Entrepreneurship & Innovation

Disrupting the Supermarket and How We Think About Food

Supermarket

There are self-checkout lines and mobile apps that store our shopper cards, but supermarkets over the decades have largely stayed the same.

Shelves are stocked, prices are posted manually, and shoppers escort their selections to a cash register — it's grocery shopping in 2015 or 1915. The process hasn't changed much.

But the industry seems poised for disruption as data delivered over cloud-based platforms present new ways to provide information both to consumers and supermarket managers. Meanwhile, evolutions in food science, coupled with dour news about the environmental impact of food production, is opening a new category of plant-based alternatives.

The following trends are forcing shoppers and grocers not only to rethink the supermarket, but to reevaluate the fundamental relationship between humans and food.

Running with bears

Just as video did not end up killing the radio star, the inevitable rise of online grocers will not lead to the eradication of brick-and-mortar grocery stores.

Many will close, according to the consultancy Oliver Wymann. But the firm also predicts that the survivors will emerge stronger. Having won local battles to become the last one standing in a geographical area, these remaining physical stores will probably be more profitable than the average store today.

“In other words, you don't have to outrun the bear — you just have to outrun the person standing next to you," the consultancy wrote in “The Future Of Online Grocery."

Among the stores that can run the fastest will be those that can provide a richer shopping experience. Carlo Ratti, founding partner of the Italian design firm Carlo Ratti Associati and a professor at the Massachusetts Institute of Technology, believes that supermarkets can accomplish this by using data to enhance shoppers' knowledge of products.

Ratti partnered with the supermarket chain COOP Italia to design the Future Food District, a pop-up supermarket that took up real estate at Expo Milano this summer. As people browsed different products, suspended mirrors displayed relevant information, creating an augmented reality without the need for a handheld or wearable device.

“Every product has a precise story to tell," Ratti said. “Today, this information reaches the consumer in a fragmented way. But in the near future, we will be able to discover everything there is to know about the apple we are looking at: the tree it grew on, the CO2 it produced, the chemical treatments it received, and its journey to the supermarket shelf."

Delivery wars

If brick-and-mortar grocers prove to have the staying power that some believe they will, they may play a role in settling a food fight, of sorts. The conflict is a battle for market share between two emerging business models in online grocery shopping — companies that own every step of the process versus those that only create an e-commerce platform to recruit participants in the sharing economy.

Of the two, the first business model is easier to understand. The grocer has full ownership over the online platform where food is bought, the warehouse where orders are filled, and the delivery network that completes the final leg of the journey. Amazon Fresh in select locations and Fresh Direct in the New York City area fall into this category.

The other category of online grocers are those that only provide an online platform for unaffiliated stores to list their SKUs, shoppers to place orders, and independent contractors to fetch and deliver the shopping list. Instacart, which promises one-hour delivery, has thrived using this model. The three-year-old company, which carries a $2 billion valuation, is now in 18 cities.

Further out on the horizon are delivery drones. Silicon Valley drone startup Matternet developed a following delivering medical supplies in Haiti, Papua New Guinea, and other underprivileged regions where poor roads hinder access to basic services. But the company also has plans to create drone delivery networks in the first world. Cofounder and CEO Andreas Raptopoulos told Business Insider that he sees Matternet drones flying for grocery stores, delivering milk, perhaps.

Protein from plants

Just as how consumers make purchasing decisions is changing, what they buy is evolving as well. That's what some entrepreneurs are hoping anyway as a group of new businesses — ones focused on replacing animal-based staples with plant-based food — begin to attract the attention of venture-capital firms.

The opportunity lies in finding ways to avoid keeping so much livestock around, which is having a profound impact on the planet. A 2006 landmark study by the United Nations found that livestock production — raising animals and growing their feed — accounts of 30 percent of all land surface. Such an environmental footprint, what the U.N. calls livestock's “long shadow," has led to deforestation, water shortages, and climate change.

Citing the impact of livestock on the environment, new companies are trying to expand the number of plant-based alternatives that are available in grocery stores. One such company, Beyond Meat, claims it has the recipe for the “meat of the future" in its expanding product line, which includes alternatives for chicken strips, ground beef, and beef burgers. Other players in this space include Impossible Foods, Soylent, and Hampton Creek.

The challenge for these kinds of products, though, is explaining to customers what they're actually eating. The website for Beyond Meat attempts to do this by giving visitors a little science lesson on what makes meat what it is.

"We know that meat is just amino acids, fats, water, carbohydrates, and trace minerals — building blocks that are readily available in the plant kingdom," Beyond Meat CEO Ethan Brown has said. “We are simply taking these elements from plants and arranging them in the architecture of meat to create plant protein that satisfies the whole family."

Extracting data from banana peels

Concerns about the environment may also lead to significant changes in the part of the supermarket that has traditionally been off-limits to customers — in the back, where decisions are made about what is put on display and what gets thrown away.

The impact is significant. Roughly one third of the food produced in the world for human consumption every year — approximately 1.3 billion tons — gets lost or wasted, according to a study commissioned by the Food and Agriculture Organization of the United Nations. And much of what's wasted ends up in landfills.

Just as data at the expo in Milan helped shoppers make informed decisions about what to buy, one company, BioHiTech America, is organizing information pertaining to waste on a cloud-based platform for store managers.

The Eco-Safe Digester, a metal unit that converts food waste to wastewater, can also output data so supermarkets can waste less and ultimately operate more efficiently.

“This level of data is extremely valuable to brands hoping to improve their margins, while making a positive environmental impact," said Frank Celli, CEO of BioHitech America.

The summing up

What underpins all four trends is improved access to information. The supermarkets of the future will be able to point us to the freshest apples, let us know if our food delivery is stuck in traffic, and educate us on the merits of choosing protein that tastes like chicken, but is actually made from peas.

The innovations may cause millions of people to lose the supermarket they frequent the most. But if the experts are right, they'll get over it, because their new store — whether online or local — will serve them better.



Mentioned in this article

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Carlo Ratti
MIT SENSEable City Lab
Director
MIT SENSEable City Lab
http://dld-conference.com/users/carlo-ratti
Cambridge
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