Retailers Turning to Digital Transformation to Cope with Increasing Pressures

Last week, the International Monetary Fund (IMF) reported that the inflation of food prices alone since the start of 2021 has damaged global living standards to the same extent that the inflation of all commodities did in the 5 years preceding the COVID-19 pandemic. As consumers look to tighten their belts in the face of economic pressures, retailers’ strategies for resisting inflation and optimizing operations become critical to maintain and attract new customers. Discount retailers will continue to pressure larger supermarkets with greater market share, as evidenced already in the United Kingdom with Aldi taking over Morrisons and entering the big four. While businesses would normally cut spending in times of economic difficulty, retailers appear to be doubling down on digital transformations and technology adoption.

At a store level, Walmart Canada recently announced a 70-store deployment of Focal Systems’ on-shelf availability technology using cameras and Artificial Intelligence (AI)-based software to optimize stock replenishment. The adoption follows two others earlier this year: 1) Ring Scanners were rolled out to stores nationwide back in April, and 2) in June, the application of Dematic automation technology, both focused on enhancing the fulfillment of online grocery orders.

Across the pond, a recent partnership between tech startup Trigo and Israeli supermarket chain Shufersal shows the growing demand for frictionless shopping and inventory analytics, an application already deployed with Trigo by Tesco (United Kingdom), Wakefern Food Corp. (United States), Aldi (The Netherlands), and REWE and Netto (Germany). The applications have been designed to be integrated seamlessly with existing infrastructure and provide real-time inventory data for greater visibility along the supply chain.

Companies like Cloudpick and Mashgin have also been offering frictionless checkouts in stores with Deep Learning (DL) and edge computing technologies. A recent deployment by convenience store brand Alimentation Couche-Tard to more than 7,000 of its stores over the next 3 years looks to push Mashgin’s AI-powered self-checkouts into one of the largest computer vision-powered checkout rollouts to date.

In addition to in-store technologies creating a more seamless experience for attracting and retaining customers, the application can greatly alleviate pressure on store operations in an industry that is facing increasing demand with a declining workforce. As well as facilitating better customer flow, day-to-day tasks can be optimized through enhanced visibility from real-time stock tracking, allowing for more accurate inventory control and freeing up time for better customer engagement.

A second key reason lies in the additional data gathering that such technologies can provide, which can have profound benefits across the supply chain. With continuous data points being gained down to a granular level, stronger forecasting can help develop a clearer fulfillment plan for both suppliers and logistics providers. Full visibility of store inventories and insights into consumer behaviors can substantially improve stock replenishment processes and order profiles, lowering customer dissatisfaction that can arise when products are not on the shelf.

As pressures on food supply continue, retrofitting such technologies with existing infrastructure is key to keeping time-to-value down. The more accessible that providers can make these applications will not only encourage wider adoption, but it will lay the foundation for further supply chain optimization.