Tech and Bread and Butter
Not long ago I was waiting at the deli counter of my local supermarket when I saw a young couple nearby, perusing a printed circular in search of bargains.
I had to fight down an impulse to tell them, “You’re millennials! Don’t you know you’re supposed to be using a smartphone?”
Technology always gets plenty of attention, in all business sectors, because it’s sexy. In the business-to-business press, in expos and seminars, you can always count on hearing a lot about the latest and greatest in apps, devices, interfaces and the like. This is, of course, a natural tendency. Technological progress is the lifeblood of business and industry, accounting for most of the increase in general productivity we’ve seen over the last few decades.
Online commerce means trusting other people to pick out your food, and many consumers simply won’t do that.
But as a certified curmudgeon and technophobe who literally got his first smartphone less than a month ago, I have to wonder if, when it comes to food retailing, digital tech isn’t perhaps getting a little more attention than it deserves.
Digital technology, especially when it comes to online shopping, is much less developed in food/CPG retailing than in other retail sectors. Less than 2 percent of groceries in the U.S. are ordered online, and only 19 percent of consumers download digital coupons, compared with 32 percent who use paper coupons. (The latter comparison is from a survey by The Retail Feedback Group.)
There are various reasons for this. I’ve covered the food industry from manufacturing to retailing, and I’ve found that food consistently lags behind other major sectors in terms of tech sophistication. This is partly because it’s a high-volume, low-margin business that tends to be cautious when it comes to capital investments in general, and partly because of the very nature of food. Online commerce in food means trusting other people to pick out your heads of lettuce and pork chops, and many consumers simply can’t or won’t do that.
Smart food/CPG retailers know this, which is why they are careful to integrate digital innovation into their existing operations—or at least not make it disruptive. They leverage brick-and-mortar stores for online services, while not disturbing existing customers or skewing inventory; they match the proportion of print to digital ads and coupons according to their customer demographics.
Tech and gizmos will always be flashy and cool. But retailers who have a clear vision of how they make their real money, and incorporate tech wisely into that strategy, will be the winners in the end.