 |
|
| Tech-Enabled Innovation in Food Retail |
Experimentation, especially when done in step with changing consumers, can sometimes lead to great innovations as well as flops. Take, for example, the launch of new store formats like Bloom by Delhaize (slated in early 2012 to be retired and turned back into Food Lion stores) or the failure of Coors "Sparkling Water" and Colgate Kitchen Entrees, all launched with noble intentions and an eye toward changing shoppers but now fading or extinguished.
Perhaps more promising, because of their relevance to a digitally-engaged population, are technologically-enabled experiments, both in retail and in collaboration between retailers and manufacturers. Such innovations feed from the increasingly fertile intersection of wireless, digital and mobile technological possibilities and provide services like virtual grocery shopping and delivery, automated food and beverage production and the extension of in-store product mix into expanded virtual variety. Here are nine experiments in the world of food and beverage that reflect the brave new world of technologically-enabled retail -- will they sizzle or fizzle?
The following examples have been selected based on the relevance of their tech-enabled innovations within the ever-changing food retailing market. Typically such relevance is established by the inventor, with culture acting to determine the validity of the experiment. Our predictions as to success or failure are based on factors that we know resonate with shoppers and their households in terms of a changing food culture, changing food occasions, and the tastes and preferences that are driving such cultural shifts.
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Peapod Virtual Store
Following on similar experiments in Philadelphia in February 2012, Peapod, Ahold’s online grocery company, recently created a virtual store in the subway tunnels of Chicago. Reflective of experiments by Tesco in South Korea and other such virtual stores in Japan, commuters can now scan QR codes from virtual shelves and order groceries for home delivery. Peapod notes, “Not only is Peapod the first in the nation to pilot this on-the-go, virtual store concept, but it's also the first company to mount a "tunnel takeover" ad campaign of this magnitude in Chicago.”
Insight
From a marketing standpoint, what could be better? Captive, bored commuters walking down dull subway tunnels, surprised by faux-supermarket shelves. Like Tesco, which claims such marketing has greatly increased both interaction and online traction in its stores in South Korea (confirmed by one our of analysts who saw the Tesco walls in use there), this is a great way to extend products trapped in an invisible “online” store into the physical. As far as QR codes go, we know from our social media studies that few consumers are using them, so this also encourages use of the technology, along with online grocery shopping. |
Sizzle! Similar marketing likely to continue as consumers engage further with online grocery. Even though QR codes see low usage among consumers, this method of advertising is compelling in that it encourages tactile interaction and will lead to follow-on traffic to the target website. Risks include the overall adoption of smartphones within the population, which currently approach 50% among mobile phone users, and grew 47% 2011 to 2012 according to ComScore. |
|
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Kroger 24-Hour Kiosk Vendomat
Functioning as an outpost to its many store formats, including convenience stores, Kroger recently opened a 24-hour vending kiosk in partnership with Ohio Northern University. According to the Toledo Blade: “About the size of an enclosed bus stop, the robotic kiosk is a self-contained, refrigerated vending machine that can carry up to 200 items. It is restocked daily with such staples as toiletries, cleaning supplies, and perishables that include fresh milk, bread, fruit, and ground beef.”
Insight
An interesting alternative to convenience stores, and in locations like college campuses—and even high schools—no doubt possibly popular. The “daily stocking” must take its toll on somebody, but that’s it for human effort. We know that growth in “alternative” vending machines (offering natural and organic SKUs) is trending up, so, combined with a fresh component and pretty wide selection, this is likely to be a long-term and expanding experiment. For snack manufacturers, such outlets are an interesting way to experiment with new products. A logical additional service: online SKU-specific inventory for students to check (while in their pajamas, of course). Up next, automat-of-old prepared foods? |
Soft Sizzle: With no real employee costs except for stocking labor, we would expect to see continued experimentation likely in select locations: colleges, high schools, urban and transportation centers. Fresh offerings will determine long-term success. |
|
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Rubi: Seattle’s Best Coffee/Coinstar Coffee Vending Kiosks
Per a recent release and launched in partnership between Coinstar and Starbucks’ Seattle’s Best Coffee, the new Rubi kiosk “provides a unique offering by grinding and brewing fresh whole beans in a single cup process on demand and around the clock. The Rubi kiosk serves brewed coffee and specialty drinks including mochas and vanilla lattes with price points starting at $1.00.” The kiosk is slated to launch into 500 food, drug, mass locations.
Insight
We’re sure Rubi makes what is likely to be a great cup of coffee—however, for food retailers specifically, this is just one more notable food and beverage experience taken over by a third party. Coffee is a key element of many occasions, and this highlights the opportunity in marketing to the coffee occasion. Aside from other mass channels, grocers should own as many food and beverage experiences as they can within their stores. This is especially true of food retailers that have added cafés to their store designs but often do not provide the food and beverage services shoppers hope to see in such areas. |
A Little Sizzle: We think the verdict will be out on Rubi just as with Coke’s Freestyle machine. Outsourced expertise has its place but, as we point out, for food retailers, this is giving up turf. Also, it’s a pretty unique occasion that drives consumers to buy coffee from a kiosk. Most likely, Rubi will succeed in locations where shoppers are surprised to see a quality hot beverage offered (e.g., dollar and drug stores, college campuses). |
|
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Pizza Vending Kiosks
Just making their way into the United States via Atlanta, Let’s Pizza robotic pizza kiosks are, according to the company behind them, “machines which make it possible to create an authentic pizza, made with only fresh ingredients from scratch into a delicious pizza. 24/7 and in less than 2.5 minutes.” The futuristic machines that originate in Italy promise hygienic production that is “un-touched by human hands.”
Insight
We watched the pizza machine video and have to admit this has a kind of Rube Goldberg attraction, just as with cupcake ATMs and sushi robots. Yet, with the machine’s marketing focus on “hygiene” and lack of human touch, this seems more like a faddish one-shot form of entertainment and not a seriously compelling new source of food. In other words, try it once and return? Doubtful—especially since, despite the short ingredient list, this is really “factory food”—something consumers have a primary aversion to. As to target locations, we’re trying to imagine where such machines would be located—possibly transportation centers (e.g., airports) or college campuses—anywhere people are up late and sources of food dwindle. |
|
Most Likely a Fizzle: Pizza has become a commodity—just ask Domino’s. Consumers are seeking higher-quality experiences in the category than typically provided by a robot. Artisan pizza is de rigueur, and we question whether
“untouched by human hands” will be a winner in the pizza category.
|
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Relay Foods
Call it online grocery retailing 2.0, but Relay Foods, which sources and delivers locally grown foods in Charlottesville and Richmond, VA, seeks to pick up where Webvan left off. According to Forbes, “Founded in 2007, Relay sources its groceries from a select group of local small-scale producers (e.g., artisan bread and cheese makers, family farms, organic butchers) — and delivers their products to a few strategically placed drive-thru pick up locations like health clubs, hospitals, corporate parking lots and commuter-friendly stops where customers can easily drive through and pick up their groceries in 30 seconds.”
Insight
Online ordering and delivery of locally produced goods has significant legs. Relay Foods is a child of the new technological era: Combined with online shopping and ordering capabilities, each producer selling through Relay has a digitally-available narrative and picture. From the consumer perspective, putting a face on food is one of the primary drivers behind the interest in all things local. In step with ever-growing mobile and online behaviors, this seems a compelling scenario. |
Sizzle! Assuming Relay can continue to act as an effective consolidator and hub of local producers, this would seem an innovative example of things to come in terms of distributing local and regional foods. The only limits to success seem to be supply: We’ve seen evidence of seasonal and scale-related shortages on other local food hubs. |
|
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Evian Smart Drop
Perhaps most notable as a technologically-enabled B2C sidestep of retail, Danone’s Evian is experimenting in Paris with a device that can be tacked onto refrigerators and enables water delivery with the “push of a button.” Per AdAge: “The idea is for a consumer to set their preferences on the website, choosing the frequency of shipments and number of bottles delivered … The device, which Evian for now is dubbing the Smart Drop, is a Wi-Fi-enabled magnet about four inches long, with an LED screen; by the time it rolls out it is expected to also have a mobile app to run on smartphones.”
Insight
While of interest, this seems like a manufacturer-specific attempt to take over what is likely to become an industry-wide and common offering as households continue to gain digital and mobile enablement: Automated inventory and replenishment of home pantries and refrigerators. BeeLine Shopper tried to do this almost 10 years ago here in the U.S., and it faded quietly. In truth, how many devices—requiring technical support, batteries, etc.—can households possibly maintain? We believe this is headed quickly for a techno-fizzle. |
|
Destined To Fizzle: And be replaced by some giant-killer app or higher-order scenario cutting across FMCG categories. Automated inventory and replenishment of home pantries and refrigerators is the next logical step for online grocery scenarios, many of which already keep virtual lists (and tallies) of what shoppers have on their grocery lists.
|
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE?/FIZZLE? |
Walmart "Goodies" Mail Subscription Food Service
While described as a direct mail system, we’re sure this must have some intersection planned with Walmart’s growing presence in online grocery shopping and delivery—thus our inclusion here. Described by Reuters, “Wal-Mart Stores Inc will soon launch a monthly mail subscription service called "Goodies" that will allow customers to sample new foods not found in stores run by the world's biggest retailer. Once a month, subscribers will get a surprise box of items that will include artisanal foods.” Walmart has not disclosed the monthly charge for the Goodies service, which will focus on packaged food.
Insight
Adding any element of surprise and delight to food shopping experiences is a boon within food retail. This scenario seems a fascinating method by which to link shoppers with specialty and/or local products not found in physical stores. While initially a direct mail scenario, it’s somewhat easy to see how shoppers could be encouraged to interact with an online version of brands and products found within the scope of the “Goodies” program. |
This could either Sizzle or Fizzle: Success depends on the ability of the Goodies program to provide ongoing, relevant surprises. Somewhat like Relay Foods, this sort of program can serve to put a face on specialty, small-scale or local and regional food producers—something consumers have told us they have a high level of interest in. The element of surprise is a great method of creating high experience, emotional connections between Walmart and shoppers—something the retailer is not well known for. |
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Goodwin’s Organics Food Truck
Goodwin’s Organics, a Riverside, CA specialty market, has launched an organic food truck that travels weekly routes offering sandwiches, salads, smoothies and Goodwin’s bottled drinks. As with nearly all other food trucks, the Goodwin’s market truck is dependent on social media for marketing. According to Goodwin’s head chef Frank Ortiz: “This is Riverside County's first organic food truck. Consumers can follow us on Facebook or Twitter.” The truck travels under the tag line “Eat REAL food: Fresh, local & organic."
Insight
While not at all unique in the face of growing convoys of full-service, gourmet food trucks (especially in California), the idea of a food retailer operating food trucks and extending their brand into communities is a great one. This seems a superb way to physically connect with a store’s community, by providing food experiences to both current and potential customers. From a brand perspective, this has significant upside to showcase capabilities in fresh foods and private labels products. |
A Little Sizzle: While we’re not sure about Goodwin’s truck itself succeeding, we think food trucks and food retail are a great combination in terms of extending food experiences and the retail brand into a store’s trading area. What could be better? A mobile advertisement for a retail banner that also serves fresh foods and acts to showcase new products available in the stores. |
|
| TECHNOLOGY-ENABLED FOOD RETAIL EXPERIMENT |
SIZZLE? |
FIZZLE? |
Walmart P&G Faux Food Truck in New York City
New York City shoppers, who rarely get to encounter a physical Walmart, are being marketed to by a joint Walmart/Procter & Gamble truck initiative called “@PGMobile.” According to MediaPost: “The initiative centers on a truck that will visit a dozen popular locations around New York during June. It features QR codes for several P&G /Walmart products, including Bounty paper towel, Head & Shoulders shampoo and Iams dog food on one side. Passersby are invited to use their mobile phones to scan the codes to instantly buy the products at Walmart’s “everyday low prices.””
Insight
Like pop-up and temporary retail, this is an effective way to market to consumers who normally don’t experience certain brands. Bears some resemblance to the impact of Peapod’s virtual store in terms of in-your-face marketing with tactile product exposure. Because of the focus on QR codes (which, as we note earlier, only a minority of shoppers use), the truck encourages both digital and online engagement and exploration of products shoppers might not normally examine. The temporary, disruptive nature of the program gives a surprise element that encourages interaction. |
Sizzle! Like pop-up and temporary retail, mobile marketing like this will continue to be used by brands that face challenges connecting with shoppers—although in this particular case, with mega legacy brands like Bounty and Head & Shoulders (available in wide distribution), you have to wonder why anyone would really scan the QR code to “instantly buy the products.” This is clearly more of an effort to build awareness for Walmart.com—the surprise factor would make for a memorable brand experience with lesser-known brands. |
|
Return to newsletter »
Share:     Comment:  |
|
|
Custom Research
Our human-centric approach that dissects consumer and shopper culture to reveal breakthrough insights:
Hartman Research | Worldview Capabilities
Your Passport to Global Insights, Strategic Planning and Innovation:
Hartman Worldview | Growth Strategies
Helping food and beverage clients align their food portfolios to real consumer demand, existing and emerging:
Hartman Strategy | | UNSUBSCRIBE | FORWARD EMAIL | ARCHIVES | FEEDBACK | CONNECT WITH US | The Hartman Group respects your right to privacy. We do not rent, sell or exchange email addresses. You are subscribed using the following email address: . If you wish to change your selections or unsubscribe, click above.
WRITE US: The Hartman Group, Inc, 3150 Richards Road, Ste 200, Bellevue, WA 98005 |  | |
|
|
|
 |
