A Guide to Digital Transformation in Supermarkets

by | May 19, 2022 | Grocery

A supermarket employee using new digital inventory tools that benefit the digital transformation in supermarkets

The landscape of digital transformation in supermarkets is evolving due to the onset of a pandemic, shifting consumer trends and refinements in technology. Digital transformation is the incorporation of digital technologies into all areas of business. This means fundamental changes to everything from supply chain flow to in-store product display for the supermarket industry. Below, we will discuss some of the innovations supermarkets can adopt to stay competitive and their implications on the market. 

Key Takeaways 

  • Supermarkets are digitally transforming their consumer relations through eCommerce.
  • Artificial intelligence will facilitate sustainability efforts.
  • Automated systems are necessary to increase efficiency in supermarkets.

4 eCommerce Models to Help Start Digital Transformation in Supermarkets

The COVID-19 pandemic has drastically influenced the way consumers shop. Due to mandatory shutdowns and shifting sentiments concerning public health, consumers shifted their focus to online shopping in 2020 and have not slowed down since. The pandemic added over 100 billion in additional revenue for eCommerce sales in the last two years.

COVID-19 has added over 100 billion in additional revenue for e-commerce sales from 2020 to 2021.

Image from Digital Commerce 360

In less than five years, eCommerce is projected to account for more than 20% of all grocery sales in the United States. Due to a variety of omnichannel strategies, the eCommerce landscape is multi-layered and evolving. Here are some of the different models and strategies to determine which is best to spark a digital transformation in your supermarket:

Chart displays grocery ecommerce sales through 2026

Image from SupermarketNews

1. BOPIS  

The “buy online pick up in-store” (BOPIS) model is also referred to as the click-and-collect method. In this model, consumers purchase items online and pick them up in-store or curbside. BOPIS and its variant, “buy online pick up at curbside” (BOPAC), ensures that consumers can reduce wait times and social interaction. While the latter concern is still heightened, statistics suggest that 50% of the consumers who adopted BOPIS during the pandemic plan to return to traditional shopping methods in the post-pandemic future. 

2. Inventory Based

In the inventory-based model, companies secure their inventory from a third party and store it in a warehouse equipped with both cold and dry storage. The vendor is responsible for inventory management and communicating with the customer. This model is a one-stop-shop for consumers because the online supermarket procures inventory from distributors and sends it directly to the customer. The online supermarket can create uniformity and consistency because there are no third parties involved in delivery or QA. 

3. Hyperlocal 

In many ways, the hyperlocal model is the antithesis of inventory-based. This online model relies heavily on sourcing inventory from multiple vendors to service a specific geographic area. From a branding perspective, it can be much harder to create consistency and maintain uniformity due to differing quality from multiple vendors. 

However, this model lends itself to increased delivery speeds and wider accessibility for consumers due to a larger number of vendors and delivery methods. This model is also ideal for businesses that lack the infrastructure or reallocated funds to digitally transform their supermarkets. They can increase their digital presence by simply selling their product through a hyperlocal vendor. 

4. Multi-Vendor Marketplace 

The multi-vendor model is similar to hyperlocal in that it benefits supermarkets that do not have their own online store. It is an online platform where suppliers and vendors can sell their products. This community model reduces overhead costs for smaller supermarkets that lack the budget for online marketing budgets and IT implementation. This model differs from hyperlocal in that the admins cannot restrict their customer service area radius and their delivery emphasis is not same-day. 

Digitally Transforming Supermarkets with Automation and AI Tools

For businesses struggling to keep up in the eCommerce race, there is another avenue that can digitally transform their supermarkets. Advances in artificial intelligence (AI) and automation will allow supermarkets to improve their sustainability efforts. Some of the current technologies improving sustainability efforts in supermarkets are computer vision and electronic shelf labels.  

Computer Vision 

According to United Nations data, supermarket retailers are responsible for 13% of food waste globally. To help reduce food waste, you can use computer vision, which is an artificial intelligence that allows computing systems to gain pertinent data from videos and images. Cameras can scan a supermarket and gather data that the AI can process to determine inefficiencies. 

For example, cameras can scan a produce section over a desired period and provide detailed analytics on what produce is purchased and how often. Managers can then utilize this information and improve inventory optimization and demand forecasting. This increase in inventory optimization ensures that niche produce is strategically displayed to avoid spoilage. 

In another example, this AI can use temperature detection features to determine if a freezer is malfunctioning or has been left open by a person. The system can alert employees to fix or close the freezer, thus eliminating frozen food waste. This technology has not been widely adopted as of 2022, but there are alternative technological advancements below that are being adopted at a faster rate. 

Electronic Shelf Labels

This decade is all about efficiency in the marketplace. It is the primary reason supermarkets have embraced automation and online grocery sales have grown to nearly $30 billion in sales last year. Digitally transformed supermarkets are utilizing automation technology in-store to streamline business. 

Electronic shelf labels (ESL) are used in tandem with dynamic-pricing software, which enables grocers to adjust prices to align with consumer demand patterns. This effectively eliminates the need for paper labels and time inefficiencies caused by applying and fixing those labels. ESL allows for quick price changes to accommodate promotions and can be scanned for QR codes, so that customers can check online inventory. ESL can display more product information to help customers make sounder decisions, aiding in increased transparency efforts desired by consumers. 

Transform with SIAL America

In the era of digitization, supermarkets must become digitally literate and agile to stay relevant. This may be a confusing time for your business, but you are not alone. SIAL America features a vast community comprised of food industry businesses of all sizes that utilize a variety of systems and technologies, solidifying it as the most comprehensive food & beverage networking event in the United States. 

To keep up with the latest trends, join us at the upcoming SIAL America 2023 conference.