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How collaboration will feature in the future of digital supermarkets

Morrisons’ new deal with Ocado has helped the supermarket chain expand its online capabilities, but will we see more collaboration between retailers and digital service providers in the future?

Every retailer worth its salt has heard of the term “omni-channel” and customers’ cross-platform habits are forcing retailers to become increasingly digital.

Some supermarkets have developed huge digital teams to drive their technology offerings, while others have hired new tech leaders to shift the direction of the retailer’s omni-channel operations.

Morrisons, one of the UK’s top five supermarkets, recently signed a new deal with online retailer Ocado to expand the areas its online service can deliver to.

Claire Muir, business development director at e-commerce provider Arvato, says there has been an increase in such partnerships as retailers decide how best to deliver a digital customer experience.

“There is a need for retailers to drive customer experience not only with excellent products, but also by offering enhanced services,” she says. “Often this means working with technology companies and suppliers who need to be technology enablers.”

Today’s customers are surprised if a retailer does not have an online offering, and retailers are also bringing online technology into stores through email receipts, endless-aisle technology and click-and-collect capabilities.

The omni-channel movement has been led by customers in recent years as they use online services for reasons of convenience, availability or price savings.

Frank Lochbaum, manager partner at KPS Consulting, says: “We know the customer journey cannot always be predicted. Some consumers will switch between online deliveries and shopping for groceries in-store, whereas others may choose to do their larger weekly shop online and only go into a store for ‘top-up’ shops. 

“A unified process for serving customers, and enhancing the customer experience, will result in higher spend, repeat visits and endorsement.”

This often causes crossover between in-store and online as customers blur the boundaries between physical and digital shopping.

Increasing collaboration

Many retailers have turned to software or hardware providers to bridge this gap. Some observers believe the future will see not only collaboration between retailers and service providers, but also between retailers to give customers more reasons to visit their stores.

At the National Retail Federation’s Big Show 2016, Steven Lowy, co-CEO of Westfield Corporation, said retailers would have to collaborate in the future to create experienced-focused stores and to pool customer data to offer the optimum shopping experience.

Maarten Bais, EMEA vice-president and general manager at Elo, says: “Without collaborations of any kind, the industry will become static, so it is important for retailers, brands and technology providers to embrace each other to fully understand the consumer – whether it’s through sharing data, technology software or hardware, or simply sharing ideas and experiences.”

This is also happening with in-store technology, because although supermarkets and other retailers have tech departments, such resources are sometimes easier to source from third parties.

As demonstrated by Accenture and the Co-op’s “supermarket of the future” at Expo Milano, shopping experiences are expected to become more interactive and data-driven. Bais expects supermarkets and stores to become showroom-type “destinations” where customers will be drawn into an interactive experience that mixes online with offline.

“The Ocado and Morrisons partnership is an example of where the industry is headed,” he says, “and we are sure to see more collaboration like this between retailers and technology providers, especially as the retailers themselves start to transform their bricks-and-mortar stores into fully functioning and interactive ‘destinations’ rather than a static, transactional location.”

Reasons for collaborating

Many retailers are using partnerships and collaboration to deliver the backend capabilities for a good customer service, such as automation for warehouse fulfilment and supply chain management.

Also, as customers become more omni-channel, it is difficult to determine whether they will shop online or in-store without gaining a unified customer view with help from analytics software.

Charlotte Briscall, head of digital experience at Sainsbury’s, says her team has been able to implement digital technologies despite the large legacy systems the retailer had in place before the omni-channel environment began to grow.

For supermarkets, this legacy can often mean pairing up with third-party providers to avoid developing silos and making their digital capabilities too complex.

Read more about digital retailers

  • IC Tomorrow’s Future Retail Contest aims to help the retail industry tackle some of its business issues by leveraging retail-focused startups.
  • This PowerReviews study, based on a survey of 1,000 people in the UK and a similar number in the US, explores the impact of technology on shopping behaviour and outlines what retailers need to consider to meet these changing demands.

Lucile Ripa, insight manager at Aquila Insight, says: “Retailers will slowly start to see the potential of this, but are not yet prepared enough to take on this massive digital challenge. They need new collaborations that are mutually beneficial and third-party expertise and support to help them deal with new tools, big data and new customer models.”

As retailers begin to compete with big pure-play online retailers such as Amazon, data is becoming increasingly important to gain customers insights, but many retailers and supermarkets cannot handle this data by themselves.

Ripa adds: “Traditional bricks-and-mortar retailers have a blind spot when it comes to digital data, and especially linking digital to in-store data. They desperately need third-party guidance on how to store and use their data better.”

Next Steps

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Read more on IT for retail and logistics

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