Earlier this year, iTradeNetwork’s Head of Marketing and Strategic Planning, Rene Cardenas, was asked to give his take on the current and future states of the food and beverage industry during a conference panel discussion. We’ve received a lot of positive feedback since publishing the original post, How Will We Relate to Food in 20 Years, so we decided to revisit the question by asking Director of Product Management for iTradeOrder, Ashish Kumar, his thoughts on the prompt. Here is Ashish’s take on how we’ll relate to food in 20 years:
We’ll still be going to grocery stores.
Despite the recent popularity of food delivery services like AmazonPrime, Shophopper, and Good Eggs (to name a few), grocery stores will still be the preferred method of grocery shopping in 20 years.
According to a recent study performed by FMI, two thirds of food retailers involved in online commerce saw sales increases of more than 10%, while the rest reported relatively marginal gains or losses. While this may seem promising to some, it makes more sense to attribute these slight increases in profits to first time users trying out these systems. Take WebVan as an example -- an early mover in the food delivery space that couldn’t scale accordingly in the late 90’s and ended up ceasing operations in 2001. As more and more users joined the system, WebVan had difficulty scaling to meet the needs of these users, which led to low quality produce and spoiled perishable goods.
Online delivery is all about scale. If food delivery services cannot adapt to meet the needs of their growing client bases on a national level, early adopters of these local delivery services will switch to larger services, or the next best means of acquiring groceries. This is to say in order to remain relevant, food delivery services and meal prep deliveries will have to find a way to address their growing client bases through cutting edge order management, shipping and logistics management.
With retailers on the other hand, shoppers actually prefer shopping at their local grocery stores, and have a sense of loyalty to smaller or mid-market retailers. Plus, they have the physical infrastructure in place already. All they need is to make sure they have relevant technology that will allow them to compete with the new entrants. For the most part, mid-market retailers have the capacity to supply locally sourced, organic and artisanal product offerings directly from the source, which is crucial given the increasing popularity of niche diets. To meet these rising customer demands however, it’s critical that retailers establish procurement processes with a slew of vendors and have the right technology partner, because technology is not a choice anymore -- it’s a necessity. In this case, it’s possible for food delivery and retailers to coexist, so long as both businesses understand their target markets and what it takes to be successful.