The Seeds of Opportunity: Grocers Meet Challenges with Tech Investments

Grocers continue to reinvent themselves and are investing heavily in the IT firepower needed to provide a safe, memorable, and engaging experience for customers and staff. RIS and Progressive Grocer’s annual look at the current state of grocery benchmarks more than 70 unique technologies and provides a roadmap for continued success. Read on for a behind the scenes look at the report and discover where your grocery peers are making big tech bets to stay ahead of mounting competition. Tim Denman: Welcome everyone to the “Challenges Present Opportunities: Grocers Continue to Invest in Tech to Meet Consumer Demand” webinar hosted by RIS and presented in collaboration with Hughes. I'm Tim Denman, editor-in-chief of RIS and CGT. Thank you for joining us today. As we're all aware, the pandemic has had a lasting effect on consumer behavior and the desire for convenience and seamless transactions is at an all-time high. At the same time, grocery shoppers who have missed the in-store environment are looking for an engaging, high-touch, and personalized experience. Despite the ongoing perfect storm of disruption, including supply chain woes, national labor shortages, and the ongoing health crisis, grocers continue to reinvent themselves. They are investing heavily in the IT firepower needed to provide a safe, memorable, and engaging experience for consumers and employees alike. Joining me today for a lively conversation on the current state of the grocery segment, and an exploration of RIS and Progressive Grocers' newly released benchmark research report, is Hughes' senior director of enterprise marketing, Jeff Bradbury. Jeff, thank you for joining us today, can you take a few moments to introduce yourself as well as your role at Hughes? Jeff Bradbury: Thanks, as Tim mentioned, I'm Jeff Bradbury, senior director of enterprise marketing at Hughes. My role is to sit at the intersection of business and technology in an effort to try to understand where customers are going from a business and industry perspective, as well as where technology is going. I make sure that us as a service provider is at the right place and time with the right solutions to meet customers' needs. I tend to look out a couple years, certainly 12 months, and usually two to three years into the future to try and understand what's driving technology adoption, technology change, and how that technology adoption is improving business outcomes. Denman: Great, Jeff. That's going to be useful today because we're going to be talking about investments today and investments into the future, so it’s great to have you here. As I mentioned, our conversation today is going to be framed around RIS and Progressive Grocers' recently released “2021 Grocery Tech Trend Study”. RIS and PG have been producing this report for the past six years, benchmarking grocers' tech maturity across more than 70 unique technologies. Obviously, Jeff and myself won't be able to cover all 70 of those technologies unless anyone wants to sit for a four-hour webinar, but I imagine that's a hard no for most people listening. The good news is that you can access the full report and review the results at your own pace. Here's a quick look at some of the key findings from the report. As you can see, more than half of grocers plan to increase year-over-year tech spend, which is not surprising considering the ongoing disruption and the constant need to increase your tech. It actually seems a bit low to me, I would think that would be a little higher. We see here, where they are going to be allocating all this increased money. It's going to be a deep dive throughout the webinar, but the store is still a major area of focus, with technologies designed to lessen the burden on overworked associates being a major focus. There are also some other labor statistics, nearly three quarters of grocery stores report that the current labor landscape is a major obstacle. We're going to be diving into that quite a bit throughout the webinar today as well. Jeff, looking at the key report findings, are there any that are particularly striking to you? Bradbury: One thing that caught my attention was the POS overhauls. First of all, that number seems about right, just in general for me. We know organizations, retailers tend to update or overhaul the POS systems every four to five years. So, one in five or 20% per year sounds like a good standard number we would look at. The other thing that's interesting to me is the degree to which those POS overhauls may have something to do with integrating loyalty initiatives. We're seeing POS and loyalty come together in a more integrated fashion. Also, POS and frictionless checkout systems. I wonder to what degree some of that POS overhaul effort has to do with loyalty and frictionless checkout coming to the forefront, and people trying to get those capabilities brought into their grocery environments. The other part that is interesting is the degree to which omnichannel expectations and digital orders have gone up and made up a significant portion of grocery in general. In particular, the way that both omnichannel expectation, as well as the digital element of the grocery ordering process, go hand-in-hand with how grocers are integrating in e-commerce systems and bringing that to bear. Those are the two ideas that caught my attention. Denman: These are just a few of the stats. Obviously, there's hundreds of individual stats if anyone wants to go check out the full report. One of the big things beyond the stats is the discussion about challenges and opportunities. We asked survey respondents to provide the biggest challenges they're facing today as well as some of the top opportunities. First, we asked them to choose from a predetermined list. Jeff, looking at some of the top challenges, quite a few of them are out of the grocers' control. What can grocers do to try to bring those uncontrollable things under control? Bradbury: You're exactly right. Looking at that list of challenges, so many of those leap out as being externalities that are impinging on the grocery business that the grocers themselves don't have a lot of control over. The tight labor market, even price competition to a certain extent, the economic uncertainty, waning CPG brand influence — those are things that are outside of the grocers' control. Yet, they do open up certain opportunities or avenues for grocery participants to find ways to get in front of some of this stuff. One area that caught my attention is the tight labor market. We're seeing that across just about all industries, but certainly in the retail market in general. There are elements where you ask yourself, “are there activities or are there items that, within my business, I can find ways to automate?” We'll talk about that a bit more as we get further into the conversation. Are there places where I can upskill my employees? Drive them up the value chain a bit and find a way to get those employees to do more; to engage with the customer more; to take on more of a significant or central role in customer service, customer fulfillment, customer satisfaction. Also, by doing so, get those employees more engaged and more connected to the company, and therefore, lower turnover and help keep those employees with the company. You'll have the excess cost involved with turnover and also get more value and input out of those employees. There's something to be done there. The waning CPG brand influence is another one. You can see the opportunity side goes directly to that house brand development line item there. There are some places where some of those external items open up avenues where there is opportunity within those gray clouds. Denman: You touched on a couple of the challenges and how there's opportunity directly correlated with it. There’s also this other list of opportunities here that don't necessarily go point for point with the challenges. Do you see anything here on this list of opportunities that the survey takers picked? Is there anything here that's particularly interesting beyond the responses to the challenges? Bradbury: One of the big items that caught my attention is that the first four items on that opportunity list all go hand-in-hand one way or another, with the omnichannel environment and enabling the in-store systems to leverage the e-commerce platforms. Whether it’s click-and-collect or curbside, analytics or personalized marketing, or even the advanced digital capabilities, those are all at that intersection between what you're doing at the store and what you're doing at a broader e-commerce level. There's a lot of sophistication that happens at that intersection, and having the right systems in place, the right digital infrastructure in place, to provide the capabilities for integration as well as the agility to adopt and adapt to the changing environment which has been so dynamic over the last 20-22 months, or whatever. Those top four all fit together, emphasizing how the store systems and corporate brand systems are having to come together and work more holistically as an integrated whole. Denman: As I mentioned, this is from a predetermined list that we asked people to choose from, then we also asked them for challenges and opportunities for 2022 as an open-ended question. For me, if I were to fill this out, some of the biggest challenges for the new year are going to be overcoming the ongoing supply chain crisis, obviously workforce issues. We talked about hiring, retaining, and training staff. Inflation concerns could drive up the cost of goods, which is also a major concern. In terms of opportunities, there's plenty. Shoppers continue to demand digitally-infused purchases and savvy grocers can bridge the gap between digital and physical shopping with strategic in-store investments, which we talked about. Jeff, how would you fill that out? What are your biggest challenges and opportunities for 2022, and why? Bradbury: For opportunity, I'm going with one that didn't quite make the list, and that is AI. We're seeing AI permutate everything in the technology world. You're seeing it apply to customer-facing staff, to back-end systems, to analytics as well as voice computing and computer vision systems, and whatnot. It's being brought to bear in almost every aspect of the IT world. AI is that one technology that's going to address many of those needs from loyalty to supply chain, to business performance and margin. Look for opportunities in how grocery stores could apply AI in different areas, but in particular in supply chain and sourcing, to find ways to drive efficiencies and improve the way that they can make sure they're meeting the customer's expectations and needs. On the challenge side, it's all about supply chain. This is where we've got the near-term supply chain dislocations. But there is a slightly longer term, let's call it a one- to two-year term, where the supply chain changes significantly. There's a lot of areas here where the elements of the supply chain can be refined and improved to make sure that we are getting all the right products at the right stores in the right volumes to meet the demands of the customers. This is reducing stock outs, reducing erroneous systems or having to run sales to drive excess inventory out of the system. Also recognizing that localities are becoming more and more differentiated with different buying patterns and buying behaviors. Different stores will have vastly different, big, or slightly hyperbolic terms, but significantly different inventories in terms of what's carried as well as items that are carried for different communities. The supply chain side of this equation is quite interesting in a place where AI can bring a lot of value to address some of the supply chain challenges, but also to make the supply chain a differentiator. Again, you're getting the right products on the right shelves for the right customers at each and every store. Denman: A couple listeners did submit their challenges and opportunities. One here from a well-known grocer wrote a simple inventory. That makes sense. We're going to be talking about inventory in a bit. Obviously, there's many ways to look at that, whether you have the goods; and when you have the goods, what to do with them once you have them. Another one here, which is half statement, half question: The challenge of a small business working in that physical and e-commerce space, how can they leverage and win in this new market economy and metaverse? They’re not alone there. Throughout this presentation we’ll see that a lot of mid- and small-sized grocers filled out the survey this year. We definitely had plenty of the tier one guys as well, but we skewed a bit mid-size and smaller this year. We're definitely seeing a lot of people, companies, challenged with the idea of how to keep up with the big boys. How to invest in these next-gen technologies while still keeping the lights on and doing the things that need to be done. Jeff, that's definitely a point well-made. It's not easy in this tech-driven world for the mom-and-pops to compete at that level. Continuing on with the discussion of challenges and opportunities, we're going to transition to the supply chain. As we're all roughly aware, the global supply chain is in disarray. Whether its ships docked in the canal, closed ports, lack of trucks and drivers to transport the goods, supply chain issues have impacted the entire global supply chain, and grocers are certainly not immune. Grocers continue to invest in supply chain capabilities to help lessen the impact of these outside forces, particularly in order management and fulfillment capabilities. Jeff, what kind of effect do you think the ongoing supply chain crisis will have on the industry going forward? When do you think we'll get out of this “crisis mode'' and get back to some semblance of supply chain normalcy? Bradbury: Great question. It's on all retailers' lips. Grocery in particular, which has some advantages over some of the other retail industries that we serve or look at. A lot of these supply chain dislocations, ships stuck overseas or offshore, they can't get into ports, or there's not enough port resources or transportation resources to get them moved out of the ports and into the distribution pipeline. My sense is a lot of that will work its way out of the system by the end of Q1. It lasts that long because the holiday season is its own mini disruptor. We're going to have some excess demand pushing on what's available in the supply chain right now, and you're at a time of the year when getting resources and people to work ports, shipping, facilities, transportation takes a bit of a hit. That's going to stretch it out a little bit, but by the end of Q1 most of the major disruptions that we're seeing on the news will work their way out of the system. Primarily for the grocery market because they're not as dependent on products coming in from China, or wherever, the way some other retail sectors are. But the supply chain is ripe for a sea change. You're going to see over the next year or two, maybe longer, people figuring out how to apply some smart decision-making and new technology that's coming to market in a way that will make the supply chain a critical component of their differentiation strategy. How they get the right products selected and sourced; integrating local sourcing for things they can with the distribution sourcing; finding the most dependable, reliable supply partners to work with; and then using technology to manage that growing web of suppliers and merchandise to bring it all together and get it to the right place at the right time to make the store shopping experience what's needed by customers. You're going to see — maybe normalcy is a bit of a stretch for the supply chain — but some interesting things are happening there, bringing that supply chain to the forefront and making it part of the differentiating element of each and every grocery chain. Denman: To your point, there's a lot going on with the supply chain that is out of the grocers' control. Obviously, the truck shortage, not much we can do. But there's plenty that we can do to improve the flow of goods once we have them. With the report findings as a backdrop, where do you see the greatest investments in the supply chain? And are retailers, and grocers in particular, making the right investment decisions? Bradbury: That's a good question. First of all, I want to be clear and give out the appropriate level of recognition to the folks on this webinar and in the industry. Just the other day some friends and I were talking about our local grocery stores creating special hours for elderly folks or folks at risk. Coming to the store outside of normal shopping hours where there was a little more isolation for them, a little more social distancing, a chance for them to shop a little more slowly or carefully. That wasn't a technology answer, that wasn't super outside-the-box thinking — it was just good, honest, the right thing to do for the right reasons. It engendered a lot of goodwill and recognition about how powerfully and how well the grocery industry responded to the pandemic and the needs of customers. I want to set that up as a way of acknowledging that this is an industry that has done fantastically by the consumers over the last couple of years. In terms of where they're placing bets and what they're investing in, this is all the right stuff. You recognize they're focusing on fulfillment, sourcing, and logistics. Those are the things that are the bread and butter of getting the supply chain right and getting things on the shelves. Then, the piece where it's starting to come a little more forward, where we're starting to see some of the more forward-looking grocers step out and do smart things, is around the new warehouse strategies. They're creating automated or sophisticated warehouse chains that they control themselves. They work with third-party logistics companies. Their micro-fulfillment and store fulfillment programs that they're running are very advanced, highly intelligent thinking where people are putting thinking caps on about how to refine and hone this system, and build within ourselves some resiliency to make sure we can get the right products for the right people. It’s great stuff. The money's in the right places, they've hit all the highlights. Denman: Building off of this supply chain turmoil idea. We asked retailers to rank their interest in these inventory management solutions as high, medium, low, and no interest. While there is some general interest in a lot of these next-gen technologies because all this stuff is cutting-edge, a larger-than-expected cohort responded with no interest in a couple of key categories. Seventy three percent of autonomous vehicles, that makes sense as it’s a big gamble. Automated warehouses at nearly 60%. To your point, Jeff, we could all agree that that's the future. What do you make of the findings here? Do you think they're indicative of the entire industry? Do you think retailers' interests are aligned with where the market and tech landscape are ultimately headed? Bradbury: Those are really good questions and I want to be sure I answer them all. First off, to your point, there was likely some slight skewing of the numbers from the sense that there were a lot of smaller grocery chains who participated in the survey. From that perspective, they may not be thinking about a discrete AI initiative or a discrete automated warehouse initiative. So, maybe the numbers were slightly skewed there. The other thing that probably skews the numbers a bit is the fact that somebody may not have a discrete AI initiative. They may be specifically seeking out other solutions — vendor management solutions, merchandising solutions, whatever — that are coming with AI built into them. That may be another case where they didn't have an interest in a discrete particular type of solution, but they may be buying other solutions that have those discrete elements included within them. I want to pause here for a second and go back to a question from the audience about how a smaller chain participates in this environment where you've got this sophisticated e-commerce omnichannel in-store integrated environment. One of the ways those types of businesses compete and stay relevant is to look at places where the technology is ripe to be deployed within a hosted or managed service-type environment. By that, I mean, the example here, automated distribution centers and warehouses. Certainly, at a certain size, a grocery can't do that on their own, but they may choose to partner with a third-party logistics company who offers that as a service. They get all the benefits of the automated distribution centers and warehouses without the need to invest, develop, and figure out how to do it themselves. They could get that capability and get that technology by partnering with a particular service provider. AI/machine learning. Again, they may not do something on their own there, but they may be able to procure a loyalty system or inventory management system that has AI and machine learning built into it. They're able to get that capability set delivered as part of a broader solution they're purchasing. More and more those technologies and capabilities are coming to the forefront and being integrated into other solutions. Look for places where, instead of trying to develop or invent the solution yourself, go find a place where somebody has already done the hard work and figure out how to leverage it and lift that capability via other solutions that you bring on board anyway. Denman: With AI and machine learning, you'll probably be hard pressed to find that as a line item on a lot of P&L statements. To your point, it's infused with everything that we're doing now. You can't do sophisticated marketing or merchandising without some kind of AI and machine learning engine running in the background, whether you know it's there or not. Bradbury: One other quick point, it just caught my attention and I wanted to follow up on it. The last three items: real-time reporting, computer vision, and in IO mobile robots, mobile robots being at the far edge of that. Both the price of computer vision, as well as the acuity and the localized computational power needed for those, is coming down quickly. There's a host of solutions that computer vision enables, everything from loss prevention, to grab-and-go checkout-type solutions, to planogram management, pricing management, making sure the right prices are on the right things at the right times for those sorts of things. Computer vision is one that's very ripe for exploding onto the marketplace and providing a lot of value for grocers and being used in different ways. The real-time reporting, same thing. There's lots of things that real-time reporting is being built into the capabilities of whatever solution you're buying, and that real-time reporting just provides a host of new analytics and capabilities. You can track, manage, and mine for trends or customer information to help improve in-store performance. Those two in particular, while they didn't get a lot of love in this particular survey, they're on the cusp of being one of the next big things. While robotics is probably a year or two beyond that, it's something we're going to see more and more. The robots are getting much more capable, price points are coming down, and we're seeing them being used in fulfillment, micro-fulfillment centers, warehouses, and places like that. We've got several customers using them and have used them in aisles for in-store use. They've got a lot of capabilities. Again, with computer vision, they can do planogram compliance, check for pricing, check for stock outs, request reorders — there's a lot of things they can do. It’s maybe still three, four, or five years out, but the price is coming down, the capabilities are going up, and they're integrating into more and more different systems. Definitely something to keep an eye on. Denman: To your point, you're saying the robotics automation pricing is going down. One thing where the price point is not going down certainly is labor, which is our next topic. Finding in-demand loyal employees is getting harder and harder. Hourly rates continue to rise. With the grocery store that I frequent, they have basically a permanent “Help Wanted” sign up in multiple places throughout — on the door, by the register. They've increased rates so often on the hourly rates for new employees that they don't even print new signs anymore, they just take a piece of tape, put it on top of the old price, and write a new price in. Going back two years ago they were $10, $11, $12 an hour maybe for certain positions; now it's over $16 an hour for even just the most entry level job at the grocery store. That's pretty shocking. Obviously, beyond attracting new employees with these impressive hourly rates, retailers must find new and inventive ways to engage with them once they have them to ensure they stick around for the long haul and don't jump ship because someone's offering $17 an hour down the street. Jeff, what can grocers do to better connect with the employees they have and ensure they get the kind of training and on-boarding necessary to create that loyalty with employees? Bradbury: This is an interesting business area and one that's near and dear to Hughes's heart. We have a business line that specifically addresses employee communications and training. This is an area we focus on. The labor market is getting tighter. We know it's getting harder and harder to fill certain positions, and hourly wages are going up, both organically because they are and also because different localities, states, and whatnot are raising minimum wage rates. We've done studies where it's $3,500 per employee to replace an employee. If you've got 50% turnover, you're replacing that position twice a year, you're spending $7,000 to get that employee in the door twice a year. Now, multiply that by how many employees per store and how many stores you have, that number becomes a cost center for all the employees. Even if you can drive down the turnover rate 10-15%, that's a meaningful improvement for a lot of businesses. We've seen that happen when starting to engage employees. You've got to onboard them, find a convenient but engaging way to onboard employees, and then be able to keep them engaged and participate with them. While it doesn't show up on this list of technologies or approaches, we've got a solution. Our customers have told us a component of their approach is having some sort of employee engagement program where using digital signage in the employee break rooms engages them and keeps them informed. It lets them know what changes are coming, what's happening, what work practices are being done differently, or what behaviors are being expected for them as part of the changes in the pandemic. It’s a space to provide rules and things they’re trying to deal with and change, in some cases, week to week. Extra cleaning activities, things we're trying to do to keep customers safe, letting a certain number of customers in the stores, etc. All of these things are dynamic. The ability to stay in front of them; to communicate that to employees; to make the employees feel like they're part of something; to give them the opportunity to learn more, train more, be recognized; identify as part of their team, part of the organization, part of the brand; keep them informed; keep them up-to-date, these are all things that make them feel part of the brand and part of the community. That goes directly to employee satisfaction and employee loyalty. All of those components, that thick section there — education and training, recruitment, onboarding, that compliance piece, employee comps where you're talking about what's expected of them, what needs to be done and what's changing, or how certain stores are doing compared to other stores, whatever — those all go to the heart of that engaged and better-informed customer. Denman: Those are all great points. Another way to attack the tight labor market is not necessarily looking for the best way to engage with your employees, but unfortunately, possibly looking for ways to replace them in some way or enhance them. Similar to the conversation we had about robots in warehouses and fulfillment centers, automation is coming to the stores, too. Retailers are looking for ways to replace some high-cost, maybe low-skill laborers. Whether it's scan-and-go technologies to eliminate cashiers, or we're still a little ways away, but there's testing of robots that can cook, chop, and do all those things for your pre-packaged food area. Restaurants are already using some of that and we'll be seeing it in groceries in short order. Retailers are prepared to use all this automation. What do they need to do to ensure that the enterprise is prepared to fully leverage these available options? Bradbury: We talked about robotics, and it’s certainly very interesting because it's a visible way that automation is happening — but there's so much more that can be done. You raise a good point about the scan-and-go shopping experience. If you can get employees out from behind the cash register to interact with customers in the store, trying to smooth the transition through the shopping process and out the door, that's a good thing. As I mentioned, computer vision systems are doing a lot of things, such as planogram management and pricing management. If your digital computer vision systems can be making sure the right products are in the right places, on the shelves per your planogram, and can make sure the prices are accurate second-by-second or minute-by-minute, etc. to reflect changes in weekly pricing. If they can look at the shelves and identify which are bare, have low inventory, need restocking, or things are in the wrong place, that's all labor effort. You don't have to pay somebody to walk around the store to do it. One of our customers used an in-aisle robot and found that the robot could do a complete store scan for planogram compliance, pricing compliance, and properly stocked items once every two-and-a-half hours. Usually, an employee had to do that in the evening, about four hours per. A physical employee can only do it once a day because they can only do it in the evening. Meanwhile, the robot can do it every two-and-a-half hours all day, every day, 24 hours a day if they wanted. There's a great example of using technology to pull somebody out of a relatively low-value task and convert them into a more high-value task, so that employee can be on the floor helping customers or doing other tasks the store finds more value-generating then making sure they didn't have any stock-outs and ensuring things were priced properly. There's a lot of similar things that can be done and brought to bear. How do grocers go about getting ready for this? The first thing to do is ask what roles do you want to automate? Is it the cashier role? Is it that inventory management, stock-out management, price management position? Is it loss prevention? Figure that out. Then, based on what roles are chosen to be automated — or that are the easiest to automate — build out a roadmap of what it is that needs to be done to replace that person's job, that role, and how you're going to do it. Am I going to use computer vision systems, robotics, scanning technology, shelf-sensor technology for grab-and-go or scan-and-go, basket technology where every time something drops in a basket, it scans itself? Whatever that is, figure it out, look at that roadmap, and ask: Does that roadmap have natural intersection points with other things that need to be done? Can computer vision do both loss prevention and store shelf management? If so, great. Now there's two birds, one stone. If I'm interested in scan-and-go, do I want to use shelf technology, computer vision technologies, basket technology, and those other technologies that lend themselves in other places? Denman: As we know, big data and analytics play a role in everything the retailers and grocers do on a daily basis. RIS and sister brand CGT do an analytics survey every year, and we'll be doing it again next Spring. For this report, we asked grocers specifically to benchmark their analytic maturity across 11 different technologies. The annual Analytics Report looks at somewhere between 70-80 different technologies. We're seeing vital technologies being ranked with no immediate plans. Obviously, the data might be skewed a little bit because of the small- to mid-size grocers that we have here. But, Jeff, are there any numbers here that are surprising, or that are higher than they would be if it was all tier one? Is there anything here that's surprising to have no plans for in the analytic space? Bradbury: The bottom five items stand out for me. The upper items, above those bottom five, all seem to be traditional things that grocers have done for years, and they've figured out a way to apply analytics to those. The bottom five things seem to be the new area. I suggest doing both because they seem to have some of the lowest scores in terms of up-to-date or major upgrades going on right now. Also the lowest scores for people who are interested down the road. Maybe those are less well-known or less well-appreciated in the industry right now. All five of those stand out as the analytic solutions we see being very broadly adopted across the retail space. There's probably a significant role for those bottom five capabilities to be rolled out, developed, and grown over the next two to three years in the grocery market. Look for those to take on a more significant role moving forward, or those capabilities will be rolled into other solutions and they'll be part of a broader solution. For instance, a loyalty solution would bring in in-store shopper tracking or something similar. I was surprised by that bottom grouping being so distinctly out of step with the rest of the analytics maturity. Denman: I agree 100%. Especially the workforce, we think that might be a bit higher, but I guess they're more concerned with getting people than figuring out what they're doing once they're there. Looking back just a few years ago, grocers were considered the laggards in the race to digitize the shopping experience. A ton of work was done long before the pandemic came along, and then, obviously, during the pandemic it all got heightened and grocers are now — believe it or not — on the forefront of the digital revolution. Which is great considering that the customer's expectations for a digitally-powered, go-anywhere experience, is rising by the day almost. More than three-quarters of groceries report that customers' omnichannel expectations have increased over the past year, and more than one-quarter are saying it has increased greatly. With omnichannel expectations and the services grocers are offering to meet them in response on the rise, the distinction between physical and digital shopping continues to blur. How are the most forward-thinking retailers building that hybrid phygital experience everyone likes to talk about, Jeff? Bradbury: That greater than 75% of customers who have a somewhat-increased or greatly-increased expectation for omnichannel, has essentially set the tone for what customers expect moving forward. You hear this a lot across various different industries, customer expectations have been significantly shaped by the past two years, and they'll continue to be shaped for likely the bulk of the next year, at least. These are being solidified, they're becoming table stakes. This omnichannel experience is baked into what customer expectations are moving forward, and they're not going to go back to pre-pandemic behaviors. The other part of that is within the grocery sector in particular, those top five elements, from free delivery up, seem to be table stakes. I'm talking about setting customers' expectations. If you recognize the changing customer behavior, ingrained expectations, and those table stakes, the question becomes: How do I, as a grocer, shape my omnichannel experience to meet the expectations, deliver the table stakes, and do it in a way that's particular to and beholden, or true, to my brand promise? Every brand is going to choose to do that in a slightly different way, even though they have to achieve the same results. That's going to be part of the differentiating element here. In the big scheme of things, how do you make this work? Now that you know what you have to deliver in terms of table stakes, the trick is to figure out how you want to deliver it. What is that omnichannel experience going to be? How do you focus on customers? How do you personalize the experience? How do you integrate the experience with what the traditional shopping experience has been? Do you emphasize pricing? Do you emphasize ease and value? Do you emphasize delivery and fulfillment capabilities? Whatever area you as a business want to build upon, you need to figure out how to reflect that within that omnichannel experience. The next big thing from there is, as part of that personalization and customization, how are you able to bring that to the forefront for the shopper? That way when they're in the store, online, or in that curbside pickup lane, it all feels part of the same experience? That's a big part of that. Denman: We all know digital's on the rise. The idea of an omnichannel shop anywhere, shop anytime, that's definitely table stakes. We could probably all agree that, especially in the grocery segment, the store is still the king. We have to find ways to create an inviting store environment that draws customers in, provides that enjoyable opportunity to stroll the aisles and discover new products, which allows for simultaneously offering that speed and convenience. It's got to be a top priority for every grocery that's listening today, whether you're digitally-focused or more traditional. Jeff, what are some of the key in-store technologies and strategies that will help grocers differentiate stores now and well into the future? Bradbury: Wow, differentiate the stores now and in the future. For a lot of stores, a lot of grocers, you want to find a way to keep to your brand promise. What is it you deliver as a store? For some stores it'll be everyday low prices, for some stores it'll be best food, best product selection, freshest food, organic food, high-quality products, a butcher shop, a fishmonger, a poultry shop, where you're getting that traditional local market feel. Every store has something about them that is presented and brought forward as the essence of their brand promise. Differentiate your stores and bring that experience forward. Find a way to make that element or component of the shopping experience stand out. It has to stand out like it has to stand out of the store, it has to stand out in your e-commerce platform, it has to stand out in the way you fulfill your services. It doesn't do any good by having the freshest, best organic food and then delivering bad looking food in a warm container that doesn't keep it fresh and delivered in the best condition that you would expect it to be delivered. That's part of the big differentiating factors: where you play, how you want to compete, and what you want to deliver. One of the big things that stuck out to me is the breadth of technologies and the places where you can make investments and deliver those capabilities. Looking at this long list — I know in the report there's more data as well — but you need to ask where you’re applying your resources to bring these capabilities to the forefront, and how do these capabilities work together to deliver that holistic experience that you want to give the customer. Denman: Quite a few questions here, I’m looking for one that fits well into Jeff's wheelhouse. Hughes is a networking company. Where are groceries at in the in-store network upgrade cycle, and what features are becoming must-haves as they look to build the network of the future that can run all this that we talked about? Bradbury: Technology is, and continues to be, a core column of what supports the grocery store of today. It was a big part of how the store responded to the needs in the last two years with curbside, delivery, third-party integration, and all that. What that tells you is that technology is coming to the forefront in grocery, the way it has in so many other industries and businesses. Because of that, your application portfolio is growing, the amount of technology being used in-store is growing, the different platforms and different users at each location are growing, and that puts a big strain on the network. What's happening, or the big thing we're seeing, is that a lot of stores are moving to increased bandwidth capacity, recognizing that so much is depending on the technology deployment, at the store locations in particular, and having to integrate with the e-commerce systems. They need to have an always-on, always-available network to make that happen. Part of that is making sure you've got sufficient bandwidth. Another big part of that is going to SD-WAN with two conductivity circuits delivering service. Usually, some sort of wired service like cable modem or fiber, something local. Then, in a lot of cases, a second circuit is delivered via wireless. Most recently, we've seen a lot of interest in new 5G services to complement those wired services. With the higher capacity and throughput, the 5G provides the natural fit for that dual path SD-WAN solution. On the LAN side, upgrades to WiFi networks and the vibrancy of those networks, especially stores that are running both an enterprise or business network and a customer network. The enterprise network is for all the new handheld devices, all the new users operating on the employee side and on the customer side. It’s the desire to keep that customer engaged — have the in-store app up and running on that customer's phone and give that customer a chance to be tracked for shopper tracking, as well as personalized marketing to market to them while they're in the store. We're seeing a lot of emphasis on the wireless networks within the stores. Lastly, security. Security has been a big concern in the business community over the last 18 months or so. Grocers are not exempt from that, they're certainly in the same boat. Both to protect their own assets and information, but also protect the customer side of that relationship, given how exposed and customer-facing that side of the business has to be. Grocers are doing a lot more to put the security capabilities in place to keep both their own network safe and secure, but also to protect customer data and information as well. Denman: That’s a great place to end today’s webinar. Jeff, thank you for your time and for joining us. Thanks to everyone for sending in questions and for listening. Of course, thank you to Hughes for your continued sponsorship and partnership. Until next time, thank you everyone and stay safe.