Technology in the food and beverage industry has been continuously evolving well before the COVID-19 pandemic. Still, the pandemic has led to an inevitable surge in the industry, speeding up the use of digital technologies in all facets of the sector to help them succeed or even survive through these times.
Many have estimated that there has been a five-year acceleration of online penetration in a few months, once the pandemic hit. According to mckinsey.com, in late 2019, e-commerce penetration in North America hovered around 4 percent of sales. By late spring in 2020, e-commerce penetration had reached 10 to 15 percent of sales overall, with some regions (such as high-density urban areas) topping 20 percent.
The restaurant industry has been mainly focused on survival. At the immediate onset of the pandemic, social distancing was a requirement, and in-house seating was nearly non-existent. Online ordering immediately took over as the only experience the customer had available. Therefore, restaurants needed to shift and embrace online ordering technologies to survive, such as Square. A large majority quickly moved to using alternative contactless payment solutions and had to embrace third-party delivery services such as Door Dash, Grub Hub, and Uber Eats. This was a needed shift and “ate” (no pun intended) into profits as these commission fees can typically vary from 15-30% per meal.
And even as restrictions began to lessen and more people were dining at physical locations, there has been a shift from using paper menus to QR code menus. QR codes are scanned by a customer’s phone, and the menu is accessed online, allowing for a contactless experience.
Similar to the restaurant industry, the supermarket industry has embraced technology in its move forward, which was also immediately sped up very quickly during the pandemic. Customers either could not go in person or were limited and waiting in lines to allow for proper required social distancing. This created an immediate need to leverage the supermarket’s existing technology or invest in additional technologies.
During the pandemic, one of the largest changes was that more customers began ordering groceries online either for direct delivery or to pick up at the stores. And with the existing technology in place, this created massive backlogs and issues for the consumer.
I recall, in early April 2020, my wife and I were trying to log into our local supermarket’s online ordering system at midnight the week before the groceries were to be available for contactless pickup. We would start putting in an order to continuously get “kicked” out of the system.
It seemed like a futile attempt, but we finally go through and celebrated with a glass of wine like we just won a prize! But we understood why this was happening and wondered how these businesses would react to better the experience going forward.
But the supermarket industry is reacting and moving fast in all facets of technology. Here are a few technologies that are either happening now or are in the process of being implemented:
- Micro Fulfillment Centers
Several supermarkets are investing in micro fulfillment centers that offer robotic technologies to enhance the online experience for customers. Each center uses robots to assemble each portion of the online order before the order is completed in store. This automation is to eliminate repetitive manual processes and maximize efficiency.
- Robotic Cart Delivery
Several supermarkets are joining forces with Tortoise, an electronic delivery cart system. These robots bring food and household items within a three-mile radius of the supermarket. A remote-control operator uses a camera and speakers to navigate the battery-powered robot to your house. The cart can hold over 100 pounds and travels at an average speed of 3mph. When it arrives at the home, the customer gets a text to say it is there, and then the operator unlocks the container with the goods.
- Just Walk Out Stores – Cashier-less Technology
As many already know, based on heavy press and through social media, Amazon has implemented an automated checkout technology to several of its Whole Food store locations. It allows shoppers the most seamless of experiences, where they can enter a store by scanning an app and exit without needing to go through a checkout line. Cameras and sensors track their entire order, and the customers are charged when they leave the store.
- Self-Scanning Apps
These are apps on your phone where you can scan your items while in the store. The app then keeps a continuous log of all items, allowing the customer to skip the checkout line.
- Shelf-Scanning Robots
These autonomous robots travel up and down aisles at the supermarket and scan shelves for inventory to make restocking easier. These robots also ensure shelves are stocked, prices are correctly listed, and products are where customers expect them to be. As a result, it minimizes the time workers need to spend in the aisle and removes the mundane task of inventory checking. It also frees up time for workers to focus on more important services such as assisting customers.Since the beginning of the pandemic, it has been extremely challenging for all areas of business, with the food and beverage industry being right in the middle of it. While many have adopted new technologies or just quickly sped up and enhanced their existing technologies, one thing is certain – there will be an ever-expanding need to keep up with the customer demands and needs, while leveraging proper technology to maximize efficiency and gross profits. There is still continuous evaluation as to what the next generation of consumers will want. Still, understanding that change will always need to be evaluated and reacted upon, is the only way to survive and thrive going forward.As Leonard Sweet is often quoted, “Stagnation is death. If you don’t change, you die. It’s that simple. It’s that scary.”
John Mellage, CPA, CGMA is a Member of the Firm at SobelCo. John has extensive experience in the areas of retail, manufacturing/distribution, nonprofit, and construction. His real world, practical advice provides the firm’s mid-size, privately-held clients with the knowledge they need to have a competitive advantage in the market place. John takes a holistic approach when addressing clients’ needs, analyzing key performance indicators, reviewing internal control systems, and conducting financial analysis to recommend solutions and suggestions to drive profitability.