#ByteSizedBreakthroughs: Embracing diverse tastes

The regional grocery retail market is becoming more and more diverse, offering enough space for further growth. For perspective just the UAE’s grocery retail sector is expected to surpass $40 billion in 2024. Needless to mention, technology is enabling innovation in multiple directions ranging from understanding customer preferences through access to data and serving them better to making supply chain and inventory management more agile and responsive to change, among others. Having said that, the power of human capital remains pivotal in overcoming barriers to technological adoption.

Opening a panel discussion at the recently concluded Food Business Forum 2024, Tamanna Padhi, Partner, MEA Consumer and Retail, Kearney stated that technology is now firmly established as an essential driver of growth, profitability and competitive advantage. By 2030, it’s estimated that artificial intelligence (AI) is going to contribute to at least 20% of retail GDP in this region. “Technology is going to add significant value, whether it’s knowing your customers, establishing your brand, ensuring traceability and control over your supply chain or offering your customer a variety of experience.”

But to leverage technology optimally, businesses must be able to overcome the barriers to technology adoption, whether it’s people and culture or integration of systems, democratising access to data, systems and tech tools.

What are some proven technologies that add value to retail business models, Padhi asked.

Retail has evolved with a primarily technology backbone. Almost everything is tried and tested, yet how well retailers know their customers is still less than 1%, observed Sadique Ahmed, Chief Executive Officer, RetailGPT. “That’s because retailers are busy selling products, and they need to connect with their customers to understand their preferences. So, technology is going to help retailers in discovering their customers, not just the names and phone numbers, but also their buying and spending patterns, frequency of purchase, preferred items and their wallet size.”

The way online e-commerce has evolved, and the way brick-and-mortar stores are evolving, there needs to be a connect between these two channels. Thus, the future of retail is phygital where every brick-and-mortar store will become a fulfilment point for its neighbourhood catchment.

“We often say reality is different from expectation when it comes to AI, data and machine learning. The problem is sometimes we don’t even know the expectation from a business and customer points of view,” shared Umesh Chopra, Market Intelligence Head, Sharjah Coop. “Since we haven’t articulated that expectation, the reality is what we see, which might be far from the actual ground reality. For example, we’re very proud to have done demand space modelling. We’ve gone into supply chain optimisation. We’ve used analytics to understand customer preferences to personalise experiences. Yet, the connect has to be much stronger.”

“Retail is majorly a visual game when it comes to customers. People come in, buy their products and as retailers we strive for stability of supply to serve our customers. So, be it any innovation – from leveraging AI to optimising our planogram software – tech-based innovation tends to take place at the backend first,” added Rishikesh Datar, Director, Adil Trading Co LLC.

“For us, the brand experience is very important, which we can ensure through our digital platforms. But the moment the brand reaches a physical store, the first thing we lose is control of that experience as our brand is one of the many on the shelf. I believe if we can create a system and enable the same brand experience even in a brick-and-mortar environment with the same control that will be the future,” added Robin Nagar, Founder & Chief Executive Officer, Valley Culture.

Offering perspective form the startup ecosystem, Ahmad Shamieh, General Partner, Homegrown Ventures said, “One common thing we’re seeing across startups is the complexity and cost of demand creation within the digital landscape. To maximise their spending, startups need to adopt tools that allow machine learning in a way that the brand messaging evolves based on consumer demand and reaction. Only then, with each post there will be an improvement leading to more clicks and more purchases, eventually finetuning future campaigns while retaining a clear and consistent tone of voice to protect the brand assets.”

At this point, Padhi asked about aspirations for food & grocery retailers when it comes to technology adoption.

The number one aspiration for a grocery retailer is to get to know the buying habits of their customers to serve them across channels and find ways to expand the share of wallet. Making the buying experience compelling leads to customer stickiness. And grocers have different strategies to create customer stickiness in a price sensitive market. So, technologies that facilitate this can do extremely well, Ahmed responded.

“Prior to the pandemic we weren’t exactly a tech first company. We were always a retailer first and tech came to us in a hindsight,” Chopra admitted. “It was pushed on us, and we came up with different approaches to fulfil the new customer demands through things like supermarket on a bus, leveraging technology tools to enable such experiences.”

The supply of people specialised in technologies such as AI is quite low at the moment, Datar observed. “Since retail is a price game, we need to ensure that our prices stay competitive. With salary being one of the biggest fixed costs, it tends to hinder retailers from adopting new technology that require specialised skills. Once the landscape is more mature and when the labour supply is a little more specialised, we will see AI and new tech tools being implemented in retail.”

Moving beyond the experience, how does technology enable building a supplier ecosystem, enhancing traceability?

In this context, Nagar shared his experience. “Initially when we started in the Himalayan region, the biggest issue we faced was the logistics around prediction of the harvest. To understand and get a hold on the produce itself, we created a tech-based system to predict the harvest. It also helps us to predict customer purchases over the past one year and accordingly plan storage. As for traceability, we’ve always been focused on telling the story about how a food item is produced, sourced and delivered.

“Today people consume stories, the emotion that goes into creating a product. But the problem is we’re not able to personalise the same story for everyone. Here technology can be an enabler in ensuring the right content goes to the right consumer, promoting products and services in the smartest manner,” Ahmed pointed out.

Nagar shared an interesting detail at this point. “Initially when we started, we had a small consumer base. So, for every order I used to chat with customers personally. After a few months, when I met a customer, they were surprised that I was a human. They thought Robin was the name of the chatbot. But eventually as we grew our consumer base, we named our chatbot Robin.”

Steering the conversation towards return on investment (ROI), Chopra shared, “When we set up KPIs, financial and consumer-led KPIs are well separated. The beauty of data or analytics or AI is that ROI is instant – be that through increasing the average basket or net promoter score or customer retention.”

In summation, Padhi asked about the barriers or challenges to technology adoption.

“I’d speak about two. The first one is having the right people in place to understand the business and the tech required for the business. The second element is assessing the full cost of the solution you’re putting in place to measure the ROI,” Shamieh observed.

Sometimes, the company culture itself must undergo change to embrace innovation, Datar added.

Sharing as much information as possible as opposed to working in silo is a challenge that organisations need to overcome for any successful tech implementation, Chopra stated. “In our organisation, we have this policy of data democratisation, which means each department has access to as much data as they need, and they should use that data for the betterment of what they do on a day-to-day basis. Projects must be backed by data and not by gut.”

Valley Culture is dependent on farmers based in remote locations and to implement any kind of tech that’s the biggest challenge, Nagar shared. “While data is available, interpreting that data often becomes difficult because the farmer doesn’t have a phone. They may not have network connectivity, but we must connect to them daily to see the produces. So, the challenge was to first find a simple tech tool through which we can connect with these people and then interpret that data. So, we created a voice or a speech to text-based model to stay connected with the farmers, interpret the data and cater to the end consumer.”

The biggest challenge which we’ve seen is the siloed mindset. The future belongs to a coalition and collaborative approach within the compliance of data security. The power of information will then become exponential, Ahmed stated.

Adaptability, agility, innovation are a must and not a nice to have, Shamieh added.

Technology will play its role, helping businesses with a lot of data, helping them with mundane, repetitive tasks, become more agile and responsive to changes. But human connect will always prevail.