Opinion: How tech can help grocers compete with food start-ups

These global giants have traditionally sold non-perishable items such as clothing, technology and household products, all with the click of a button.

However, in recent years the food delivery and grocery market has been the subject of vast ecommerce investment.

Two months ago, Amazon launched its Fresh proposition in London, its own food delivery service that allows Prime customers to order groceries to their home.

In addition, new subscription model start-ups such as Hello Fresh are increasing in popularity, delivering tailored meal ingredients to members for a fixed fee.

The market is changing quickly, and the challenge now for traditional grocers and local businesses is identifying how they can compete with these big hitters.

Punching above their weight

In an increasingly globalised world, the ability to access a wide selection of multi-cultural cuisine in minutes is easier than ever.

”Adopting technology and software has a key benefit for any grocer or food retailer looking to compete – it allows them access to a much larger market”

Shane Finlay

As this continues to grow, the smaller retailers and food businesses need to adapt their strategies to avoid losing customers to the likes of Hello Fresh.

Adopting technology and software has a key benefit for any grocer or food retailer looking to compete – it allows them access to a much larger market.

Rather than selling produce to a local footfall, it can suddenly open this up to people all over Europe with the single click of a button.

Businesses are already embracing this – from our own customer base we’ve seen independent grocers focusing their efforts towards online retail. The potential for growth is far greater than with a physical store.

Technology innovations, such as forecasting and replenishment tools, now enable grocers to take a single product, such as a bag of flour, and divide it into individual measurements, assigning it a value and a profit margin.

Less waste, less cost

The desire to limit waste and reduce costs applies to the business, but also the consumer.

Customers don’t want a large number of perishable goods – they want to have single, well-portioned ingredients that enable them to prepare a meal every night with no waste.

It isn’t cost-effective for a retailer to spend time and money manually dividing ingredients, so the technology provides the solution.

Without it, grocers are also ill-equipped to cater to ‘flash’ trends or complex requests.

“The popularity of online food shopping and the rise of the new food start-ups could actually provide a huge opportunity for retailers”

Shane Finlay

For instance, a customer looking for a specific item online may find it is unavailable in their postcode, but the grocers can now direct them to the nearest store that stocks it.

That keeps the customer happy, and keeps them returning for business.

Therefore the popularity of online food shopping and the rise of the new food start-ups could actually provide a huge opportunity for retailers.

If they can use the right technology and software to strengthen the visibility of online orders, firm up delivery times and minimise costs, they truly can compete against the market’s latest disruptors.

• Shane Finlay is head of digital for retail at SAP UK