When Amazon opened its first checkout-free convenience store to the public in 2018, digital transformation it has reached another corner of our previously analog lives. With its expanding chain of Amazon Go and Amazon Fresh stores, Amazon has once again created a new consumer experience and a new catalyst for innovation in an established market.
The future of grocery shopping
As has happened in other domains that Amazon has reshaped, revitalized and shaken up, entrepreneurs and venture capitalists jumped in quickly, vying to grab a piece of the new $11.3 billion share. global market. Grocery retail tech has raised a record $19 billion in 2021, up 115% from the previous year, according to BC Perspectives.
israeli startup Wheat is one of a number of startups around the world that aim to outsmart Amazon in improving our grocery shopping experience. The top three complaints about grocery shopping, says Michael Gabay, co-founder and CEO of Trigo, are “waiting in line, out of stock, and not knowing where the item you want is.”
With these requirements in mind, Trigo has developed a retail operating system that combines AI, smart sensors, and machine vision on one platform that runs various store, inventory, and customer management applications.
The first application developed by Trigo, currently implemented by major supermarket chains in the UK (Tesco), Germany (REWE and Netto), the Netherlands (ALDI Nord), the US (Wakefern Food Corp.) and Israel (Shufersal), turns traditional grocery stores into frictionless supermarkets where shoppers can walk in, select their items and check out without having to queue at the checkout or scan any items.
Trigo’s technology does not use facial recognition, capture biometric data, or contain direct customer identifiers. The system recognizes the movement of shoppers while they are in the store but does not know who they are at any time. Trigo’s privacy-by-design technology complies with even the most stringent data protection legislation in Germany.
Currently tracking live inventory status across multiple stores in Europe and the US, Trigo’s second app provides complete real-time visibility into store inventory status, improves restock processes and Provides out-of-stock alerts that reduce customer dissatisfaction and increase efficiency and sales. “This is a level and type of real-time information that retailers simply don’t have today,” Gabay says, anticipating the future development of a third Wheat app that will tell shoppers the in-store location of specific products.
The technology used by Trigo is very complex, the algorithms very sophisticated, and many of the startup’s 200 employees are involved in long-term R&D. “It took us a few years to be able to say, ‘We support all the products in the store,’ and get to 99% accuracy,” says Gabay.
In addition to its deep investment in R&D and top-tier talent, Trigo’s approach to merchandising stands in stark contrast to Amazon’s initial strategy: Trigo collaborates with established grocery retailers rather than competes with them. It promises to modernize existing stores, of any size, in a matter of weeks and integrate its technology with the retailer’s existing apps and payment options. The collaboration is wide and deep, with Tesco and REWE contributing to the $100 million in funding that Trigo has raised to date.
There is no doubt that the rapid increase in online grocery sales in recent years has accelerated the digital transformation of the sector, leading established grocery retailers to look for solutions to improve customer satisfaction, better management of inventory and innovative “omnichannel” strategies, seamlessly merging its physical and online operations.
The US e-grocery market accounted for for 9.5% of total grocery sales in 2021, up from 3.4% in 2019. By 2026, forecast to account for 20% of U.S. grocery sales. 57% of online grocery shoppers they say they stay with the retailers they buy from in-store, providing new opportunities to build customer loyalty, experiment with store layout, offer discounts and help shoppers discover new products.
With new sales opportunities in this new shopping environment come many challenges that retailers, and the startups that sell them new solutions, must overcome. Many consumers are reluctant to change their established purchasing practices and/or adopt new technologies, even with the promise of greater convenience.
Retailers have responded to new opportunities and challenges by experimenting with alternative solutions. For example, Shufersal, Israel’s largest supermarket chain, has been testing a smart cart developed by Shopic, an Israeli startup, and plans to roll it out to about 200 of its largest branches. At the same time Shufersal Opened last week, a new Tel-Aviv convenience store equipped with Trigo’s scan-and-go technology.
Possibly the biggest challenge for established retailers and retail technology startups alike is the constant experimentation of the elephant in the room, that Day 1 company. At the end of last year, Amazon reviewed further its go it alone, build it from scratch strategy when Sainsbury’s became the first international third-party retailer to use Amazon’s “Just Walk Out” cashierless technology, the first time Amazon has modernized an existing store.
A few months ago, Amazon thrown out Store Analytics, which provides CPG companies “with aggregated, anonymous insights into the performance of their products, promotions, and advertising campaigns,” based on data it collects (with buyers’ permission) from Amazon Go stores and Amazon Fresh in the US Amazon will, in the future, offer retailers this insight as a consulting service so they can “improve the shopper experience by making store layouts easier for shoppers to find their items.” favorites and discover new ones, improving product selection and availability, and offering excellent value through relevant promotions and advertising”?
That is the key promise of the digital transformation of the shopping experience: no more shoppers. leaving the store without buying 1 in 5 items they planned to buy. That’s the promise of a limitless shopping experience, what Gabay described here as “a customer-centric approach to retail that seamlessly bridges the digital and physical worlds with the goal of delivering unique interactive experiences for consumers.”
