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Technology

Retailers, meet your customers of the future

David Ciancio - Global Head of Grocery Retail, Kyle Fugere - Global Head of Ventures & Labs, and other dunnhumby experts discuss the future of grocery retail
Photograph: Shutterstock

To mark dunnhumby’s 30th birthday this year, the company is looking ahead to what the next three decades could bring.

There’s no doubt that the world of retail has changed enormously since dunnhumby was born in June of 1989. From the launch of contactless payments to self-checkouts and digital shelf edge pricing, the world of commerce has grown leaps and bounds. This spurs the question: What changes could the next 30 years bring, both for retailers and their customers? Looking at the direction retail is taking today, here’s what dunnhumby experts think shopping might look like in the near future.

Food for thought: the menu of tomorrow

While there’ll always be dishes that will never go out of style, certain foods are set to go through some exciting changes. Forget beef burgers–think plant-based protein, or ‘meat’ grown from cells in a lab. Sushi fans will be tucking into Ahimi®–a tuna alternative made from tomatoes. And that delicious bacon served up with breakfast? A meatless substitute made from shiitake mushrooms will serve as a great alternative. But that’s just for starters.

Expect to see fresh produce harvested from the grow tower or ‘living wall’ in local stores, or even from the roof garden on every apartment building. There’ll be personal genetically-engineered nutrition bars and snacks designed to help meet individual health and disease-state needs, too, all produced by a 3D printer that keeps a record of individuals’ DNA profiles. These innovations will be taking the science of personalization to the next level.

Delivery on tap: food shopping that’s easy as pie

Who will have time to go to the store themselves? Already,one-hour order-to-delivery is common, particularly in urban areas. Yet in 30 years’ time, this will likely be the norm, with drones, driverless vehicles and food printers delivering groceries.

For retailers, this means much leaner supply chains and super slick delivery models will be essential. Robotic technology is likely to handle many of the jobs such as warehousing, distribution and store operations. Machines will even help consumers decide what’s for lunch and then prepare it for them—and hopefully clean up afterwards, too.

Cool customers: the surprising potential of the fridge

Everyone knows about smart fridges, but in the future, they’ll be even smarter—think fridges that become ovens, with sections that hold pre-prepared meals and can warm them on demand, all operated remotely by mobile device. Particle detectors within the fridge will monitor gases released by fresh food as it ages, alerting their owners when food is near spoiling. This tech will also have the ability to detect the nutritional value of the food in the fridge. These smart devices will work in partnership with domestic robots who will plan menus for their owners based on nutritional calculations and efficient use of what’s already in stock.

High sustainability standards: the norm of the future

Through public opinion and legislation, the grocery industry of the future will become more sustainable. Fewer visits to stores and deliveries made by electric or solar-powered vehicles will help reduce the carbon footprint, and the current packaging crisis will be resolved, with plastic likely to be outlawed and biodegradable materials used as standard.

Brick by brick: physical stores are safe as houses

Bricks-and-mortar stores will still exist in 2049, but they’ll look very different than today’s stores. People will still visit shops, but for entertainment instead of necessity. Rather than just pop in for their bread and milk, they’ll visit to check out new brands, watch recipe demonstrations, sample new products or services and see what the latest trends are. If they like what they see, they might take goods to go with them—but more likely will have them delivered.

This means that larger format stores will probably all but disappear, replaced by smaller, easier-to-shop stores that hold less stock. But, most importantly, they’ll still be made of bricks.

The devil’s in the data: The customer is always first

Data being the driver behind modern retail strategies is something that will continue to evolve. In fact, no retailer or CPG brand will survive without it. Customer data science will have an all-encompassing customer model, allowing deep 360-degree understanding of customer interactions and how different marketing levers impact customer behavior, purchase intent and satisfaction.

But customer intuition around the value and leverage of their own data will evolve alongside this. Customers will access, control and share the data held about them by others, aided by radical new services and software.

Game on: Value versus innovation

With no sign of the pressure on retail margins easing, it’s likely that private label products will overtake brands, making retailers operate more like manufacturers. However, CPG manufacturers will themselves operate more like retailers, selling direct to consumers and through third-party marketplaces like Amazon.

Private labels will continue to compete with brands on value, with branded products continuing to hit back with innovation. And both will have to compete on quality.

Differentiating commoditized goods will be increasingly challenging in the coming years. In 30 years, consumers may be buying subscriptions for unlimited household goods, in the same way that they buy unlimited data on mobile phone plans today.

Customers first, 2049 style

Whatever the future brings, grocery retail will be a very different industry in 30 years’ time. But one thing that won’t change is the need for retailers and CPGs to put their customers first.

With physical visits to stores no longer driven by the need to replenish, foot traffic will be lower, and retailers will need to provide experiences that inspire and entertain to motivate shoppers to wantto visit them. Having said that, physical stores will still offer an invaluable opportunity to build relationships with customers that will be much harder for online-only marketplaces to achieve. For many, ordering online is often not quite as gratifying as the in-store shopping experience.

Wherever they shop, customers of the future will demand an exceptional experience from retailers–and providing this will still be founded on a solid understanding of people.

From all of that, one thing is clear: coming to grips with today’s data-driven economy is the best option for any retailer or brand who wants to be prepared to serve the needs of their customers of the future.

To hear what retail might bring in 2025, join David Ciancio and Kyle Fugere for dunnhumby’s upcoming webinar, Planning for the Future: Building your Customer Engagement Strategy for 2025. After all, 2025 will be here before we know it.

This post is sponsored by dunnhumby

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