The Evolution of the Retail Food Industry

An explosion of innovation creates exciting opportunities in the food industry.

By Jim Pytell, Assistant Editor On Mar 12, 2018

Amazon’s acquisition of Whole Foods this past August has created a hectic pace for traditional supermarkets to move towards digital platforms. It’s obvious that consumers value convenience, and the prospect of having one’s groceries delivered fresh to his or her doorstep, eliminating the need to carve out time to take a trip to the grocery store, is intoxicating.

But, it’s more than just grocery and meal delivery. With smart labelling, an increase in non-traditional food serving venues, seamless checkout experiences and cellular agriculture, the food industry is changing, and with that change comes exciting opportunities.

“It is a pivotal time for the food industry,” says Linda Doherty, president of the New Jersey Food Council.

She says that Amazon’s acquisition has certainly accelerated the pace of change within the industry – particularly on the retail side – but Doherty also expects there to be a balance between traditional retail and omnichannel competitors such as home delivery services and e-commerce platforms.

“Brick-and-mortar stores are not going anywhere,” she says. “Customers still want to squeeze their tomatoes, pick their meats and ensure their perishables are fresh. Traditional brick-and-mortar stores have that commitment to the fresh experience, and I think that will always be there.”

The acquisition by Amazon seems to be further evidence dispelling the notion that retail is dead or dying, but instead changing. For instance, in other industries, some traditional retailers have merged retail with industrial, using their storefront as a showroom for product, while at the same time shipping out product from the same location to fulfill online orders.

Having a location that a consumer can walk into is still very important, especially when it comes to food.

“People are looking for real connections in an increasingly digital world,” says Karen Meleta, vice president of consumer and corporate communications for Wakefern Food Corporation. “We know, for example, that ShopRite customers often have a favorite butcher in the meat department who custom cuts their meat, or a baker in the bakery department who creates that special occasion cake. Many ShopRite stores are also family-owned and operated and those families are invested in the community and support local organizations, schools and sports teams. Many of our stores also have retail dietitians who work one-on-one with customers to help them with meal and nutrition planning. Customers appreciate all these personal connections.”

These personal connections are obviously much harder to make in an all-digital marketplace. Food is such an intimate product – that is, people literally put the product into their bodies and it makes them feel a certain way – that these physical connections with the people who are selling it are vital.

“Consumers are demanding trust and transparency,” Doherty says. “Today’s consumer wants to know the story behind the brand and the product, and you are starting to see that demand being met.”

“The future of retail is an integrated marketplace enabled by technology,” says Shakeel Farooque, vice president and head of digital and e-commerce, Campbell Soup Company. “The traditional store is not going away, but its role is changing, as it becomes a single part of a complex network of consumer options.”

That opportunity is being seized by retailers across the state, who are finding interesting ways to integrate new technologies into the traditional food shopping experience.

“Select ShopRite stores offer Mobile Scan, which lets customers use their smartphones to scan groceries as they shop, then pay and go,” Meleta says. “The ShopRite Pharmacy App, meanwhile, allows customers to use their phones to manage prescriptions at our pharmacy. The ShopRite Deli App also lets customers pre-order cold cuts from select stores.”

Different consumers have different desires. ShopRite, for example, utilizes a plethora of online shopping programs, including mobile orders that can be picked up in stores, home delivery of hand selected in-store products, and even a program that allows customers to order selected products directly from ShopRite warehouses.

Other cutting-edge innovations include Campbell’s Kitchen partnership with Watson Ads.

“[This is] an industry-first capability in which consumers can interact with IBM Watson,” Farooque says. “A consumer might ask by voice interaction, ‘What can I make for dinner tonight?’ and based on its machine learning and reasoning ability from the data it has ingested, Watson can sort through ingredient and flavor profiles to make recommendations based on the weather, time of day, location and even ingredients users have on hand – all surfaced via dynamic ads. The data will offer quick and easy meal solutions in real time.”

Campbell is also identifying and piloting new models to serve consumers, with one such example being the personalized nutrition startup Habit. Habit is a science-based program which analyses a person’s unique biological data to produce individually tailored food recommendations.

Additionally, with so much information at their fingertips, people are becoming increasingly aware of the effects of putting different kinds of foods into their bodies.

“People are more mindful about what’s ‘better for them’ and are interested in fresh, organic and functional foods,” Farooque says. “People also increasingly want to know what’s in their food and where and how it’s grown.”

Doherty says that smart labeling is one example of how companies are strengthening the transparency between their consumers as well as satisfying their desire to eat healthier.

For example, ShopRite’s Well Everyday campaign provides tips, recipes and signage in stores to help people meet their wellness goals. Additionally, Campbell recently entered into an agreement with the food-data platform SageProject, to partner on customizable and digital labels for its products that include nutrition facts and product attributes as well as details about how certain foods and beverages are made and the choices behind the ingredients.

As digital platforms expand, there are opportunities for the food processors in the state, which in turn, creates more jobs and innovation. Doherty sees this having an “extremely positive impact” on the state and its economy.

“You [also] have foreign competitors who are planting their flag in New Jersey and lowering their prices on staple items to bring in traffic to their stores. This is putting pressure to compete on all retailers, and ultimately, it is the consumer who is winning,” she adds.

Speaking of overseas food companies, the Rutgers Food Innovation Center (FIC) is the only certified “soft landing” food incubator in the world. Located in Bridgeton, FIC helps food companies get their products launched, and helps with identifying potential consumers, marketing and traversing the regulatory landscape.

The FIC, along with the state’s strategic location and active ports in Newark and Camden, have made New Jersey one of – if not the – premier destination for food companies looking to do business.

Lou Cooperhouse, executive director of the Rutgers Food Innovation Center, and executive director of the New Jersey Food Processors Association (NJFPA), says that as Hollywood is to entertainment and Silicon Valley is to technology, New Jersey is emerging as a “food cluster,” with the entire supply chain collaborating within the state.

NJFPA also contributes to strengthening New Jersey’s food culture, as the organization of manufacturers and suppliers of food and agricultural products, joins together to promote best practices, share information and expand the food industry of the state and the surrounding region.

Looking ahead, the food industry still faces some challenges, including finding ways to attract more young talent to the workforce. Most notably, though, is the prospect of a minimum wage increase to $15-an-hour, which Doherty says would be paralyzing to retailers.

She points to New York City, which recently increased its minimum wage to $13-an-hour, and the effects that such a move has had on retail, including a significant cut in hours, a loss of jobs and higher prices.

Despite these challenges, the food industry is certainly pivoting towards new opportunities. Technology has caused consumer desires and trends to evolve, and, as a result, what it means to be a retail store is changing.

In the future, we will likely see a seamless checkout experience become more popular, allowing shoppers to enter a supermarket, grab what they need, and simply walk out the door, getting charged for what they purchased without having to wait in line.

Cooperhouse also mentions cellular agriculture, the method of creating food – particularly meat – in a lab, which would be a game changer when it comes to sustainability and health concerns. He says that the reality of that for consumers could be a mere “three to five years out.”

Overall, it’s an exciting time for the food industry.

“It’s an explosion of information, technology and opportunity,” concludes Doherty.

To read more articles in New Jersey Business magazine, visit: www.njbmagazine.com

 

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