The food industry had better start preparing for a new age in which computerized home shopping and other services delivered to consumers where they live emerge as major market forces.
e food market. But all agree dramatic change is coming.
Consumers eventually will demand much greater convenience and flexibility in how they shop and where they shop. Distributors who are going to succeed in the future will have to cater to their needs. The big question for all segments of the food industry today is how best and most effectively to do that.
Here's how SN's discussion with five leading MIS executives went on the subject:
SN: How big of a role do you see computerized home shopping playing in the next few years?
PATRICK STEELE: In the next five years we're going to see a lot of tugs and pulls on the traditional ways we do business. I can't predict when the change is going to take place, but at some point enough people will want to shop at home that we're all going to have to provide some type of service. Because if we don't, someone else will, and they'll get that 10%, 15% or 20% of our business.
PETER ROLANDELLI: Right now I think PC-based home shopping is primarily a research-and-development project. There are many companies playing around with it, and eventually there will be some positive results.
RAY HAMILTON: The cost of entry is a little high now, but computerized home shopping will have a niche in the industry. It could be the consumer's version of ECR. Customers could place orders as soon as a product at home runs out. Computerized shopping could also include a preordering component by which customers regularly have certain items, such as cereal, delivered to their homes.
DAVID HAYES: It's going to be a big deal in the future. Home shopping has started slowly, but the futurists of the world predict a large market for it. The systems are now being developed to provide a wider and wider range of services for the home. Companies such as Staples already deliver to the home and office. People want things delivered.
SN: What are some of the obstacles to home shopping succeeding?
BILL MAY: Computerized home shopping has been tried a few times in our market area, but I don't think it has ever worked out well. The concept sounds great, but as much as many consumers say they dislike grocery shopping, they still prefer going into a store and looking at the product they're about to buy.
HAYES: The problem, of course, is that the consumer still wants to squeeze the Charmin. Home shopping is going to start with recognizable hard goods, and by that I don't necessarily mean nonperishables. I think it could include packaged meat, for example, as long as the product is recognizable. Retailers today have to watch the developments in this area closely. For some retailers it will be worthwhile to start launching some test programs with computerized home shopping.
HAMILTON: I think it'll mainly involve nonperishable items. I don't think consumers want someone else selecting their fruit and vegetables. I also don't think it will catch on until consumers can place orders by the remote control of their television set during a commercial or something like that. It's too much work to have to log on to a PC to write an order.
We're very interested in the potential of computerized shopping. We sell a lot of food gift items, and I think we could substantially increase sales by offering them through a home shopping program. Eventually there could be a wider range of product offered, but it'll always be a niche.
SN: What long-term changes do you see taking place in how people shop?
ROLANDELLI: Some people envision a future in which the entire nation shops at home. But in reality, all that's needed to affect our business greatly is for 10% of what we do today to move to home shopping. At that point the dynamics and the cost structure of doing business will change dramatically.
Will the market eventually get to the point where 10% of shopping is done at home? I think it will, but it might be eight to 10 years down the road. A lot of developments, such as couponing from home, will be taking place in this area over the next 10 years.
STEELE: There will continue to be supermarkets in the future, but there are also going to be other solutions that we're going to have to provide to satisfy the needs of customers. That's something we're all going to have to pay attention to. I'm referring to home shopping and the additional level of information customers will demand about products and services.
But long-range there's going to be enough people wanting to be able to use their computers or some other device at home to take care of some of the routine things they have to do in their life, and shopping may be one of them.
I'm not sure that in 10 years the successful solution will be to duplicate the shopping experience in an interactive, virtual-reality, walk-through-the-store type of experience. Remember, the need is people must consume calories to live, and how can we provide the best solution as an industry? If the shopping experience is not the best piece to satisfy that, how can we change that shopping experience to make it more enjoyable or information-rich or whatever to allow that to happen?
Many things could come forth in the next 10 or 15 years that change the way we go after the consumer. The ability to access information and shop from the home may play a very big role in the future, and then again it may not. The need for people to have social interaction, and a supermarket certainly provides that, isn't going to go away, and may never go away enough to allow the concept of home shopping to take off.
HAYES: Whether home shopping will take off on the Internet or through separate networks, I'm not sure. There's one firm I know of offering a grocery home shopping service on the Internet now and it has thousands of customers signed up.
Because computerized home shopping in the supermarket industry is so new, it's hard to say what the real potential is. It'll be a long time before people stop wanting to go into a store to do impulse buying for both perishables and hard goods. I don't think home shopping is going to have an immediate impact. I think it'll increase slowly.
Like other technologies we've seen over the years, at some point it will become a pull instead of a push, at which time people will start wanting to sign up and use the service much more readily.
STEELE: We're going to have some very unique challenges of how to use technology to allow this business to continue to grow. The biggest challenge retailers and wholesalers now have is how to use technology to satisfy customers' needs. No matter what we do, the bottom line is, does it benefit our customers, does it satisfy their need to purchase groceries and does it help me get a bigger share of the "calorie pool"?
SN: What about the role of interactive kiosks?
MAY: There's probably a niche for interactive kiosk shopping in the store, but I'm not sure if it's going to be a great success. Some stores in our area use them but we're not experimenting with them yet.
STEELE: Interactive kiosks will play a role in the future, but I don't know how big a role it'll be. Research indicates that people want convenience, quality and a hassle-free experience. They want to get in and out of the store. Grocery shopping isn't at the top of the fun meter for most people.
For some people, providing an additional tool for dispensing information, such as recipes, nutritional data or store directories, will be important. But we don't feel the vast majority of people will respond to that unless there are enough of those devices throughout a supermarket to make it very easy for people to use.
But the concept of interactive kiosks may just be the first step in the whole arena of electronic commerce. There's a lot of talk in the industry about the information superhighway not being capable of transmitting large amounts of data rapidly to households in a cost-efficient manner.
There is talk about providing CD-ROMs to people to give them the same thing that interactive kiosks can provide, and maybe you could get price changes once a week through your modem and start the home shopping experience that way. That may be the next step.
ROLANDELLI: Interactive kiosks can be used to add a little pizzazz to the shopping trip. I think people like to be excited a bit when they're doing something they consider dull, such as shopping for food. By telling customers, "You're special and we've giving you these four coupons," retailers can also promote products. It can bring excitement to the process. It's a way for retailers to talk directly to customers.