Grocery, mass retailers to up the ante in technology investment

Grocery and mass retailers are less-than-satisfied with stores’ digital experience, technology and worker productivity, and are prioritizing operational efficiency, cost reduction and profitability in their tech investments, according to Incisiv’s 2023 Connected Retail Experience Study.

The analysis—surveying 107 retail executives at grocery, general merchandise, department and specialty stores—also found that retailers have big plans to automate store tasks, with over half of those polled expecting staffing cuts as a result.

Fewer than half of grocery and GM retailers reported being satisfied with their business performance in store digital experience (25%), store technology (38%) and store associate productivity (48%), Jacksonville, Florida-based digital retail and brand specialist Incisiv said in its Connected Retail Experience report, released this week. In contrast, 56% are satisfied with their in-store customer experience, and 63% are satisfied with store operations.

“Retailers need to embrace digital transformation to meet evolving expectations of their customers,” Incisiv noted in the study. “This transformation can’t be restricted to digital channels, as the store continues to be the largest sales channel and a driver of long-term loyalty.”

Source: Incisiv 2023 Connected Retail Experience Study

Despite current high levels of dissatisfaction, grocery and GM retailers are more satisfied versus a year ago in store digital experience (to 25% in 2022 from 22% in 2021), associate productivity (to 48% in 2022 from 46% in 2021) and operational efficiency (to 63% in 2022 from 62% in 2021).

“While grocery and general merchandise retailers' satisfaction with their store's digital experience is low, there is a silver lining. Their satisfaction with the digital experience increased in 2022 compared to 2021,” Incisiv explained. “With the continued low satisfaction with the store’s digital experience, there will likely be significant attention to adding more digital capabilities, such as interactive digital signage, mobile app features (wayfinding, product details and personalized promotions) and scan-and-go checkout.”

Looking at store system investments for 2023, grocery and GM retail execs cited inventory accuracy and visibility (96%), store operations and efficiency (96%), and store and digital integration (94%) as the top drivers, followed by sales associate productivity (88%), checkout speed (79%) and cloud applications support (60%).

Only 44% of grocery and GM retail respondents named in-store digital engagement as a tech investment driver for this year. However, Incisiv’s report noted that customer wi-fi and mobile apps with in-store features are becoming “table stakes” for the shopping experience because of high smartphone usage.

Source: Incisiv 2023 Connected Retail Experience Study

“The desire to streamline the checkout processes and reduce customer wait times drives the other areas of significant investment, especially for grocery and general merchandise retailers. While these technologies are customer-facing, they are still efficiency plays, as they help reduce friction in the shopper journey, the study said. “Self-checkout terminals will significantly increase deployment, particularly among grocery and general merchandise retailers, and almost all retailers (92%) will have deployed them in 2025 [versus 29% now]. Most of the increase in self-checkout terminals will likely be in the general merchandise segment, as most grocers currently have this capability.”

Thirteen percent of grocery and GM retailers also aim to have autonomous/cashierless checkout by 2025, compared with virtually none currently.

Technology areas where grocery and GM execs plan to ramp up deployments by 2025 include artificial intelligence (AI) apps to improve operations (10.5x to 21% of those polled); real-time inventory management (7.8x to 31%); remote/virtual customer engagement such as video, chat, etc. (4.8x to 19%); video-based associate training (4.6x to 37%); mobile app with in-store features (3.9x to 39%); mobile POS (3.9x to 31%); and real-time video communication with associates (3.5x to 35%).

These retailers said they also aim to at least double their current deployments by 2025 in customer wi-fi (42%), curbside sensors for pickup/delivery (36%), mobile device access to relevant customer data (25%) and mobile inventory receiving/tracking apps (65%).

“Improving operational efficiency is crucial for retailers in today’s competitive landscape,” Gaurav Pant, chief insights officer at Incisiv, said in a statement. “Automation is imminent, and retailers must embrace it to streamline processes and reduce costs.”

Source: Incisiv 2023 Connected Retail Experience Study

Indeed, 71% of grocery and GM retail execs surveyed said they plan to deploy store task automation technology by 2025, up more than threefold from 22% currently. That’s about the same for specialty and department stores, as 70% aim to implement this automation by 2025 versus 34% of these retailers that already have the technology deployed.

Just 6% of grocery and GM retailers have deployed robotics for associate tasks (such as cleaning, inventory audits, etc.), but that stands to rise to 14% by 2025. Robotics deployments are few among specialty and department stores (2%) and aren’t expected to rise much by 2025, only to 4%.

“The deployment of robotics for associate tasks is still relatively low, but it will increase over the next few years, particularly among grocery and general merchandise retailers,” Incisiv said in the report. “Using robotics to restock shelves and pick-and-pack products can improve operational efficiency and reduce labor costs.”

Labor will be a key issue for retailers as they deploy automation technology, the study pointed out. Of retailers polled, 56% said they would cut staff as tasks are automated. Twenty-six percent indicated they would redeploy associates to operational tasks, and 18% of respondents would redeploy staff to customer-facing tasks.

“Retailers’ focus on improving store efficiency and labor productivity will accelerate store automation. Retailers across various formats are increasingly adopting automation in their stores,” Incisiv stated in its report. “However, the rise in automation will also lead to a reduction in staffing needs. Retailers expect a 13% reduction in their workforce requirements due to task automation. This underscores the need for retailers to be thoughtful and intentional about how they deploy their remaining staff.”