As the use of artificial intelligence (AI), robotics, data analysis, and other forms of technological innovation transforms every aspect of the produce industry, Blueprints delves into how these new efficiencies are affecting the bottom line.
In the software industry, developers and investors alike are always searching for the next big thing. More and more frequently, this is a so-called a “killer app”’—a transformative technology that changes the way business is conducted and forces everyone to either get on board or be left behind.
Nowhere is the search for a killer app more competitive than in food. The way consumers purchase food (and by extension, fresh produce) continues to change rapidly. Whether it’s through grocery pickup or delivery, meal planning services, or carryout/delivery from restaurants, online ordering has permanently changed the outlook of both wholesale and retail.
A recent survey by the Food Marketing Institute notes that 49 percent of Americans have bought groceries online, with participation by Gen X and millennial shoppers ranking even higher. Amazingly, this number is expected to hit 70 percent within three years.
This online bonanza has forced some of the biggest players in the industry to scramble. Can they fit the newest high-tech solutions into their current business models, or is it necessary to scrap them and build new ones?
Delivering the goods
With low margins and fierce competition, grocery delivery is a risky proposition, but it shows no signs of declining and no one wants to be left out, as illustrated by Amazon’s 2018 merger with Whole Foods.
Almost every large grocery chain is either developing its own delivery service or partnering with existing companies to provide the service. Kroger, Target, Sprouts, and Sam’s Club have all made major forays into online delivery channels; Walmart’s own efforts in grocery delivery account for 1,200 stores and have led to an increase in online sales of 33 percent from last year.
And although fresh fruit and vegetable selection has traditionally been a personal choice for consumers, more and more are trusting retail pickers to choose their produce as convenience takes on more importance.
Online delivery options, which now account for over $20 billion in sales for U.S. retailers, include home delivery, automatic subscription services, personal shoppers, virtual supermarkets, and in-store, drive-through, and curbside pickup.
All of these options come with their own set of problems—from food safety and product quality to data and financial security, as well as finding and keeping reliable partners. Then there’s the potential ‘retail apocalypse’ as in-store visits fall, with a reported 2 percent drop-off measured in the last quarter of 2018 alone.
Every problem demands solutions, and for many, the solution revolves around smart technology.