We have all experienced the frustration of opening the fridge, only to find there is no milk for our morning tea or coffee. For some of us this is a minor inconvenience, for others it is a caffeine catastrophe.
However, it could soon be a relic of the past. I believe technology will eventually enable retailers to become real partners for customers when planning and buying their weekly shop. It will help customers spend less time shopping for groceries, and ensure they buy enough of the essentials, preventing the calamity of early morning milk shortages.
Next Wednesday evening, I will deliver the keynote speech at the City Food Lecture 2021 on the topic ‘the role of new technology in the future of UK food retailing’. I will discuss how Ocado’s model overcomes the challenges facing traditional retailers in serving customers online, and innovations that will revolutionise the UK grocery industry.
Back in 2000 when Ocado was founded, the world of grocery retail looked very different. Only half of us owned a mobile phone, and a quarter of households did not have a computer. Twenty years later, one in five households buy their groceries online and the online channel has grown to nearly 13% of total spend. Thirty per cent of UK consumers say they will shop more for groceries online after the crisis has ended. That is because customers who try shopping online quickly recognise the benefits of better choice and less effort.
Technology has been the driving force behind Ocado’s success. Our technology already creates significant efficiencies over the traditional grocery model in terms of shorter supply chains, more availability, quicker and more accurate picking of orders, highly efficient deliveries, longer shelf-life and huge reductions in food waste. In the future, I believe our tech will drive further competitor advantage, allowing us to build ever closer relationships with customers.
New technology solutions will make customers’ lives even easier. The launch of 5G, the introduction of smart appliances, and improved AI capabilities will help to reduce the amount of time needed to plan the weekly shop. Soon, you may be able to link your basket to your smart fridge, which will work out what you are running low on and what is going out of date, and will add it to your basket. AI could help with the onerous task of meal planning by suggesting and completing recipes based on what is already in your basket. It could also provide ways to use leftover food, like how to use the last half jar of pesto that you bought to use in another recipe.
Delivery is also an area that is likely to see massive leaps forward to become more environmentally friendly at a lower cost. Ocado is working hard to reduce our carbon footprint: last year we doubled the number of hybrid, electric and natural gas vehicles we have on the road, and a third of our lorries are now powered by natural gas. I think we are still some years off being able to introduce driverless vans in a robust and scalable way, but they have the potential to have a massive impact on the costs of last mile delivery. Whatever solutions emerge, they will be incredibly important in lowering the level of pollutants and improve our air quality, especially in urban areas.
Post pandemic, the pace of technology-driven change in grocery retail will continue to be rapid and will be the differentiator that drives customer loyalty. After all, who is not going to keep shopping with the supermarket that makes sure you can enjoy your morning darjeeling or java?