Hear experts Steven Duffy and Steve Blevins weigh in on how technological innovations are changing the grocery industry as we know it.

December 3, 2018 Published by CP Voice

Steven Duffy, CP VP of Grocery (L) and Steve Blevins, CP Principal and Tech Leader (R)

 

Audio Transcript:

[Music]

Steve Duffy: Hi Steve.

Steve Blevins: Hi Steve. I’m Steve Blevins with Cuhaci and Peterson Architects and I’ve been practicing architecture for about 25 years now. More recently, I’m going into a technology role, so I’m kind of transitioning from architecture into an angle toward technology called digital practice as a digital practice leader.

Steve Duffy: I’m Steve Duffy, and I’m with Cuhaci and Peterson leading the grocery and the food initiatives for the firm. I have been in the retail and grocery industry for about 35 years. So we’re here today to start a series of podcasts around food, grocery, technology and innovation.

Steve Blevins: Yes, absolutely. Food and architecture. that’s why we’re here today. What’s the most interesting thing from your standpoint of food and architecture?

Steve Duffy: For public awareness, there is radical change going on and we can almost overuse the word transformation, but truly what’s happening is we are at a major watershed in history and it’s driven by technology and the engine behind that is artificial intelligence, AI. So if we just sort of start out with the major issue that drives a lot of this change, it’s that. We’ll delve into that, the implication of that. But I know we’ve set out something pretty heavy in the beginning but it’s fascinating. And we hope to unfold this in terms of not only the interconnectivity of what’s going on, but transformation of how we actually buy and consume food.

Steve Blevins: Yes, so Cuhaci and Peterson has a long history of food and architecture, over 40 years in fact. We started out– the company started out with building neighborhood shopping centers, so that connected the neighborhood to the community – that’s the roots of the company. So how do you think that, from your experience of grocery and technology, how do you see that transitioning? What should the consumer be looking for? What kind of experiences do you think that they want for future grocery shopping?

Steve Duffy: You think about the consumer and the consumer needs are changing and accelerating in terms of change and that essentially parallels a lot of the changes that are happening in technology today. The use and the embracing of mobile technology is driving a lot of this change. And consumers’ experiences and expectations have been elevated in time. One of the chief drivers, and this is one of the things that we will talk about, is convenience. Society’s interest and drive for greater convenience in their lives– and there are many facets of that. But another main thing that shoppers are looking for is experience. While we are going delve into the virtual nature of shopping today and the convenience components, people are still looking for experience. They want to go in, they want to interact in the social realm. That’s what we do as architects. We create store environments. The challenge and the opportunity for us as a firm is to really create that on the experience and how we integrate the new virtual shop with the physical. And that’s, again, what’s really transitional. We’re going to delve into the innovation surrounding that.

Steve Blevins: Yes. So one of the things that comes to mind about removing friction in the shopping experience is one of the current advances Amazon Go, which Amazon has a long history in technology and shopping, both online, now into the physical space that they’ve gone into. So I wonder from a standpoint of just a general shopper, how are they going to feel about going into these stores with all these electronics, devices and things like that? Are they going to be more comfortable? Are they willing to do that in order to get that convenience factor of not having to stand in line and wait and those kinds of things? What are your thoughts on that?

Steve Duffy: So to answer you specifically, again, another interesting notion around the idea of technology. Technology continues to accelerate. Also the adoption of technology by society continues to accelerate, meaning that people feel more comfortable with the uses of that technology. And also, we’ll say some of the information that they’re more free to give away, and freedom associated with it. When you think about your mobile platform, you carry it on your person every day, you’re essentially tracked. That metadata is being aggregated by retailers, it’s being used. You referenced Amazon’s Jeff Bezos, a note about the company and him and it’s really kind of fun for us when we think about frictionless checkout and frictionless shopping experience. That’s the way Jeff Bezos- that’s the way Amazon views, what they’re doing in the marketplace. They are creating an experience that is frictionless. So they’ve taken that virtual shop, and they’re taking that same modality and advancing it with the Amazon Go store. You’ve probably heard that they made a major announcement recently that they’re going to be deploying three thousand stores. They have various test markets across the US that they’re deploying it in. And what they are doing as they deploy it is they are overcoming the friction of the technology; they’re working through it. And so there’s many analogies here to how this technology gets implemented and that’s what we do as a firm. We understand and we fit this very complicated puzzle together called the Omni shop.

Steve Blevins: And one of the things I’ve wondered about is this kind of- with all this convenience you mentioned convenience is something folks want. But one of the things I’ve wondered about is this technology injection into our shopping habits. Amazon Go is one; we’re no longer going to be standing in line to check out, so now we have the impulse buys that need to be addressed. At some point we’re changing the actual nature of shopping and I’ve wondered how much that’s going to impact the buying influence and is it going to drive a different kind of experience that we think the shoppers are going to be looking for in the future? When we can eliminate the standing in line, and all this other friction, what do we replace it with? This is the question.

Steve Duffy: That’s a great question, Steve. So the shopping experience is and will continue to change significantly. And what we’re really creating is the ability to shop any time, any place, anywhere, and have your needs met. And what do we mean by that? So you may have a need where you want to be social, where you want to actually go out to the store, you want to interact with the physical brick and mortar, you want to be able to socialize, you want to be able to consume food in the store. Maybe you want to grab a glass of wine and actually shop in the aisles, if liquor laws allow that. But what’s interesting is you also have the ability– If you’re in the office, you can have your grocery shopping done immediately, not to say that if you’re a passenger in the car you could also order enroute and have your groceries ready for pickup. So there’s many different needs states that people will be able to be satisfied. And that is, again, the nature of the transformation of what’s happening with the environment. The other thing is that, again, food is now readily accessible across all channels. So what do we mean by that? You’re not just going to the grocery store. You can even be going to a convenient store which is going to be significantly increasing prepared food offers. Grocery stores are changing in their approach towards the consumer, meaning that they know that everyone out there in the various food channels, even straight retail are competing for that food dollar. So the need and the urgency to adopt this technology to make shopping as convenient as possible is really an underlying theme. It’s really an expectation today.

Steve Blevins: Yeah. Okay, very good. I think the other thought that I wanted to bring up is the notion of if you think this is going to bring more of a community shopping experience as it becomes more localized, kind of a unique experience to individual communities and how those might start to develop over time and be more integrated in the local community as opposed to the current super centers and the super shopping experiences there are today?

Steve Duffy: So the physical format of stores, the data proves that stores are shrinking in terms of popularity. There are other trends that we’re going to speak to in a coming podcast called Micro-fulfillment. So it’s the leveraging that technology allows the normal, what we would call center of store be reduced or almost significantly eliminated through the use of these distribution technologies. So, logistics of how food gets delivered to your home, how you may actually pick it up at the store level is changing. And again, it’s centered around people’s interests and desires. Creating that emotional experience is very important and will drive the change in format.

Steve Blevins: I think one of the things that this brings to mind is this notion of how, historically, some of our social media and some other things have had the tendencies to separate us or isolate us from this. And it’s really kind of interesting to hear that maybe we can start to use some of the technology into the grocery shopping experiences, start to reverse that and actually bring us back to this kind of community and remove some of the other pain points that could be more of a community shopping experience. I’m thinking of some of the old, kind of an old town thing where you have the local butcher shop and you have the ice-cream shop and stuff like that. So maybe some of those things, experiential things come back and bring it more into a full circle, back into more of a community.

Steve Duffy: Well, think about the idea of a grocery store. It was a very social place. We were talking about this earlier, right? The notion that– People refer to the grocery as “my grocery store.” They go there because it’s a social place. So the power and the importance of food, grocery and retail as a social exchange or place of socializing is so much- it’s about community. We talked about social media. In the virtual world, how does that mesh with the idea of the physical social gathering place called the grocery store? So, again, very fascinating that we have the merging of these ideas and the virtualization where you can be outside physical brick and mortar. But how does it integrate with the actual physical shop as well? These are the things that we’re grappling with. The grocery and retail we’re grappling with today as the entire shopping experience has been transformed across all channels.

Steve Blevins: Yeah. I think the other thing that, from a shopper’s standpoint, is I think– They really have more of a choice today. And I think that’s becoming more and more of a benefit for the consumer, that you can shop online, at home, do your grocery shopping and have it delivered. You can have shopped online and go and pick it up. And I love that most of the grocery stores now are doing the pickup series and/or you can just go and do your traditional shopping like you always have. But I think that there’s a lot of choice out there today, so that could be good or it could be bad if there’s too much choice. We talked in the past about confusion for the shopper. I don’t know. Maybe at some point, though, I think that we’re going to see if your input- we’re going to see a convergence of different experiences and kind of bring it all back together.

Steve Duffy: So a lot of this centers around the notion of convenience. We touch on frictionless shopping, but it’s the convenience and the consumers’ different need states, to be able to have their needs fulfilled, wherever they are, whenever they are. The other things that we want to talk about in this podcast, Steve, are, again, the technology behind the scenes to these strategic partnerships that we have and the nature of the transformation that’s going on. How do we pull these different things together to create this new Omni experience?

Steve Blevins: Yeah, one of the things that I have been experiencing recently is working with different partners which is different from traditional architecture. In the past, it’s like we work with engineers, architects, interior designers, contractors and all those. But I think going forward, we’re going to really have to engage with other startups. We’re engaging with NVIDIA, Microsoft, Autodesk and several other startups that are going into this industry. So the exciting thing is there’s a lot of dollars, venture capital dollars going into the AEC space right now. And so that’s really giving a lot of this kind of new energy into this space. I think a lot of it’s coming from the Amazon affect to be honest about it. And that kind of energizing folks and they see a new opportunity to kind of reduce the waste in our AEC processes and so there’s dollars to be had there and I think we’re seeing a new energy into that. The new role for architects is probably going to be expanding so you’re going to have to bring in these technology partners. Some of them might end up, at the end of the day, being a little bit of a competitor because of the merging the technology these other things. So it happens within the retail space.

Steve Duffy: Steve, so that’s exactly what we’re experiencing. The level of collaboration is ever increasing. These strategic technology partnerships have become more and more collaborative in the nature over the years. We use collaboration everyday with other partners such as Case Manufactures. We need to understand the implications of all the finishes and the materials that go within the built environment. And then, we of course, have the collaboration with our clients. We position ourselves to be a trusted partner in the industry, to be able to aggregate all the levels of strategic partnerships and the complexities that go into the built environment. And now, you just touched on the fact that we have this next virtual level. One of the things that you drive which I know you’re very passionate about is the use and the leverage of our virtual platforms for drawing and rendering. We no longer draw in 2D anymore. Everything is in model space. And the leveraging of that technology has so many other outputs, more than just great visualization from the actual technical bones of building the building, to actual inputs for the virtualizations that can be outputted into the retail environment and ultimately used by our clients. In augmented reality and virtual reality; we’re just starting to get into that.

Steve Blevins: Yes, very exciting stuff. I think that there’s a true benefit for creating this kind of virtual world and mashing that up with the real building in the real world, so that you can get drive. Use machine learning the analytics of AI to drive out those benefits. So it’s one thing we design today. We do roll down tables, and all this kind of stuff that we never really get the true, actual real-time data that’s coming from the building back in to inform the design, and inform the operations of the store. And that’s kind of the exciting part about the whole digital twin aspect. We can do these predicted analytics not unlike the IBM Watson commercial where they go in and say, “I’m here to fix the elevator.” and they say, “What do you mean? It’s going to break tomorrow, 12 o’clock.” So we want to bring that same kind of level of expertise into the grocery stores so that they can understand what the shopping experience is and understand how the vendors need to place their products on shelves. We’re going to do much deeper dive into these things in the future podcasts. So I’m really excited about it!

Steve Duffy: That’s great. And the other thing that’s going on, Steve, is that all the industry out there, specifically some of the professional publications that we’re associated with, like Progressive Grocer has been driving, every month, a whole series of publications on the digital transformation that’s going on in the Omni shop. We’ve been fortunate enough to be closely associated with them and we have had a series of articles. We had one in August, we had one in November that just recently came out. Now there is an additional series where they are promoting the advancement of technology. There is a real hunger out there in the industry to continue to drive the Omni shop transformation. It is certainly one of the focuses, as a practice, that our firm is deeply connected with driving, being part of the transformation.

Steve Blevins: Great. Sounds good. So I’m looking forward to the first series to kick this off on our next topic and let’s go shopping.

Steve Duffy: Sounds great! And great chatting with you.

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