Has the UK checked out of the supermarket wars?

If you take today’s teenager and transport them back to a supermarket in the 90s, it’s safe to say that the fundamentals of the experience haven’t vastly changed in the intervening 20 years – yet from Tesco’s groundbreaking use of data via its Clubcard scheme, to the dominance of the German discounters across England in the mid noughties, the supermarket wars have yet to wane; in fact, they’ve surged.

The US has seemingly overtaken Britain as pioneers in grocery shopping. Amazon’s checkout-free Go stores are springing up across the US, and Walmart has recently invested in robots. Both these technologies underpin a focus on reducing overheads and delivering greater operational efficiencies – and according to a piece in The Times, British supermarkets are “scrambling to catch up”.

True’s CEO, Matt Truman, spoke to The Times about this new pace in the cross-Atlantic supermarket wars, stating that the German discounters came to the UK and made it the most competitive and technology-led market in the world, meaning that for a long time, the UK was looking back on the US.

While the UK has been a leader in online grocery shopping for years – the emergence, and subsequent dominance, of Ocado married a consumer’s propensity for the adoption of new technology with the demand and need for efficiencies. However, Amazon’s prolificacy in the US has seen a strong response from Walmart and Kroger and we’re now seeing technology being put at the heart of all operational strategy. Yet this is often a perception: Walmart’s use of robots has yet to demonstrate a business case. Indeed, its sole success is in stealing a march on Amazon’s favoured tactic for publicity: experimentation.

Are the robot wars really keeping the UK one step behind? Far from it. The supply and demand forces are equal. At True we see over 2,500 new businesses each year through our innovation Hub – the vast majority are tech-focused and can be used immediately by supermarkets, and indeed other retailers, to optimise operational strategies and create positive customer experiences. On the demand side, we are also seeing a real willingness to engage in technology on the part of the retailers. In practice this technology adoption is making its way into stores via the use of computer vision to reduce stock loss, robotics for the monitoring of shelf availability and optimising replenishment, and automated staff scheduling to free up employees for better consumer engagement.

Put simply, there is still much more to see and take up. The US is by no means more advanced than the UK – the US grocers are simply on a positioning mission due to the shadow cast by Amazon. As Matt Truman told The Times, there’s a clear imperative for Walmart to be positioned as future-facing: Amazon has parked the tanks on the lawn with its 2017 acquisition of Whole Foods and the rollout of checkout-free Amazon Go stores across America. Yet across both the US and UK, there’s been a big mind shift towards adopting new tech and it is changing the way a store operates: the curve has been on a steady incline, but recently it has moved to an expediential upward trajectory.

On a five to ten year view, supermarkets will be different and that will be driven by the intersection of technology-driven supply and customer-adoption demand: payment solutions will become mainstream, stock checking and shelf stacking more automated, the whole premise of the car park is likely to change as autonomous vehicles become mainstream (part store, part ecommerce fulfillment centres). The exponential innovation curve will accelerate and at True we expect the UK to be at the forefront.

19 July 2019