Retail Segments

Grocery Technology Is Mobile App First

Do you remember the old days of supermarket shopping? Walking down the aisles with clipped paper coupons? This process is from another era. From getting groceries delivered directly to your doorstep,  to cashier-free supermarkets, technology truly has changed our shopping experiences.  Nielsen and FMI research reports 3 in 5 grocery shoppers now look for sales or coupons on their mobile devices before entering the store and over 50% use mobile apps to shop at the store. In fact, in the USA, UK, France, and Germany, the grocery segment is leveraging mobile apps to drive better shopping experiences both digitally and in-store.

USA: No-Checkout Shopping

In January, Amazon launched its first cashier-less grocery store; Amazon Go. The biggest retail news of 2018 along with its 2017 acquisition of Texas-founded grocery chain Whole Foods. It’s no doubt, the Amazon effect driving grocery retailers to up their online and mobile commerce offerings. The  Amazon Go store experience begins and ends via a mobile app, from scanning a QR code at the store entrance, to being charged immediately when picking up items from shelves. When a shopper has completed their journey, they simply exit the store, shortly after they will receive a receipt and charge on their Amazon account. This experience brings a whole new meaning to the adage ‘frictionless commerce.’

UK: Subscription Meal Kit Trend

In the UK Apple Store top 30 free ‘Food & Drinks’ apps, HelloFresh ranks higher than any supermarket app. Subscription recipe boxes are the new trend in large UK cities, delivering weekly ingredients in exact quantities with matching recipes. The subscription meal kit trend is eating supermarket shares by “taking the stress out of meal planning and shopping” - it is also expected to generate $10bn (£7.2bn) globally by 2020. The HelloFresh app does more than letting users order and manage their weekly box: the voice control assist users in following the recipes while cooking, users can rate, save and review recipes, and meals nutritional info is synced with the user Health app. The box is delivered for free on a weekly basis, whereas a typical supermarket delivery is often more expensive.  With nutritional and educational benefits, it is without surprise that more entrants are entering this market. Only a couple of months ago Gousto raised £28.5m from venture capital investors as it aims to be responsible for 400 million meals in UK homes by 2025.

France: Drive-In Experience

While a drive-in is mostly associated with McDonald’s, French supermarket chain Carrefour has been offering its version of the drive. In fact, the “Drive” was so successful, it generated 5M€ total sales in 2016 and is seen as the most dynamic distribution channel for the grocery market. Using Carrefour Drive app, customers can shop from the comfort of their desk at work or from home, and then simply drive to the dedicated collection area where a Carrefour employee will fill their car with the order placed. Despite Carrefour offering a 1-hour home delivery service, the Drive model is more popular especially among couples with young children - parents can save time and keep the weekly grocery shop a pleasant experience. In the US, mass-merchant Target also offers a similar curb-side service known as “Drive Up” which allows customers to place orders directly from the Target app. Upon arrival to a Target store, a customer must park at a designated parking spot, where an attendant will quickly verify the purchase, and then bring purchased items directly to the customer.

Germany: Discount Stores Are Mobile

Discounters remain the largest grocery market channel in Germany with a value estimated to grow by +11.2% to 89.3€bn in 2021. While discounters may not be the retailers investing the most in technology around the world, Lidl shoppers based in Germany have access to the latest grocery technology shopping experience. The Lidl app accepts no less than 9 payment methods and includes Snap’n’Buy visual search feature as well as offers, brochures, a customizable shopping list and product reminders.  The Lidl app is available in Germany, Austria, and Switzerland.

Amazon is a driving force for change in grocery technology. From cashier-less shopping experiences to diversified distribution channels --with a robust and frictionless mobile app experience as its foundation. While mobile apps are the first step towards a 21st-century shopping experience, grocery retailers are seeing new segments emerge such as the meal kit industry which is encouraging healthy competition among supermarket chains. These market pressures combined will serve as a forcing function for traditional retailers to offer fast and convenient mobile commerce experiences, and to continuously reward customers for their loyalty.


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