Symphony Retail Ai, the leading global provider of Artificial Intelligence-enabled decision platforms, solutions and customer-centric insights that drive validated growth for retailers and CPG manufacturers, announced key trends that are forcing unprecedented and rapid changes in the grocery industry, with the release of its “Supermarket 2020” findings and recommendations. The findings1 pinpoint the market forces that are driving radical disruption in supermarkets, along with prescriptive information on how the grocery industry can transform itself with a massive re-imagination of supermarkets driven by consumer trends. Symphony Retail Ai’s vision for grocery reinvention is highlighted in this Supermarket 2020 video.
Symphony Retail Ai’s research identified key trends that include:
- Large weekly shopping trips being displaced by online shopping and preferences for prepared foods. The weekly “pantry-loading” shopping trip to the local grocery store is declining, with a 3-4% decrease in large baskets from just a year ago. Consumers are increasingly turning to online shopping when purchasing 15+ items, and online grocery shopping has risen 14% in the U.S. In addition, 76% of consumers report that they are increasingly buying prepared food instead of cooking dinner.
- Amazon’s disruption through its acquisition of Whole Foods. Whole Foods immediately lowered prices on many products on Day One of the Amazon acquisition, and together, Amazon and Whole Foods have a huge logistical advantage. Eighty-one percent of Whole Foods shoppers represent the same demographics as Amazon Prime customers, and 95% of Amazon Prime customers now have refrigerated Amazon distribution centres within 10 miles.
- Growth of private label brands. CPGs are feeling the pressure, too, facing increasing competition from private label brands. Private label is up 18% in the U.S., leading to revenue losses and lower margins for major CPGs and creating headwinds for future growth.
- Continued, fierce competition from discounters such as Aldi, LIDL, Walmart and others. Aldi and LIDL are turning up the heat on traditional supermarkets by rapidly increasing their store count in the U.S. Far more than just discounters, they are expert product curators with highly efficient stores that feature higher-margin private label brands and low overhead. Adding to this, Walmart has declared a “price war” on grocery SKUs, asking CPGs to move all trade promotion dollars into “Everyday Low Price.”
“Supermarkets face unprecedented competitive pressures today,” said Pallab Chatterjee, Chairman and CEO, Symphony Retail Ai. “In order to compete and win, grocery retailers must transform their outdated store models and become ‘stores of the future’ that are agile and aligned with today’s consumer preferences.”
Supermarket 2020 stores are radically different from today’s stores
Symphony Retail Ai has identified the distinct characteristics of “Supermarket 2020” stores, including the following:
- Stores will have fewer than 10 aisles instead of today’s 15+ aisles, with an average product range of fewer than 10 highly curated SKUs per category to meet consumer needs for convenience and quality. Stores can support this in-store model by offering a million SKUs online as part of their multichannel strategy, offering shoppers virtually unlimited product access.
- Stores should remove the centre store aisles to make room for prepared foods, taking advantage of shoppers’ intentions to spend 3-4X more on prepared foods compared to other areas. Symphony’s research indicates that year-over-year growth in prepared foods is 8-9% annually for supermarkets.
- A special products aisle can offer a “surprise and delight” section that engages shoppers with products that change twice a week.
- Grocers can recreate a farmer’s market in every store, supplied by local and regional farms and suppliers that meet strict requirements.
- Private label will represent a much higher percent of SKUs, increasing to 40-45% compared with today’s 18-20%.
- Stores will offer shoppers convenient tools such as click & collect, 3D store-navigation that allows shoppers to connect their shopping list to store layout on their mobile phones and AI-enabled, real-time basket cost reduction offers.
Symphony Retail Ai enables Supermarket 2020 transformation
Symphony Retail Ai is rapidly delivering new solutions that enable these stores of the future through AI, machine learning and voice technologies. Late last year, the organization introduced CINDE, (Conversational INsights and Decision Engine), the first and only digital analytic assistant specifically for grocery and hard goods retail. CINDE incorporates AI, machine learning, natural language speech technology and immersive visualization in a prescriptive analytics system that is visually rich and easy to use for category managers.
Throughout 2018, Symphony Retail Ai will aggressively bring CINDE skills to every area of the business for grocery retailing and CPG brands, with additional solutions for store management, marketing managers, supply chain managers, account managers and brand managers. CINDE sits on top of the data-rich Customer 360AI platform, which provides shopping behaviour data on 70 million US households with longitudinal, 3-year data on 5 million US households and shopping/ behavioural attributes for 300,000 customers. Customer 360AI also includes demographic, store, panel and customer location data.
“CINDE is a game-changing solution that is helping grocery retailers transform into stores of the future that can thrive against the likes of Amazon, Walmart and others,” said Chatterjee. “Symphony Retail Ai is uniquely positioned to deliver AI-enabled solutions that help retailers and CPG manufacturers meet the urgent challenges of our times.”
Symphony Retail Ai will demonstrate its AI-enabled solutions in booth #1553 at NRF, Jan. 14-16, at the Javits Center in NYC. For more information or to schedule a meeting, visit nrf.symphonyretailsolutions.com.