The future of grocery

PG: How much of these inflationary pressures  do you see continuing? 

DW: A lot of the supply chain, the manufacturing side of things, has kind of leveled a little bit, assuming you’re not sourcing stuff from China. COVID spikes up in China every now and then, and the Ukraine conflict creates other supply issues. But it’s the distribution side that is more upstream that I think we’re going to continue to see pressure on. Then, I think, there’s still such high demand on a lot of these things that I think we’re going to continue to see that pressure. Inflation is at a 40-year all-time high. I think we’re going to see — I don’t know if I’ll use the full “R” word, recession — but there’s something that’s got to give here. I think the labor markets are going to start to figure themselves out. I think the fuel markets will take a little bit longer to stabilize in terms of the way I think about it. But I don’t think it’s going to let up this year.

PG: How you see the physical store evolving, and specifically the front end? 

DW: I think we’ll kind of land somewhere in the middle of, does the front end of the store change? Absolutely. I’ll put it on continuums because my mind thinks that way. If today, the continuum is every checkout is in the front of a store and it has a person standing at it, I think the continuum will shift towards more and more consumer-driven checkout and less fixed-position checkout. Is it computer vision, Just Walk Out technology? Probably not right away. Is it more of a pervasive checkout, where I’ve got mobile applications where I can scan my own items? Where I make an order ahead of coming into the store, I come in and pick out fresh produce, meats and flowers? The grocery store has always had checkout in the front. What else in history has never changed over 100-and-something years? We build stores; we put checkouts in the front. That’s the way we do it, well, because we felt like we had to have this physical barrier. I think technology will help break us free of that a little bit.

PG: Speaking specifically about checkout innovation, what kinds of technologies do you think retailers should be thinking about training their people on now or in the next couple of years?

DW:  Mobile checkout has not attracted massive adoption like we thought it would. But if you look at — taking a page out of the restaurant book — a client of ours, Chick-fil-A, the way they’ve done drive-through mobile, I mean, there’s no reason why you can’t do something like that in grocery. I think mobile is important. I think computer vision is another big thing. And computer vision, you don’t have to necessarily train them on the technology itself, but you have to train them how to interact. So there’s a business process to enable a flexible front end. A lot of that comes with creating that experience. 

PG: Have you been in an Amazon Fresh store? 

DW: I have, in London, and a Morrisons and a Sainsbury’s nearby — all of them have their kind of experimental cashier-less checkout. But there’s no shoppers in them.

PG: Seriously?

DW: I’m not sure how viable they are in their current form. At NCR, we’re trying to achieve balance and inclusiveness in the checkout experience. Just putting a barrier to make checkout life easier is not the way most consumers want to interact. I mean, it’s like if I want to pay with cash, I want to pay with cash. If I want to pay with a card, I want to pay with a card. If I want to use this line, if I want to get help, I should be able to. We’re trying to give the broadest reach possible to our customers. To make this happen, we’re experimenting and partnering with a lot of different companies. I just don’t know that [cashier-less checkout] is going to look like it looks today, in my opinion. But I think there’s just still a lot of friction in that experience.

PG: Can you talk about the trends that you’re seeing in grocery e-commerce?

DW: The grocery e-comm business is about $100 billion and continuing to grow, to get to maybe 10% of sales. Do I ever think it’s going to be 50%? Maybe not — it’s hard to predict. But even if it’s 10%, it is very likely not 100% of the way all shoppers shop. So, it’s this blended experience that you have to think about with e-comm. The interesting side of our e-commerce is we find a lot more is being done to be picked up at the store than delivery. If we look at our Freshop, if we look at the data that sits on our platform, as we look at all the transactions that flow through, more orders are being picked up. The basket sizes for the online ordering, or the mobile ordering, are higher — two to three times higher — than the store shop. The margins per basket are higher because of the types of items people are buying. It’s a really good thing for retailers. In the grand scheme of things, I think delivery is a distraction. I mean, grocery can’t make money at delivery. It’s going to be one of those things that will have to figure itself out. I don’t think a grocery chain wants to figure out how to be their own delivery agent. They’ll have to charge for it. We bought Freshop because we think grocers need to control their brand experience online.

PG: Talk about NCR’s digital commerce and engagement strategy, and why it’s valuable to grocers.

DW: We are taking a platform approach, more of an ecosystem-driven approach. In the world today, you have this monolithic software stack that runs the point of sale, and everything you do has to go through the point of sale, integrate to the point. Our commerce platform strips that apart. Our digital experience will be one of unifying the data, unifying the transactions, unifying the capabilities to live in a multimodal world, whether I start the transaction outside of the store and want to finish it in the store, or at the gas pump and finish it in the store on my mobile, or whatever. We are taking that platform approach.

PG: How does Freshop fit into the overall retail vision and strategy at NCR? 

DW: We bought Freshop because we did a lot of research, and it’s quite honestly the best application. It has the consumer-facing mobile capabilities. We can use that same app to do in-store scanning. Our in-store mobile-scanning application has the ability to do cross-sell and upsell. It has the ability to do ad injection. It has picking and planogram integration. It offers two-way communication between consumers. And it was built by people with decades of experience in the grocery industry. I mean, it was effectively purpose-built for grocery.

PG: What other trends do you see sticking in grocery?

DW: I believe the center of the store will continue to be challenged by pure-play online. Grocers will have to differentiate by creating sensory experiences in-store — smell, taste and touch — things that you just can’t do online. So I think grocery has to take on maybe a little bolder mission and think about how do you create those experiences, and what are your true differentiators around the outside edges of the store? And then create a way to compete and win. I think there’s a way to do it with the mixed trip of buying online, or creating more subscriptions, or doing things like recipes, always with the grocery store as the center of the community.