Grocery of the Future: The Right Food at the Right Moment on Aisle 4

Get ready for an extended period of trial and error—and intensified marketing—as grocers use technology to change the way you shop.
A customer orders food at 365 by Whole Foods store in Silverlake, California. (Photo: Élishia Sharie)
Dec 7, 2016· 4 MIN READ
Valli Herman is a Los Angeles-based lifestyle journalist. Her work appears in publications nationwide, including Fortune and the Los Angeles Times.

In a toasted, locally baked bun, a braised carrot topped with tamarind chutney slaw, cilantro, and avocado stands in for a conventional hot dog in the prepared foods section of the new grocery store format 365 by Whole Foods.

The $6 vegan sandwich ordered via a digital touch screen is a symbol of things to come in the grocery business. Its meatless ingredients show how new eating habits can address the challenge of producing enough food to feed 9 billion people by 2050. The touch screen hints at another change: Technology will make shopping, storage, and delivery smarter and more efficient, even as delivery- and diet-preference niches make serving consumers more complex.

The new Whole Foods store format already has footprints from that future. When it debuted in the trendy Silver Lake neighborhood of Los Angeles in May, it was positioned to appeal to a younger, digitally savvy, and environmentally conscious consumer. An app allows shoppers to filter products to match preferences, including vegan, kosher, and Paleo diets, or quickly select items that are BPA-free, grass-fed, cage-free, or even made with renewable energy.

Inside The Business of Organics
(Chart: Wri.org)

Meeting future food challenges will require more than choosing a carrot “hot dog” now and then. Experts say vast numbers of consumers must change ingrained consumption habits, products must be packaged with more information, and the shopping experience must shift into smaller, more efficient segments.

Shoppers may be in for an extended period of trial and error—and intensified marketing—as both traditional and upstart grocers try to rebalance the food retailing formula and, along with it, shoppers’ diets.

More than 75 percent of Americans consider sustainability a key factor when they shop for food, according to a 2014 Cone Communications Food Issues Trend Tracker survey. What we say and what we eat, however, are often very different. Only about 3 percent of adults in the United States are vegan or vegetarian all the time, while 5 percent say they always eat vegetarian or vegan meals when eating out, according to a 2016 Harris Poll.

To give consumers a nudge, the World Resources Institute, a global research organization, launched the Better Buying Lab, a coalition of food companies and experts in marketing, research, and economics. They’re focusing on ways to limit overconsumption of calories and animal-based food, especially resource-intensive beef.

“We know consumers want sustainable diets, so how can we use strategies and tactics to help the consumers have what they want?” said Daniel Vennard, director of the Better Buying Lab.

He and his colleagues have learned that they have to do more than offer brochures, statistics, and back-of-the-package labeling. They may have to become the Mad Men of the modern age to make sustainability a must-have feature.

“Consumption isn’t a rational process,” Vennard said. Habit and preferences override logic, while attributes such as price and taste tend to be more important than sustainability in purchasing decisions, according to the World Resources Institute.

Besides making it cool to reduce the use of energy and resources, the developed world also will be challenged to change long-held notions about how much and what kind of protein is necessary for health. That means the future grocery store may be stocking alternative proteins such as crickets and algae and promoting them with tastings and prominent displays.

Grocery stores, especially the “groceraunts” that sell an abundance of prepared food, may become a pivotal player in the transition, said food industry analyst Phil Lempert. He sees a high-tech, high-touch future grocery store that balances technology such as touch screens and electronic shelf labels with interactive cooking demonstrations and programs to help consumers learn about their food’s origins and nutritional content.

(Photo: Élishia Sharie)

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There may come a day when our smart watches lead us through aisles to find only the products on our preapproved lists. Until then, the products have to speak for themselves—and some are. In 2015, the Grocery Manufacturers Association and the Food Marketing Institute launched the SmartLabel program with major food producers such as Unilever, Bumble Bee, and Kellogg. The idea is that shoppers can scan QR codes on a jar of Hellmann’s mayonnaise to learn that it’s kosher and may contain GMO ingredients or to see if tuna is certified sustainable.

“A package is only so big,” said Meghan Stasz, senior director of sustainability at the Grocery Manufacturers Association. “We needed to find a way to get a huge array of information to consumers that’s easy and is consistent.” Food activists aren’t sure how that program will work out in practice but see increased transparency as inevitable, particularly with information at our fingertips.

365 by Whole Foods in Silverlake, California. (Photo: Élishia Sharie)

Soon, nearly half of all cell-phone users will have smartphones capable of reading labels and running food-shopping apps, making the phones an indispensable tool for informed, convenient shopping. “More smartphones mean more information, more choice, more transparent pricing and more ways to shop,” according to a McKinsey & Company report, The Future of Retail Grocery in a Digital World.

As online grocery stores such as Amazon Fresh, Instacart, and FreshDirect get better at delivery and pricing, customers are likely to carve up their shopping lists and let their groceries come to them. Grocers will respond by integrating all forms of delivery and inserting smaller stores in more places in denser cities—and maybe even deliver goods by drone.

Internet grocer Peapod has integrated mobile shopping with scannable virtual grocery “aisles” in commuter rail stations and roving trucks in the Northeast and in Chicago. Other virtual stores are popping up around the globe—the U.K. grocery chain Tesco has joined P&G, L’Oréal USA, and Chinese retailer Yihaodian in testing variations of the virtual grocery store concept. Walmart CIO Karenann Terrell recently told The Wall Street Journal that the company’s online customers have a much higher satisfaction level—above 90 percent—than in-store shoppers and that the giant is spending more than $10 billion a year on improving technology.

Smart grocers will be able to stock physical store shelves with more precision as they glean preferences from apps, loyalty programs, and online purchases.

“When I go into the store, I’m going to be looking for excitement, recipes, new products,” said Lempert. “I don't need 100 different” olive oils. “I need the store to curate that olive oil.”

If grocers can’t do the decision making, then a food app will. The Monterey Bay Aquarium offers the app Seafood Watch, which guides consumers to sustainable seafood in stores, sushi bars, and other restaurants. Other apps can link to fitness or diet goals or databases of grocery product ingredients.

The data-driven shopping revolution will allow stores to better predict what will sell, and thus they can help address one of the most vexing issues exacerbating global food inefficiency—food waste—according to the Food Futures Lab of the Institute for the Future.

Stores are redefining themselves as partial restaurants, social hubs, or delivery centers. Some are becoming mini farms with the help of Gotham Greens, which installs greenhouses on New York rooftops. The growth of climate-controlled agriculture, such as Green Sense Farms, a network of commercial indoor vertical farms, may continue to “blur the lines between producing, shopping, and eating,” according to Food Futures Lab research.

These and other new shopping methods may replace the weekly ritual of strolling the stacked aisles of a big-box store to stock up on household and food items. That may seem unthinkable now, but not so long ago, so was the idea of eating raw fish or carrots in place of hot dogs.