‘CAPTAIN OF RETAIL’ JORG SNOECK
SPEAKS AT AMSTERDAM PRODUCE SUMMIT:
How To Navigate The Omni-Channel Revolution &mdash New Consumers, New Technology, New Outlets For Shopping
Jim Prevor’s Perishable Pundit, October 14, 2018
The most renowned speaker in the Benelux on retail issues is Jorg Snoeck. When we heard that Jorg, founder of RetailDetail, working with Pauline Neerman, editor at RetailDetail, had published a new book, titled The Future of Shopping, we knew that we had to have Jorg at The Amsterdam Produce summit, which this year is headlined, Retail Strategies: Seizing Success in the Omni-Channel Future.
We arranged to write a special introduction to The Future of Shopping, and every attendee at the Amsterdam event will receive a free copy with our introduction, which is available nowhere else in the world.
We asked Jorg to expand his focus on retail and the fast-moving consumer goods category and give us a point of reference against which the role and utility of the fresh produce supply chain can be assessed.
We know that effectively offering produce involves unique obstacles for omni-channel retailers — ensuring consistency in all channels and dealing with differences in flavor, variety and point-of-origin throughout the year. Yet we also know that produce and its high frequency of purchase and need for continuous replenishment offers unique opportunities on which omni-channel retailers want to capitalize.
How do we deal with the Yin and Yang of produce and omni-channel? We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Q: Your book, The Future of Shopping, is brilliant in its analysis and scope, and reveals countless and invaluable insights for the produce industry. To start, could you provide some background of your company and give our readers some context: What was the impetus for your book?
A: RetailDetail is a leading communication platform for professionals in the retail and fast-moving consumer goods (FMCG) industry. Our newsletters, live-experience center in Antwerp and congresses attract thousands of visitors who are looking for knowledge and inspiration on the tremendous changes the industry is going through.
We are in the middle of a 4th Industrial Revolution, and while the changes and innovations are widely documented, we notice people in the industry get lost in the chaos.
Not everything that is written is true, and it’s all just too much to process. This book aims to provide a complete, yet accessible, summary, being a thorough guidebook that actually helps all players in the industry, from retailers to producers and their suppliers.
In order to survive this revolution, knowledge needs to be shared, and everyone in the supply chain needs to connect. We feel we can help the industry survive only by elevating the shared knowledge in the industry
Q: Could you walk us through the chapters of the book, highlighting the most important points and issues in each?
—In doing this, could you focus in on the points that are most relevant to the produce industry, and how these issues impact the produce industry?
—Do some of these issues with the transformation to omni-channel create unique challenges for the fresh produce industry versus other shelf-stable consumer goods products, etc.?
A: Every chapter drills down on a different factor in the retail revolution: we face new consumers, new technology and new types of stores or retail touch points. This leads to new business models, and all of the changes culminate in the supermarket industry that is being thoroughly disrupted at the moment.
So, our last chapter zooms in on the future of the supermarket, which is, of course, an important one for the produce industry.
Q: To that point, you say in your book, “retail as we have known it for centuries is dead. Economic, demographic and technological developments have made it unnecessary.” Does this apply in the same way to fresh produce? For instance, studies show that consumers prefer the sensory experience of shopping for produce in-store.
A: Retail as the debundling and rebundling of goods — to physically bring them closer to the consumer — has for the most part become obsolete. Also, in the produce industry, we increasingly see shorter supply-chain initiatives, where consumers are connecting directly to the producers and farmers. In addition, when it comes to fresh produce, where there is some sharing, swapping or selling produce from their vegetable gardens etc., consumers are becoming competitors for retailers.
However, there is still an important part in selection when it comes to produce: as there is no such uniformity like there is with other goods, a careful selection remains very important, guaranteeing a lasting role for an intermediary person/player. This can be the retailer or the consumer hand-selecting products in-store or other intermediaries.
People also find convenience very important when it comes to food. As such, they want to be able to find produce close by and in a convenient setting. Therefore, short supply-chain initiatives will probably never fully replace the part of the store or merchant, bringing food closer — and in practical ways, in terms of packaging, selection, availability etc. — to the consumer.
Q: You say digitalization has turned the world into a single large marketplace, where you can hunt for the best bargains/lowest prices and compare things online. But there is some evidence when consumers shop for fresh produce online, they tend to shop the website of the store they feel most comfortable with, and they purchase items they are familiar with. Bargain-hunting and price seem less of an issue when shopping for produce online than in-store.
There is also a discussion about the advantages of integrating online and offline and that these synergies can build overall purchases. For instance, consumers gain knowledge online, and when consumers visit that retailer to shop, the sensory experience creates additional purchases… Could you address these points?
A: All of the changes in the 4th Industrial Revolution heavily affect the produce industry as well. For example, the new consumer attaches more importance to fresh and healthy food than ever.
In the book, we especially describe how the new Millennials generation is very conscious about health, self-care and the environment. This results in an increasing demand for fresh organic food, plant-based and non-processed foods and locally produced. People increasingly want to know about the origins of their food and are interested in buying straight from the farmer as well.
Q: You point to Millennials as a target consumer for fresh produce. At the same time, you make an interesting point about the future of the consumer, talking about demographic shifts, or earthquakes, and the new normal — categorizations:
“Patterns of consumption are no longer determined by traditional demographic segments, like age, gender, location, income, family status, etc. There’s a new wind abroad, which disregards the pigeon-holed thinking of the past.”
You also say, “patterns of consumption and lifestyles not only vary within the same household, but also within the same individual.”
Could you elaborate on who is the shopper of the future, and how does the produce industry strategize around this? For instance, could seniors be greater purchasers of fresh produce, but prefer shopping in-store versus buying fresh produce online?
A: When it comes to the shopper of the future in Western markets, we see several important trends: urbanization, aging, the generational shift to digital native Millennials and Gen Z, as well as the emergence of more ethnically diversified consumers. Each require their own approach in the future of marketing and retail.
Seniors prefer in-store shopping, indeed, as they want to feel more connected and also like the social element of shopping.
Whereas, younger, Millennial consumers are very interested in fresh produce as well, but as they have little time, they highly value convenience and speed. Because of the urbanization, this convenience is increasingly found online and in neighbourhood stores, much less in large (suburban) supermarkets.
Although, Millennials also like to ‘destress’ and take it slow once in a while, a moment in which going out to buy and home-cook healthy, fresh food is increasingly popular as well. There is an important part for produce in both the ‘fast’ and ‘slow’ consumption moments.
Ethnic consumers pay a lot of importance to fresh produce as well, but still, they too often do not find the products they’re looking for in mainstream supermarkets.
This shortening of the supply chain is an interesting alternative for producers too, since it is a way to escape the increasing pricing pressure from retailers. For retailers themselves, offering produce straight from the producers is in turn a good way to increase margin and to give consumers what they want.
In Belgium, for instance, retailer Colruyt is building collaborations with potato farmers, buying the lands for the farmers, but letting farmers exploit the land for Colruyt. They also make sure knowledge and expertise are shared among the farmers. As such, they have been able to optimize the use of land and have extended the potato season in Belgium.
Q: You provide several interesting examples in the book of short chains; VLAM recruiting more than 1,450 sales points in Flanders and Brussels, neatly distributed over different regions and localities. One Flemish person in five now orders produce direct from a farmer.
Example 2: Increased attention for local production breathing new life into farmer’s markets thanks to the internet… Buurder profiles itself as virtual agricultural market; and Example 3: American startup Farmersmarket, which organizes an online food market where consumers can order their fresh produce from the affiliated growers in their region.
You also talk about technological advancement. Could you highlight key factors in the retail transformation to Retail 4.0?
A: When it comes to technology, automation is key. Dominated by large tech players, such as Amazon and Chinese Alibaba, the most important technological evolutions in the retailing industry boil down to moving retail radically omni-channel, blending online and offline into one.
We are steadily moving into a world where grocery shopping is fully automated. Thanks to consumer data analysis and connected home appliances through the Internet of Things, groceries can be delivered into your fridge and into your pantry. Weekly supplies and meal ingredients get to be delivered at home, including also fresh produce.
The challenge producers face, however, is that the consumer will no longer make a conscious choice as to which products he or she buys, not even which fruits and vegetables. The pressing matter here is the same as for all FMCG suppliers: how to make sure that your produce is chosen and is delivered to the consumer?
Nonetheless, as said, people do feel the urge to consume more consciously and mindfully, especially when it comes to their food intake. So next to this automated, fast supply chain, there is also ample space for a slow alternative as well: people still want to go pick some fresh produce and other products they attach importance to themselves, be it in-store, at the farmers market or even online.
Q: Will some of the Internet-of-Things technologies have limitations when it comes to fresh produce?
A: The limitations for technological automatiation in the industry of fresh produce is mostly practical; it is a matter of logistics and transportation in suitable conditions. These are things lots of startups, as well as huge players such as Amazon and Walmart, are working on intensely. As for these giants, it is crucial to get this right: the delivery of fresh produce is the only thing that still stops Amazon from becoming the Everything Retailer it aims to be.
It is therefore also the sole purpose of the acquisition of Whole Foods by Amazon: understanding the fresh produce industry and retail.
Q: In your book you say, “Physical stores need to concentrate on one of two things: either ultra-efficiency or meaningful experience. Retailers and brands therefore face a straight choice. There is no middle ground.” In this competitive, omni-channel environment, isn’t there an argument (or necessity) for doing both?
A: There is, and some retailers manage to do both, such as the example of Starbucks with both seated service and mobile to-go ordering, but it is very important to create two very clearly distinct customer journeys, which should not interfere.
So, convenience online and experience offline is possible, for example, but make sure the experience-seeking customer is not misguided by your online offering, thinking it is too matter of fact and ‘sec’, while it should also be clear to a shopper on the run that he’d better not go to the store.
An example of a food retailer that IS succeeding in offering both is Alibaba’s Hema grocery chain in China: it is possible to quickly find and take home the right products if you are in a hurry, with completely till-free and cashier-free checkouts, but for those who want experience, you can eat there and have your shopping bags delivered at home.
Even quicker for the convenience-seeker: online orders through the mobile app are picked in-store and delivered at home within 30 minutes if you live inside a 3-kilometer radius.
Also, Amazon aims to do both with Whole Foods (experience) on the one hand and Amazon Fresh (convenience) on the other.
Q: This ties into The Future of Shopping. You point to the classic supermarket model being challenged by new models of production and distribution of food. And you provide great examples, challenging the existing price-versus-service dichotomy… the growth of Colruyt, which combined a lowest-price guarantee with full assortment, and a qualitative offer of fresh produce and well trained, helpful staff.
The UK had Tesco, and in The Netherlands, Jumbo started Seven Certainties; in France, the rise of E. Leclerc was unstoppable. In Spain, the winner was Mercadona…
A: When it comes to online, fresh logistics still need to improve to increase efficiency, but this is a matter of practicalities that will be solved in due time. However, the fast and online system will put even more pressure on producers, because retailers will want to guarantee only the best and most fresh produce goes to their customers, since there is no way for them to return or swap products that do not meet their demands.
To build consumers trust, only the very best will do.
Q: Could an omni-channel retailer create a way for consumers to return or swap products that do not meet their demands, reassuring them, and also opening up possibilities when consumers return products in store that they’ll increase their purchases?
A: You’re right, it’s not that it isn’t possible, but more that it kind of defeats the purpose of convenience. So definitely, this is absolutely possible, but given the speed at which produce moves and is consumed, it would be rather inconvenient to return the product and wait for the delivery of another one.
Or to go to a store to swap: you order online partially to avoid going to the store, right? This is why in food, click-and-collect customers are most often shown the fresh produce that the pickers have selected right upon collection. That way, it is still possible to swap right away at the collection point.
Q: Could omni-channel diminish brands and lead to more private label? What can suppliers do to reverse this?
A: Automatisation, not omni-channel, is leading to more private label. If you order something via Amazon’s Alexa today, Amazon has a preference for its own private labels, pushing these first.
Suppliers can reverse this by either partnering up with the retailers, through knowledge and promotional collaborations that are beneficial to both parties, or by finding their own channels through which to reach the consumer.
An example is INS Ecosystem, a recently launched blockchain platform that wants to be an online grocery marketplace where brands can sell their goods directly to consumers, without any other parties, such as the retailer, in between.
Q: How do discounters like Lidl and Aldi fit in with this competitive dynamic?
A: Aldi and Lidl are increasingly parting with their hard discount image. Every retailer invests in low prices, but also aims for more service and convenience. Aldi and Lidl are no exception: you find a broad range of organic products, A-label brands, fresh bread and produce, while also improving the in-store experience with more natural light and agreeable color schemes.
They even go omni-channel with web shops, and Lidl is even trialing home delivery. They too move towards no compromise.
Q: What are your key takeaways for the produce industry, from the retailer perspective and from the supplier perspective.
A: As everyone is becoming a retailer, suppliers get to find their own media and channels to reach the consumer. The retailer is no longer the only way to find a market.
As for retailers, this also means that they are facing unseen competition. Instead of the eternal focus on price competition and price wars among supermarket chains, we increasingly see collaborations arise, even between competitors, when it comes to purchasing alliances, knowledge sharing and partnerships.
Q: Could you provide some examples of collaborations even between competitors?
A: A clear example is the recent collaboration between Carrefour and Tesco or Carrefour and Systéme. Then there is Aldi North and Aldi South collaborating on animal welfare.
The main focus should be how to add value for the consumer, beyond the element of price. Retail becomes about servicing customers, helping them lead their lives the way they want to live it. Opportunities then lie with how to help people eat healthy, and to eat fresh food, for example, in the most convenient way.
This can be done though meal kits, organic produce subscription boxes, etc. Example: the Belgian supermarket chain Colruyt launched a premium sister chain, CRU, where consumers find local premium quality foods in a market-style environment, but most remarkable is their strategy of offering everything in 3 shapes: raw, pre-packed of fully prepared.
You can, for instance, find fresh pineapples, pre-cut slices of pineapple and pineapple smoothies. This way, the store wants to cater to everyone’s individual needs in terms of convenience.
Q: How important is consistent branding across platforms?
A: Extremely important. In this omni-channel environment, consumer do not make any distinctions between channels and platforms, so consistency is key to a brand’s trustworthiness and image.
Q: Are there different issues with product/packaging requirements/merchandising/marketing strategies for online and offline options, particularly with fresh produce and its perishable nature?
A: The lack of clear and standardized product data and labelling is still a big issue for online food retail today.
Q: Could you elaborate on how retailers and produce suppliers can capitalize on the synergistic play between online and offline to maximize sales and profits for fresh produce?
A: Retail is everywhere and everything. From laptop to mobile to super-smart applications inside your home, Alexa…Internet of Things, machine-to-machine retail and FMCG. Interaction between digital and physical. In the near future, smart mirrors in your house will record all your sizes and measurements… and there will be mobile shops and popups at places anywhere and everywhere, etc.
Q: What are the biggest challenges and opportunities for the fresh produce industry to compete and prosper in this new omni-channel environment?
A: It is crucial to capitalize on both the fast and slow moments of consumption, by offering an adapted approach to each. The same consumer can and will be looking for convenience and speed at one moment in time, yet choosing experience the next.
In the first situation, automation, online groceries and convenience stores or hubs with large opening hours are the way to go. In the latter, a lot is to be done with personalized experience, educating and informing people and the creation of authentic and entertaining moments.
People want to go buy organic, locally harvested pumpkins at the market, but also want artisanal-made pumpkin soup from a vending machine ‘on the go’ on their way to work, to give just one example. Opportunities lie in both sides.
We see 10 major points to be thinking about in preparation for the discussion after Jorg’s presentation:
1. The need for careful selection in produce
Popular opinion holds that consumers want the ability to carefully select many produce items. There is, however, also research indicating that consumers do not typically think themselves competent to do this job. So, they might be very willing to let a store do it for them — if a store has competency to select which melon or pineapple is, actually, ripe for tonight!
Controlled systems drawing on distribution centers, such as Amazon Fresh, Ocado or Fresh Direct, have won points with consumers by honestly assessing the state of the produce, even acknowledging that it is of low quality and is only listed in case a consumer desperately needs it for a recipe.
In contrast, store drawing systems, such as Instacart and Shipt, typically are not able to give much information on produce quality when ordering.
Neither store drawing nor distribution-center-based systems are able to pick with personalized detail — “I want a melon that will be ripe for Thursday night when my girlfriend is coming over for dinner.”
So, this is a big obstacle and opportunity for retailers looking to integrate produce into an omni-channel offer.
Is there an opportunity for producers? E-Mart in Korea sells “haru hana banana” — or “one-a-day banana” – which mimics a similar product Chiquita tried in the US years ago. The idea is to buy a tray of bananas where one is perfectly ripe each day. Perfect, say, for one banana in your cereal each morning.
The Chiquita product may have been ahead of its time, but many products, such as avocados, have boomed in no small part because the industry built a ripening network to give stores pre-ripened avocados.
Maybe the focus needs to be on the kind of packaging that allows a retailer to sell the customers what they actually want, say, a ready-to-eat piece of fruit.
2. Short supply chain vs quick delivery
Many things that are big consumer trends — such as local — don’t actually play out that way in the sales numbers.
For all the attention to local, more fruit is imported every year from far away. In other words, many of these movements are marketing initiatives more than practical supply chain changes.
What is also interesting is that in many cases, local farmer’s market, pick-your-own, home gardening etc., seem able to flourish without any impact on the sales through stores.
It is almost as if they are different industries. One is a type of food tourism, where you can enjoy the walk through the farmer’s market, and the other is the actual food provisions of the household.
In any case, there are specialized foods and suppliers that lead consumers to order directly. In the US, Oprah Winfrey has promoted a supplier of frozen blueberries from Maine, and consumers can receive a 5-lb. box of frozen blueberries for $50. If one is to use this method of purchasing all food items, the cost of shipping individual boxes and the annoyance of having to deal with multiple vendors means these direct-to-grower relationships are not likely to meet consumer needs.
But… it is also true that with the growth in varieties, fresh-cut options, packaging and branding alternatives, consumers may have preferences that traditional retailers can’t meet with limited shelf space.
Will online retailers distributing from a DC be able to take the “long-tail” approach, so successful for Amazon in books and music, and apply that to food and produce?
In other words, in produce, in particular, the produce buyer at a supermarket has functioned as a gate-keeper. There may be 50 mustard brands featured in the store, but only one banana brand.
They may carry several apple varieties, but nowhere near the variety that is available.
Will online vendors be able to allow customers to order Chiquita bananas, Dole pineapple, Autumn Crisp grapes, a 48 size Rome Beauty apple, a 3 lb. bag of Halos and a 216 size Jazz apple? The significance of this is substantial. Branding and marketing in produce is significantly constrained by the fact that product is not uniformly available
A marketer could run the most brilliant branded TV campaign, get consumers to leap off their couches, run to the store to buy a specific brand and type of produce, yet in almost all cases, less than a third of the supermarkets would even have the item. This is true even in the US, where branded products are more common and set produce apart. Heinz Ketchup or Campbell’s Soup are in almost every store in the country, but no brand of fresh produce can say that.
If a branded marketer could be certain that consumers can buy their product easily, it might well make them feel comfortable in marketing aggressively to consumers. In markets such as the UK, where brands are few and far between at many supermarkets, it might lead a renaissance of brands that can now effectively market direct to consumers.
Of course, there is also a question as to how this could come about. It could be Amazon and similar services taking the “long tail,” but it could also be Kayak-like services where you give your order and the systems research the best way to get the best prices on your order, perhaps ordering from several vendors. Which is a great segue to pricing…
3. Price comparisons
It is possible that retailers could see profits boom from online ordering – whether for delivery or pickup. There is not insignificant investment of consumer time in setting up their orders with a particular retailer. The easiest thing to do is just hit “order again.”
This ease of reordering gives an advantage to incumbent vendors and so reduces the attention paid to price.
This is even more so if voice recognition becomes the common ordering tool. If one is in the Apple camp or the Google camp or some yet unknown camp, one may just rely on that tool to provide reasonable prices. This creates opportunities for margin enhancement.
On the other hand, technology is a double-edged sword. Perhaps technology will break the tie between retailer and consumer, and the world might develop Kayak-like services that will scan the Internet for the least expensive option to complete the order.
In the US, there are companies that offer programs for restaurants that search the price lists of Sysco, US Foods and other distributors, splitting orders to get the best prices. There are complications that must be considered, minimum order sizes, delivery costs etc., but nothing that modern technology is not up to.
The role of produce and fresh foods, in general, may be very useful here. Consumers will have little trouble allowing technology to identify the least expensive way to buy branded laundry detergent or canned green beans; these are, by definition, parity products, and there is no reason to pay more.
But we’ve run hundreds of focus groups and have even heard people swear their pet rabbits won’t eat the lettuce sold at Vons but will only eat the lettuce sold at Ralph’s! Consumer perception as to produce quality at different retailers is vast.
So, retailers may be able to use this perception of variation in produce quality to keep consumers loyal — even to the point of paying a bit more.
4. Consumers want healthful, sustainable produce… or do they?
Certainly, consumers report great interest in things such as this. But in the US, the largest food store by far is Walmart, and the fastest growing store is Aldi. Now these chains have evolved and do handle organics and fresh foods and play up their locally grown products and other efforts — but still it is hard to reconcile those with a population desperately looking to be healthy, organic, fresh, etc.
The Pundit’s cousin, a doctor, tells us that in his experience people do not want to eat healthy – they want to eat what they want and take Lipitor!
Perhaps the survey responses that show a desire to eat healthy are best seen as aspirational expressions, not reflections of behavior.
So, perhaps a website needs to express affiliation with these healthy aspirations in its design, but still must sell Coca-Cola!
Online, it is easier to constrain one’s food choices. It will be easy to set rules so a consumer is only shown organic or only shown items grown or produced in state, province or country.
Some consumers will certainly take advantage of websites with constrained products. For example, consumers who for religious reasons only eat Kosher or Halal could constrain the choices offered to them. Thus, a digital retailer with a long tail would be transformed into the world’s largest Kosher or Halal market.
Ethnic markets could be similarly challenged… if one could just constrain the choices to Mexican specialties instead of looking through a thousand items, again the long tail of the Internet could make local ethnic food stores seem inadequate.
5. Understanding the consumer
Sometimes the industry thinks of consumers by type – upscale, blue collar, elderly, etc. — but consumers are many different people at different moments in their lives.
So, they may spring for the big bucks for a big date or buy all organic because their baby nephew is coming to stay, or they may buy conventional produce when dining alone.
One of questions is how this impacts on omni-channel. Can one brand of retail, done on many channels, serve the various needs of people, or is a multi-brand concept essential?
In other words, it may be that going to Whole Foods rather than a mainstream supermarket is a part of what consumers want to do.
Years ago, Walmart tried to sell diamond engagement rings, offering high quality diamonds at better prices than alternative vendors.
Yet Walmart failed. Why? Because when a young couple gets engaged, they didn’t want to have to tell people they got that beautiful ring at Walmart.
So, this raises the question of whether consumers will want an Amazon-type vendor with a long tail of merchandise or specialized vendors whose brand reflects something they wish to affiliate with, whether that is an epicurean, a health, a discount, an ethnic or religious format.
6. Rural vs Urban
There is no question that the world has been urbanizing since the Industrial Revolution and all projections show this trend continuing.
However, in America, urbanization is often taking the form of movement to suburban areas and ring cities. So, Alexandria, Virginia, is the place to live rather than downtown Washington, DC.
In any case, past is not always prologue. Of course, the population shifted to urban areas as jobs declined in rural areas because the mainstay of the economy. farming, simply employed fewer and fewer people. In the 1930s, one US farmer produced enough food to feed four people on average. Today, that number is around 165.
The growth of large-scale farming, the green revolution, mechanization… all left rural areas struggling. However, with the workforce moving to urban areas, this means housing is far cheaper in rural areas. With the Internet, it is becoming easier for telecommuters to work from rural areas.
New technologies, such as hypersonic planes and hyperloop trains, promise to prevent anybody from being very distant.
So, quite possibly the urban future, which allows for highly efficient delivery to closely connected people, may not turn out to be the future at all.
7. Delivery to home
A lot of attention is paid to the idea of delivery to the home, but it is not clear that this is practical or what people want.
In New York City, some new buildings are built with “Fresh Direct Rooms” that provide dry, refrigerated and frozen storage space for the Fresh Direct delivery personnel to place groceries when consumers are not home.
Many companies have focused on Click-and-Collect efforts where an order can be picked up at a store, locker or a kiosk in a parking lot. Walmart recently has been in the news for experimenting with robotic machines that allow consumers to pick up orders without human assistance.
How will this evolve? Perhaps consumers will want delivery of heavy things –say cases of water — but not of lighter foodstuffs.
So far, in the US, we don’t have much of an indication that consumers who buy online go to stores any less.
8. No longer a conscious choice vs An urge to consume more consciously and mindfully
How do we reconcile the idea that consumers simultaneously are willing to surrender conscious shopping – just give a system a reorder list or giving requests to digital assistants — with the idea that these same consumers are starting to care deeply about what they eat, want to “know your farmer,” care about the impact on the environment, care about how the labor was treated in the production of the food, etc.?
It seems there are really only two possibilities: Either product itself will be certified in some way — just as an Orthodox Jewish consumer could say, “I only want products certified by the Orthodox Union,” so other customers could constrain their own supply choices by saying, “I only want to buy food items certified by the ‘Environmental League’ or ‘The Employee Welfare League’ etc.
Or certain retailers will self-identify as committed to certain supply chain qualities, and consumers will choose to shop with them because they are aligned with the retailers and trust them.
9. Private Label vs Brands
With vendors controlling these systems, there will be tremendous temptation to bias the systems to their own private label products.
In the short term, this may boost retail profits, but long term, this poses its own problems.
Private label can be less expensive than branded because it eliminates the margin that branded manufacturers use for R & D and marketing. But whether you’re talking about bananas or bologna, who is going to be investing to develop the products that the next generation will enjoy and be willing to pay for? And who will be out there marketing and promoting to build demand as the generation who remembers past marketing efforts dies off.
Today, many an innovative produce item has built demand on nothing but impressions from consumers seeing the innovative product on the shelf. Now, if getting established means paying big bucks to market on an app, couponing, promoting off line to drive demand, that means small and midsize produce companies will be out of the race.
And on what basis can we think that retailers will replace this function?
And without this focus on innovation, isn’t it likely consumption will fall?
On the one hand, we can see many advantages to technology, but it is also true that many consumers may reject what they see as intrusive. There have already been issues with Alexa and other technologies listening in on conversations not intended for them. And having “smart mirrors” recording and measuring everything is a little too intrusive for the taste of many.
The whole Internet of Things is a little “1984” for many consumers — with too many people being able to know too much about individuals.
It is said that in response to high-tech, there has been a demand for high-touch. Is it possible that the advantages of technology may lead to a demand to be disconnected from such intrusive monitoring? Then we might… what… have to open stores? Or plant a garden?
We thank Jorg Snoeck for joining us at The Amsterdam Produce Summit. We look forward to engaging with him on these and many other key points surrounding the Future of Shopping!
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