Wednesday June 14 2017
Sam Knights, director at shopper media agency Threefold, takes a look at the challenges of robots and advanced technology in retail
It’s great to see Tesco innovating once again in the grocery sphere. The retailer is seriously taking on the online giant Amazon with its tech focus to ‘improve’ the shopping experience.
For example its ‘If This Then That’ (IFTT) channel to allow shoppers to use voice activation to add items to a shopping list through Google Home.
Now we see they’ve stepped into the world of robot deliveries, something we saw Deliveroo trial only recently.
To start competing with the likes of Amazon in the use of technology is a real step forward for Tesco.
It shows that the retailer is not complacent with its offering and wants to compete on all levels to diffuse the threat from newer entrants to the grocery retail market. It also means they can stay ahead of established rivals such as Asda, especially considering Sainsburys have already trialled their Chop Chop app for one-hour deliveries, albeit via bicycle not robot.
However, this level of tech requires big investment. Grocery retailers have already faced big decisions when it comes to offering online shopping.
Only in 2015 there were headlines about how unprofitable some online grocery services were, but the retailers had to keep running them to be able to meet demands of current shoppers.
With margins so tight and the pressure on profits so intense, it’s questionable whether Tesco is willing and able to make the necessary investment in order to make this a success.
The significant impact this has on shoppers cannot be ignored. Technology such as robot deliveries continue to test the level of trust shoppers have in retailers. Online shopping already requires shoppers to trust that the 'pickers' in the warehouse are going to choose the same fresh produce they would in person i.e. the ripest or the biggest fruit.
On top of that, as a shopper you carry a belief that your order will arrive safe and sound – something that recent reports have cast doubt on.
They have exposed grocery retail delivery services over levels of cleanliness, introducing a fresh consideration for consumers when choosing how and where to shop. With robots delivering their shopping, a whole new level of trust is required; trust that the system it is running off doesn't fail, that the robots have been programmed correctly and that nothing interferes with the robot on route.
The nature of the robot deliveries currently being trialled means that this option is only applicable to smaller top-up food shops, potentially limiting its scope.
However, the functionality and speed of this type of delivery is only a good thing for shoppers who need to make a last-minute purchase. It can also work in favour of impulse brands who can use the addition of these one-hour deliveries to their advantage and tempt shoppers through time-targeted marketing.
This could potentially provide a solution to a current need state, for example a cereal bar brand for elevenses. Whilst for 'favourite' brands this opens a potentially greater degree of loyalty it begs the question as to how brands can drive trial and deliver disruption on the shopper journey.
Robot deliveries are just one of the really interesting innovations we’ve seen in recent years in grocery retail. However, the innovation needs to be seen in the context of all the new technology already out there - drones, driverless cars, voice etc.
It all leads to an instant, on-demand world which, when combined with the capabilities of the internet of things and smart homes means that there will inevitably be a significant reduction in footfall in store and potentially a further commoditisation of brands in many categories as traditional brand communication becomes less influential.
In my opinion, navigating this challenge for ‘right here, right now’ whilst maintaining the value of products will be the biggest challenge to face retailers and brands in FMCG over the next decade.
Tagged as: Robots | Tesco | Amazon | Threefold