“Virtual” grocery aisles are popping up in train stations, airports and other venues. While it is mostly an international trend so far, are U.S. supermarkets prepared?
Turns out it may not make a difference when it comes to grocery shopping. At least that is the theory behind the continuing expansion of “virtual stores” that have become something of an international phenomenon, cropping up everywhere from Chicago to Seoul and giving convenience shopping a new definition.
I find it a bit disingenuous to sing the praises of technology in the aftermath of Hurricane Sandy. But as many of you have already seen smartphone users simply scan the QR codes or barcodes on two-dimensional product displays—everything from groceries to perishables. The order is then transmitted for delivery to people’s homes or to their regular supermarket for pick up.
Most of these virtual groceries have been placed in railroad and subway stations, which makes a lot of sense considering that people spend an average of 235 hours per year commuting. Might as well make the best use of the time.
Peapod, the online grocer owned by Ahold, which introduced the virtual grocery aisle at a Chicago train station, has expanded the idea to more than 100 new locations in New York, New Jersey, Connecticut, Boston, Philadelphia and Washington, D.C. as well as to additional stations in Chicago.
Peapod has already trumpeted the success of this new “format” and others may be looking at it. Walmart plans to open 1,000 virtual stores in China under its Yiahodian e-commerce company. These 11,000-square-foot stores will stock about 1,000 virtual items. Attempts to contact a Walmart spokesman for a comment on whether they might consider virtual stores in the U.S. were unsuccessful to date, but does anyone doubt they have looked into it?
Meanwhile, the concept keeps evolving. French retailer Casino has tried to create a warm and fuzzy shopping experience with a virtual shopping wall in the Gare de Lyon railroad station, offering different shopping scenarios such as “an evening with friends,” with suggestions using both branded and private label products.
In the U.K., Tesco plans to create an interactive 3D e-commerce store that utilizes motion sensor technology. The application was developed to facilitate 3D shopping from home using devices like an Xbox. Meanwhile, the chain is exploring ways to reach customers through other digital media, such as the recent trial run of a virtual store at Gatwick Airport. When they first tested the concept in South Korea they got 55,000 new users and 1.1 million people downloaded the app. Sales also increased 130% in just three months. However, South Korea is a hotspot for testing all kinds of new technology since it is generally considered the most wired country on earth.
One other virtue of virtual stores is that they can be placed in areas where it might be impractical to put brick-and-mortar stores. So perhaps some form of virtual store might be the answer to some of the issues surrounding food deserts. Just the ability to sell perishables without the need for additional and expensive refrigeration would be a tremendous advantage.
Might this be taking the idea too far? Perhaps. While the U.S. might not be as connected as Korea, online shopping in all categories, especially among younger consumers, continues to grow exponentially. As more consumers accept the ubiquity of the Internet and manufacturers become more confident about the opportunity and the vehicle to deliver it, virtual stores may be the next logical step in the evolution of digital commerce. It is simply another way to reinforce your brand with consumers—not to mention a neat way to significantly cut inventory and distribution costs.
On the other hand—and there always is one—let’s not prematurely pronounce the demise of brick-and-mortar retailing. Let’s remember that shopping is still very much a sensory experience and most shoppers are still more likely to make a purchase when they can touch the items, even if it is a can of soup.
Moreover, the majority of shoppers still make most of their buying decisions in-store. As such, shopping only the virtual store would be too limiting an experience.
However, we should not minimize the value of this technology as a complementary experience. Or, as someone eloquently put it: Another spoke in the wheel of omni-channel fulfillment.