports and demands for analyses become ever-present. About 35% of salaried employees work over 50 hours per week in an office, commute another 5 hours per week, and then are interacting via computer with their office or customers when at home. And;
  2. A growing supply of part-time, affordable, delivery workers (no longer absorbed in manufacturing) who need a second job to make ends meet. These independent contractors earn $12 to $15/hour from a combination of fees and tips, and represent a nation-wide pool of 250,000 non-unionized (and non-benefit earning, hence relatively inexpensive) workers. The ever-increasing demand for convenience is being met by this growing pool of “Gig” economy workers.

On the retail grocery side, last-mile delivery wars are being fought to retain affluent households (over $100K incomes) who have a weekly shopping basket 50% greater than the average. The large grocery chains started utilizing last-mile delivery to gain a competitive edge over their traditional rivals, and then were spurred on by the entry of Amazon with their 2017 acquisition of 480 Whole Foods stores (with new sites in the works) and the fear this online giant would take home delivery to the next level. (Which has not happened yet but with Amazon’s resources that could change)

What all retailers need to worry about is the Amazon Go internet-enabled store (convenience store format) in test market that effectively automates the checkout function, presaging a new, more convenient shopping environment with significantly fewer in-store personnel and their associated costs. In essence, this is what Amazon did as it transformed the online shopping experience.

How does Amazon make money off an internet-enabled retail format? Amazon Go uses an extensive in-store network of sensors to record the movement of all items off the shelf and into the shopper’s basket signaling a flood of new data aggregation and analysis that would presumably use their storage infrastructure. It is worth noting that the fastest growing part of Amazon’s business is their cloud data storage for other enterprises. Of course, we would also expect Amazon to deploy the system in Whole Foods to further solidify their hold on their U.S. Prime members whose annual fees represent an estimated $5 billion and are a key source of funding for all of Amazon’s initiatives.

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