Technologies shaping the future of online grocery shopping

By Margaux Cervatius - 18 June 2021

For a long time, the food sector seemed to be spared by the e-commerce boom. Many consumers preferred to go to the store for their grocery shopping. However, in 2020, the Covid-19 pandemic shook up our habits, including in retail. As consumers faced travel restrictions and feared catching the virus, many of them turned to online grocery shopping. The health crisis has also accelerated the change in consumption patterns that had already begun pre-pandemic. Consumers now favour healthy and environmentally friendly products.

Tech companies can help both large and small retailers adapt to these new trends. Let’s delve deeper into this trend.

The normalisation of online grocery shopping

E-commerce has greatly benefited from the Covid-19 crisis, and online grocery shopping has experienced strong growth during the first lockdown. Its market share in the mass market increased from 5.7% in 2019 to 10% some weeks in 2020. This strong growth is attracting investor interest. As such, e-grocery startups raised $5.1 billion in total in 2020 (AgFunder).

Thanks to its online supermarket Amazon Fresh, Amazon has strengthened its position as the leader in online shopping. However, new companies are beginning to emerge. Online organic supermarkets like La Fourche and Aurore Market offer home delivery of low-cost organic products. Other startups are focusing on niche markets. For example, MammaPack targets Italian expats who have trouble finding their favourite products in foreign supermarkets. The startup delivers more than 900 Italian products to 21 countries.

In parallel to these digitally native stores, small retailers are starting to go digital too. Online sales can bring them additional income during times of crisis. As many shopkeepers don’t have the required technical skills, startups have come to the rescue. For instance, Rapidle provides small retailers with a turnkey service to set up an online store. Within a few days, they can easily deploy a “click and collect” or delivery service.

What about post-pandemic groceries?

However, it is far from certain that these trends will endure post-pandemic. Indeed, a 2020 study by McKinsey showed that only 13 to 16 percent of consumers who did their grocery shopping online in Italy, France and Germany were very satisfied with the service. Moreover, even satisfied customers indicated that they saw online shopping as a temporary fix. Many of them are likely to return to physical stores as soon as the situation allows.

That said, online sales are still higher than they were before the pandemic. Some consumers will continue to use this service, at least for parts of their grocery shopping (e.g. speciality foods, heavy items, liquids…).

The rise of dark stores

As online shopping is exploding, supermarkets have adapted their commercial strategy. Drive-through stores have been around for several years, but now some supermarket chains have also set up dark stores. These facilities look like traditional stores but are only intended for the preparation of orders. Customers are replaced by operators. After orders are received, instructions are sent to the operators, who walk through the supermarket with a tablet and a shopping cart. Software can be integrated to automatically generate optimised routes.

Some players are taking optimisation even further by automating parts of the process. Tesco, a leading player in the British food market, has introduced robots in its facilities. Products are stored in racks of blue boxes. A robot picks up the required box and brings it to the operator, who no longer needs to walk around the warehouse.

This segment has been growing rapidly in recent months. In March 2021, Gorillas, a German dark store chain, announced a $290 million funding round. The startup is already present in a dozen major European cities, including Berlin, Amsterdam and London. Dija, a UK-based startup founded in November 2020, is already expanding to France and Spain. It promises to deliver groceries in ten minutes or less.

A win-win situation

Dark stores help brick-and-mortar stores to cope with the growth of e-commerce, but also to solve the challenge of last-mile delivery. These mini logistic centres are located in cities, close to the end-customers. Companies can offer fast and eco-friendly deliveries (on foot or by bike) or a walk-in pick-up service. For customers, this service represents a real time-saver. Indeed, they can quickly receive or pick up orders that have already been processed and paid for.

 

New technologies for healthier and greener eating habits

The Covid-19 crisis has changed the way we buy, but also what we buy. Now more than ever, consumers are aware of the importance of preserving their health and that of the planet.

During the lockdowns, as consumers worked from home, they had more time for cooking. Ready-made meals have been abandoned in favour of homemade food. Some startups are selling cooking kits to help beginners or people lacking inspiration in the kitchen. The consumer receives all the ingredients needed to make a delicious recipe at home. In addition to saving time, this service reduces food waste since all ingredients are pre-measured. Rutabago only offers 100% certified organic and seasonal ingredients. Most of its ingredients are sourced directly from French producers.

Consumers are also demanding healthier and more sustainable food in the workplace. i-LUNCH, a startup rated by Early Metrics, offers a zero-waste digital meal service for businesses. During lockdown, the startup extended its service to people working from home. Thanks to Télé Restau, employers can offer a home meal delivery service to their team members.

Buying greener and healthier products

Other startups are helping consumers make the best choices for their health and the environment when doing their groceries. ScanUp, a startup that underwent Early Metrics’ rating process, is developing an app to better understand the composition of products. By scanning a product’s barcode with the app, consumers discover its nutritional profile. ScanUp has also launched the Eco-Score, which shows the environmental footprint of a food product throughout its life cycle. Yuka is another well-known French app for analysing the composition of food and cosmetic products.

The ScanUp application shows the nutritional intake and level of processing of food products.

Despite these in-store apps, consumers are increasingly moving away from big-box stores and choosing to shop from smaller, local producers. A growing number of shoppers endeavour to reduce their groceries’ carbon footprint partly by supporting farmers close to home. Startups in this segment act as the sole intermediary between producers and consumers. Farmers can list their products at the right price and earn a higher margin than with large retailers. For instance, the Péligourmet platform allows consumers to shop online directly from regional producers. Producers organise groupped deliveries to the startup’s warehouse, which then prepares the orders.

In just a few months, the Covid-19 pandemic has disrupted our shopping habits. Consumers have turned to online grocery shopping in droves, but this growth seems to be slowing down. On the other hand, the demand for healthier and greener food has only been reinforced by the pandemic. Food players must learn from this crisis: in times of uncertainty, innovation and adaptability are essential. Startups can help them better respond to new consumer demands and make their supply chain resilient and more efficient.

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