Challenging Amazon In The Race To Transform The $11 Trillion Grocery Retail Market

Enterprise & Cloud Challenging Amazon In The Race To Transform The $11 Trillion Grocery Retail Market Gil Press Senior Contributor Opinions expressed by Forbes Contributors are their own. I write about technology, entrepreneurs and innovation. Following New! Follow this author to stay notified about their latest stories.

Got it! Sep 15, 2022, 09:00am EDT | Share to Facebook Share to Twitter Share to Linkedin When Amazon opened to the public its first checkout-free convenience store in 2018, digital transformation has reached yet another corner of our previously analog lives. With its expanding chain of Amazon Go and Amazon Fresh stores, Amazon has created, yet again, a new consumer experience and a new catalyst for innovation in an established market. The future of grocery shopping getty As happened in other domains Amazon has reshaped, reenergized and rattled, entrepreneurs and venture capitalists jumped in quicky, racing to take a piece of the new action in the $11.

3 trillion global market . Grocery retail tech has raised a record-setting $19 billion in 2021, up 115% from the prior year, according to CB Insights . Israeli startup Trigo is one of a number of new ventures worldwide that are aiming to outsmart Amazon in upgrading our grocery shopping experience.

The three major complaints about grocery shopping, says Michael Gabay, Trigo’s co-founder and CEO, are “waiting in line, out-of-stock products, and not knowing where the product you want is located. ” With these requirements in mind, Trigo has developed a retail operating system, combining AI, smart sensors, and computer vision in one platform running various store, inventory, and customer management applications. The first application developed by Trigo, currently deployed by leading grocery store chains in the U.

K. (Tesco), Germany (REWE and Netto), The Netherlands (ALDI Nord), the U. S.

(Wakefern Food Corp. ), and Israel (Shufersal), turns traditional grocery stores into frictionless supermarkets where shoppers can walk in, select their items, and walk out without having to queue at checkout or scan any items. MORE FOR YOU AI Startup Navina Leverages Amazon Web Services To Improve Patient Care Trigo’s technology does not use facial recognition, nor does it capture biometric data or hold any direct identifiers of customers.

The system recognizes shoppers’ movement while they’re in the store but does not know who they are at any stage. Trigo’s privacy-by-design technology is compliant even with Germany’s most rigorous data protection legislation. Trigo’s second application, currently tracking live inventory status in multiple stores across Europe and the U.

S. , provides complete real-time visibility of store inventory status, improving stock-replenishment processes and providing out-of-stock alerts that lower customer dissatisfaction and increase efficiency and sales. “This is a level and type of real-time insight that retailers simply don’t have today,” says Gabay, anticipating the future development of a third Trigo application that will indicate for shoppers the location in the store of specific products.

The technology used by Trigo is very complex, the algorithms very sophisticated, and many of the startup’s 200 employees are involved in long-term R&D. “It took us a few years to be able to say, ‘we support all the products in the store’ and to reach 99% accuracy,” says Gabay. In addition to its deep investment in R&D and top-notch talent, Trigo’s go-to-market approach stands in sharp contrast to Amazon’s initial strategy—Trigo collaborates with rather than competes with established grocery retailers.

It promises to retrofit existing stores, of any size, in a matter of weeks and to integrate its technology with the retailer’s existing applications and payment options. The collaboration is broad and deep, with Tesco and REWE contributing to the $100 million in funding Trigo has raised to date. There is no doubt that the rapid increase in online grocery sales in recent years has accelerated the digital transformation of the sector, prompting established grocery retailers to seek solutions for improved customer satisfaction, better inventory management, and innovative “omnichannel” strategies—seamlessly merging their physical and online operations.

The U. S. e-grocery market accounted for 9.

5% of overall grocery sales in 2021, up from 3. 4% in 2019. By 2026, it is projected to account for 20% of U.

S. grocery sales. 57% of online grocery shoppers say they stick with the retailers they shop in-store, providing new opportunities for building customer loyalty, experimenting with store layout, offering discounts, and helping shoppers discover new products.

The new sales opportunities in this new shopping environment are accompanied by many challenges, which retailers—and the startups selling them new solutions—must overcome. Many consumers are reluctant to change their established shopping practices and/or adopt new technologies, even with the promise of greater convenience. Retailers have responded to the new opportunities and challenges by experimenting with alternative solutions.

For example, Shufersal, Israel’s largest supermarket chain has been testing a smart cart developed by Shopic, an Israeli startup, and is planning to roll it out to approximately 200 of its largest branches. At the same time, Shufersal opened last week a new Tel-Aviv convenience store equipped with Trigo’s scan-and-go technology. Possibly most challenging for established retailers and for retail tech startups is the constant experimentation by the elephant in the room, that Day 1 company.

Late last year, Amazon further revised its go-it-alone, build-it-from-scratch strategy when Sainsbury’s became the first international, third-party retailer to use Amazon’s “Just Walk Out” cashierless technology, the first time Amazon has retrofitted an existing store. A few months ago, Amazon launched Store Analytics, offering CPG companies “with aggregated and anonymized insights about the performance of their products, promotions, and ad campaigns,” based on the data it collects (with shoppers’ permission) in the Amazon Go and Amazon Fresh stores in the U. S.

Will Amazon, in the future, offer retailers these insights as a consulting service so they can “improve the shopper experience by making the store layout easier for shoppers to find their favorite items and discover new ones, improving selection and availability of products, and delivering great value through relevant promotions and advertising”? That’s the key promise of the digital transformation of the shopping experience—no more shoppers leaving the store without buying 1 in every 5 items they planned to buy. That’s the promise of a boundaryless shopping experience, what Gabay described here as “a customer-centric approach to retail that seamlessly bridges the digital and physical worlds with the goal of delivering unique interactive experiences for consumers. ” Follow me on Twitter or LinkedIn .

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