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Natural Foods Merchandiser

The future of food retail, from AI to consumer-first technology

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The future of food and natural products retailing mainstreams the good-food revolution. S2G Ventures projects the must-follow values and technologies.

Retail grocers had to make agile adjustments in response to the rapid onset of the COVID-19 crisis, and this presents the backdrop for S2G Ventures’ report The Future of Food: Through the Lens of Retail co-authored by Walter Robb—the longtime co-CEO of Whole Foods Market and now executive-in-residence at S2G Ventures—and S2G Vice President Audre Kapacinskas.

The pandemic has shined the brightest of lights on our food system and retailers sit squarely in the middle,” Robb says.

The report states, though, that the changes the natural products industry has seen this year were not revolutionary but rather accelerations of evolutionary trends already in progress. And there is a lot of good news for good food advocates in these trends, which have moved consumer attitudes that the natural products industry has been promoting for years into the mainstream.

According to the report, “In this next evolution of food, much of what was once aspirational will be considered table stakes.” Those table stakes, reflecting a shift in consumer behavior, include responsibility, accountability and transparency, “while accessibility, affordability, safety and sustainability are differentiators.”

Brandon Barnholt, CEO of KeHE Distributors, sees the unprecedented concerns about health and wellness driven by the pandemic contributing to the trends illuminated in the S2G Ventures report. “Consumers are trying to eat healthier to prevent disease and build immunity,” Barnholt says.

Eating at home is one COVID-19 impact that is likely to have staying power with the rise of delivery options and the novel coronavirus-driven restrictions on in-person dining at restaurants.

“The consumer is and will continue to eat more at home,” Barnholt says. “They are also learning to cook and learning how to do speed scratch in real time—with a foodie palate more than ever before.”

This moment in the history of retail grocery presents massive challenges, Robb says, and “it also offers incredible opportunities both to see our food system more clearly and to reimagine what is possible.”

Food retail revolution

A timeline in the S2G Ventures retail report depicts the progression of the role of retailers from the 1950s through the 1990s—the post-World War II period that produced the rise of supermarkets—when they served as gatekeepers, dictating consumer tastes through product selection. Since the turn of the 21st century 20 years ago, that role has shifted to curator, with data driving brand selections aligned with shifting consumer preferences that include more interest in specialty products and sustainability.

S2G Ventures retail growth formula

The next phase, already developing, is the role of retailer as tailor of an ever-greater array of consumer choices, using technology tools that not long ago were novel and are now pervasive. Retailers more and more will be recognizing and leaning in to consumer power through custom offerings; enabling consumer discovery through personalized social media engagement and digital promotion; offering more options for subscription-type services; and furthering the development of smart in-store and online interactions.

The report predicts that future growth in food retail will be driven by an interactive triangle of community/customer engagement (digital engagement, frictionless in-store experience and transparency); commerce/sales channel (omnichannel capabilities, smart fulfillment and resilient fresh food); and content/products sold (product curation, “farmacy” focus, values-first marketing and sustainability as brand affinity).

Food system innovation

“Disruption in the retail channel is a proxy for the opportunity in the broader food system, which is underappreciated, underinvested and underdigitized, making it ripe for change and meaningful investment,” Robb says. “In response, innovators are bringing an astounding number of new food choices to the customer and giving form to the broader themes of more diversity, greater transparency, improving and tracking food safety, and extending food access. New technologies are also forging the convergence between food and health care, using new tools of data, AI and emerging scientific research.”

The COVID-19 pandemic has been a nightmare, spreading widespread misery, economic hardship and derailing the simple routines of our everyday lives. It would make matters worse if we failed to seize the moment to accelerate the growth of a healthier, more sustainable, more responsive food system. The S2G Future of Food report gives ample reason to hope that these needed changes are not just on the horizon but are already under way.

To learn more, access the report at https://www.s2gventures.com/reports.

naturally chicago logoRobb and Barnholt will be discussing the report at Naturally Chicago’s Dec. 1 webinar The Future of Food: Retail as a Proxy for the Evolving World. They will be joined by Anu Goel, president of Client Growth Solutions at SPINS; Carlotta Mast, market leader at New Hope Network, who will moderate; and Jim Slama, co-founder of Naturally Chicago, who will introduce the discussion. The free webinar will take place from 1 to 2:15 p.m. central time.

Register for the webinar.

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