What’s the Story?

The Coresight Research team is in Las Vegas this week, participating in the Groceryshop 2021 conference, which is being held from September 19 to 22 in Las Vegas, US. Featuring more than 150 CEOs and over 200 speakers, the event is focused on recent transformation in the retail environment, focusing on technology and innovation in consumer packaged goods (CPG), food and grocery. In this report, we present key insights from the second day of Groceryshop 2021, from across the event’s retail and technology sessions.

Groceryshop 2021 Day Two: Key Insights

We identified three key themes during day two of the event:

• The emergence of quick-delivery grocery startups
• The need to offer ever-greater convenience to the consumer
• The continuing evolution of store formats, boosted by the need to use retail space to offer compelling experiences to consumers

Retail Sessions Keynote: Winning at Omnichannel Grocery

• Speakers: Mike Del Pozzo, SVP Sales and Chief Customer Officer at Frito-Lay North America; and Andre Persaud, EVP & Chief Retail Officer at Rite Aid

The pandemic has transformed consumer demand for omnichannel grocery offerings. Grocery retailers scrambled to implement curbside pickup and other click-and-collect options, while CPG brands leveraged online channels to help consumers find, engage with and purchase their products. Del Pozzo explained that PepsiCo has changed how it thinks about omnichannel. Five years ago, it was answering the question, “How can Pepsi be always accessible and relevant?” Now, it has a mantra of “Being Always Everywhere,” which impacts how PepsiCo operates internally (the company embarked on a substantial restructuring in 2019), the investments it makes and the focus of its future efforts. Coresight Research asked Del Pozzo what it takes to win at omnichannel in the evolving market, and his response was, “Flexibility and collaboration with retail partners is very important: You can’t do it alone. And the effort must be focused end to end—spanning the entire value chain, from seed to shelf.” Covid-19 has further propelled digital growth for the company, enabling PepsiCo to reach internal goals four years earlier than initially planned thanks to the size and scale of its investments. Pre-pandemic, the organization operated in silos and was channel-focused; today, it is customer-, commercial- and format-agnostic. By removing silos, the company has eliminated about half of the internal governance that hindered speed and market responsiveness; it now has a flywheel for success, according to Del Pozzo. PepsiCo has had a demand accelerator in place for 10 years, combining North American business insights, category management and shopper marketing in an unbiased approach, using data science. Reflecting its theme of collaboration, PepsiCo just launched Pepviz, which brings real-time data, advanced analytics and machine learning (ML) together with industry expertise, to help its food and beverage business partners grow faster and in new ways—with shared goals. Advanced data supports wins in-store and boosts e-commerce. Real-time daily data on out-of-stocks can now influence and impact next-day ordering, Del Pozzo explained. The limited assortment in-store is optimized using data science and is tailored for CPG/grocery industry participants who may not have the capability to work with the data or access to it. In an early test, Pepviz reported a 23% sales lift. The company expects increased sales trips and customer loyalty, along with improved visibility into changing shopper behavior. Persaud echoed Del Pozzo on the importance of the physical store in winning shoppers, along with modern digital assets that appeal to Rite Aid’s target consumer: 25–49-year-olds who are caring for their children, parents and pets. Persaud is responsible for orchestrating new in-store experiences and retail operations in line with Rite Aid’s RxEvolution strategy. Customer engagement is the key, and store managers are integral to winning and leading omnichannel, according to Persaud. The speakers emphasized that a new store is emerging that is modern and spacious with differentiated beauty and wellness assortments, new signage that removes in-store friction and new services including BOPIS (buy online, pick up in store) and curbside pickup. Keynote: Meeting the Demand for On-Demand Speakers: Tony Xu, Co-Founder and CEO of DoorDash; and Jon Fortt, Co-Anchor at TechCheck, CNBC (Interviewer) The big news announced before the session was DoorDash’s entry into alcohol delivery, which Xu categorized as a “win-win-win” for all parties: Consumers are 35% more likely to place an order from a retailer that offers alcohol, and order sizes are 30%–50% higher, which benefits retailers and deliverers (called Dashers), according to Xu. DoorDash plays a dual role, offering both a marketplace and a platform. In the same space, the Albertsons session on day one of Groceryshop 2021 mentioned DoubleDash, which enables consumers to place a combined restaurant and grocery order, which doubles the revenue possibilities within a single channel, blurring the border between restaurants and grocery. Xu highlighted that consumers eat 20–25 times a week, or about 100 times a month, which presents a sizable opportunity for restauranteurs and retailers. Xu also mentioned that the company’s DashMart convenience stores offer a platform for retailers to enter the market and grow with little capital investment, and the Marts offer delivery for all kinds of retailers outside of normal business hours. [caption id="attachment_132952" align="aligncenter" width="700"] Left to right: Tony Xu, Co-Founder and CEO of DoorDash; Jon Fortt, Co-Anchor at TechCheck, CNBC
Source: Coresight Research[/caption]   Keynote: The Grocery Zeitgeist—The Big Picture of Grocery Transformation

• Speaker: Krystina Gustafson, SVP Content, Groceryshop

Gustafson commented that the grocery industry—which has been keeping the world running—prioritized urgent daily needs at the outset of the pandemic but took its focus off the big picture. Her presentation centered on four forces of change transforming grocery:

1. Society—Demographic forces include a Covid-19 baby bust, an aging US population, the decline of a white majority and an increase in mental health issues. The population migrating due to the pandemic did not go far, mostly moving to nearby suburbs, and those workers now have higher expectations from employers.
2. Consumer—The focus shifted from health to wellbeing, and consumers now want additional functional benefits from products. Shoppers remain highly interested in shopping locally, and generational and other shifts are changing brands, which are introducing new categories across taboo products and men’s cosmetics, for example. The share of disposable income spent on food in the US is rising again, and consumers want a hybrid offering of pickup and delivery.
3. Economy—With the US stock market seeing record highs, consumer sentiment has plunged recently. While consumers added nearly $4 trillion to savings, the upper quintile of the population represented two-thirds of savings, and the unemployment rate is higher for non-white groups, Gustafson said. There is a disconnect between corporate offerings and women’s needs: Women are over-mentored but under-sponsored.
4. Technology—Livestreaming, which is enormously popular in Asia, is making inroads in the US. For example, the Old Spice Barbershop doubles as a content studio. Technology will be discussed in more detail during tomorrow’s keynote.

[caption id="attachment_132953" align="aligncenter" width="700"] Krystina Gustafson, SVP Content, Groceryshop
Source: Coresight Research[/caption]   Making the Leap to Leadership

• Speakers (pictured on the cover of this report): Julie Bowerman, Chief Global Digital Customer and Consumer Experience Officer at Kellogg’s; Kelly Caruso, CEO at Shipt; and Krystina Gustafson, SVP Content, Groceryshop (Interviewer)

Caruso urged the audience to follow one’s values when choosing a place of work and be part of a bigger culture that is aligned with those values. She joined Shipt following the departure of the founder. Caruso explained that although she lacked a technology background, she persevered and succeeded by asking questions, listening and making bold moves to replace team members who were not a good fit. Companies such as Target (where Caruso worked previously) benefit from a humble Midwestern culture, with employees that make an impact through humility, knowledge and expertise, she said. Bowerman has more than 25 years’ experience in CPG. She has been fortunate throughout her career to hire talented people, which was identified and praised by her managers, she said. Bowerman had more than 10 roles at Coca-Cola and developed a standing within the company, which gave her a boost in her new roles. Despite their reputation for moving slowly, large companies can actually move fast when they want to, Bowerman stated. The speakers highlighted that the current spending power resides among millennials, but Gen Z is a rising generation. Having seen the damage from the Great Recession, Gen Z is more pragmatic and want to be engaged and have a sense of belonging at the companies they work for. Technology Sessions Rapid-Fire Insights: Deciphering New Customer Behaviors

• Speakers: Lei Duran, SVP of Retail Insights, Kantar (Interviewer); Jola Burnett, VP at Behaviorally; Art Sebastian, VP of Digital Experiences at Casey’s; and Barbara Connors, VP of Commercial Insights at 84.51

This session fired new consumer behavior questions at panelists, on topics including the long-term consumer adoption of online ordering, pickup and delivery; sustainable products and initiatives; emerging social commerce platforms and more. We present insights from selected questions below.

• Will online grocery plateau or grow to the sky? Panelists saw several tailwinds to further growth: Grocers keep getting better at picking, accelerated by technology, and consumers increasingly expect it. Consumers have all the choices and do not have to settle.
• For online grocery, does pickup or delivery reign supreme? Pickup reigns supreme, as it is less expensive for retailers and consumers have control over when they pick up orders—and they can make additional purchases when they pick up orders.
• What is the role of social media? Look at Asia for trends: China is the powerhouse of livestreaming. Retailers need a strategy for Facebook, Twitter and Instagram, and now also Snapchat and Tik-Tok, all to engage consumers.
• Is 15-minute grocery delivery a fad? Convenience is no longer just a channel; it is a mainstay. Fast delivery is important, but perhaps 30-minute delivery will be sufficient to remain competitive and meet consumer demand.

[caption id="attachment_132954" align="aligncenter" width="700"] Left to right: Lei Duran, SVP, Retail Insights, Kantar (Interviewer); Jola Burnett, VP, Behaviorally; Art Sebastian, VP, Digital Experiences, Casey’s; Barbara Connors, VP, Commercial Insights, 84.51
Source: Coresight Research[/caption]   Fulfillment, Pickup and Delivery Technology

• Speakers: Tony Atti, Co-Founder and CEO at Phononic; Orlee Tai, CEO at Star.ai; Scott Gravelle, Founder and CEO at Attabotics; Ben Jones, Founder and CEO at Ohi; and Bernadine Wu, CEO at FitForCommerce (Interviewer)

This session featured innovative technologies to streamline fulfillment operations and offer new ways to get groceries into the hands of consumers more quickly and efficiently.

• Attabotics offers automated, robotic fulfillment solutions (consisting of a matrix of tracks and automated bins) for fulfillment centers, with the organizational concept based on the operation of ant colonies.
• Ohi’s platform aims to enable instant commerce directly through a brand’s own website through dynamic website integrations, a micro-fulfillment platform, managing post-purchase interactions. Instant commerce becomes an extension of the consumer experience, and consumers become more engaged if they receive products in less than one hour.
• Phononic offers a solid-state, intelligent frozen tote to meet the cold-chain challenge. This technology has analogs in LED-based lightbulbs and offers a significant sustainability advantage, since the chemicals used in refrigeration, cold storage and transportation will soon cause greater environmental damage than fossil fuels.
• Stor.ai offers a handheld fulfillment solution that provides accurate product location and optimized picking routes, zone-batch picking, artificial intelligence (AI)-based personalized replacements and real-time communication and live insights into fulfillment productivity and accuracy.

Technologies Reinventing the In-Store Experience

• Speakers: Arsen Avakian, Co-Founder and CEO of Cooler Screens; Richard Schwarts, President and CEO of Pensa Systems; Matt Eichorn, Co-Founder, President and CEO of Freeosk; and Laura Kennedy, Senior Lead Analyst at CB Insights (Interviewer)

This session featured presentations from four companies.

• Cooler Screens transforms retail cooler surfaces into IoT (Internet of Things)-enabled screens, digitizing point-of-sale data. The company operates 10,000 screens in more than 30 markets.
• Pensa leverages robots, machine vision, smartphone and other cameras and AI to determine on-shelf availability, requiring no setup or planograms, having the platform learn as it goes. Applications include category management, demand forecasting, omnichannel retail, in-store operations and inventory accuracy.
• Shopic aims to digitize retail’s front end, offering a data-collection device that clips onto the shopping cart to increase convenience for the consumer in the checkout process.
• Freeosk has deployed several kiosks inside grocery stores that provide free samples and collect consumer data (on an opt-in basis) in the process.

Succeeding with Grocery E-Commerce Partners and Technologies/Customer Data and Brand-Building

• Speakers: Peter Strong, Partner at The Partnering Group; Deepak Jose, Head of Global Demand Analytics at Mars; Rocquan Lucas, Content Director, Groceryshop (Emcee); and Justin Honaman, Head of Worldwide CPG at Amazon Web Services, Amazon

This session featured presentations from executives in consulting, IT and cloud computing.

• Strong discussed how retailers typically approach the deployment of new technologies in a reactionary manner, but leaders should envision who they are and where they want to go, visualizing the desired outcome and determining gaps in strategy.
• Jose urged the audience to use IT to find value, inverting the typical pyramid with value on the bottom, bringing it to the top. He encouraged companies to develop “white box” solutions, which center on owned intellectual property.
• Honaman provided an overview of AWS and explained that topics he is currently discussing with customers include AI/ML, supply chain and sustainability. He also discussed e-commerce packaging, with a focus on sustainability—presenting a video from Procter & Gamble that shows new online packaging for Tide detergent, which ships in its own container (rather than within another box) and uses less water and packaging than typical detergent found in a supermarket.