Are Grocery Workers In Trouble?
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The document discusses the evolving landscape of the grocery retail industry in the U.S., highlighting the impact of e-commerce and food delivery services on traditional grocery store employment and operations. Analysts predict that while grocery stores will adapt to new delivery channels, the nature of grocery jobs will change, leading to a decline in cashiers and an increase in roles like pickers and drivers, often characterized by poor wages. It also emphasizes the importance of leveraging existing store infrastructure and location for competitive advantage amidst ongoing technological advancements.
Are Grocery Workers In Trouble?
- 1. Are Grocery Store Workers in Trouble? eCommerce, New Food Delivery Channels and the Future of Food Retail in the U.S. Chris Benner, UC Santa Cruz With Sarah Mason, UC Santa Cruz Chris Tilly, UCLA Françoise Carre, UMass Boston
- 2. “The main reason for the shift, analysts say, is simple: Americans are increasingly shopping online..”
- 4. • ~$750 billion industry • Employs more than 3.2 million people • Average wage of ~$15/hour • Only part of retail with significant union presence Retail is 10% of all U.S. Employment Grocery is Largest Share of Retail Food and beverage stores 20% General merchandise stores 19% Motor vehicle and parts dealers 13% Clothing and clothing accessories stores 8% Building material and garden supply stores 8% Health and personal care stores 7% Gasoline stations 6% Miscellaneous store retailers 5% Nonstore retailers 4% Sporting goods, hobby, book, and music stores 4% Furniture and home furnishings stores 3% Electronics and appliance stores 3% Employment, Retail Sub-sectors, 2019
- 5. • A few large firms dominate the industry… • But many strong regional players and specialty markets • Generally technological laggard except for leading firms Wal-Mart 26% Kroger 10% Albertsons 5% Ahold-Delhaize 4% Publix 3% HEB 2% Meijer 2% Whole Foods 2% Target 2% Trader Joe's 1% Others 43% Market Share of Leading Food Retailers in the U.S. in 2017
- 6. With growth of eCommerce Key questions • How much of the traditional in-store grocery retail industry is likely to be taken over by other delivery channels/firms? – What are implications for grocery workers and their livelihoods? • How can traditional brick & mortar grocery stores… – …take advantage of opportunities in new delivery channels? – …leverage strengths of their store infrastructure to retain/gain customers?
- 7. Background & Context of Study • Part of multi-sector study looking at technology and future of work • Designed to identify broad trends, be forward looking • Based on secondary data and ~60 interviews with: – Industry analysts – Technology developers – Retail executives—operations and technology officers • Work in progress…
- 8. Grocery eCommerce is actually 3 key processes… Online Order Fulfillment Food to customers’ home …that are now adding paid jobs, instead of consumer self-service
- 11. ● Long, slow development until Amazon purchased Whole Foods in 2017 ● Instacart was major beneficiary, for awhile… ● Major players are now all investing significantly in on-line ordering 1996 1989 2012
- 12. Growing diversity of platforms and processes
- 15. Technological Barriers Coming Down with Evolving Architectures ● Integrated web-site versus microservices ● Potential separate APIs for search, recommendations, catalog, promotions, cart & checkout, inventory, loyalty programs, pricing, OMS and CSR, etc. ● Software/Retail as a Service
- 17. E-Commerce still small part of food store sales 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Percent E-Commerce, All Retail Trade and Sub-categories All Misc. Clothing Motor vehicle & parts Sporting goods & hobbies Electronics and appliance Furniture/Home Furnishings Building mats. & supplies Food and Beverage General merch. Not Shown: Non-Store Retailers
- 18. 1.4% 2.8% 8.5% 14.1% 16.9% 18.3% 22.5% 29.6% 32.7% 16.8% 24.3% 28.0% 31.8% 30.8% 31.8% 54.2% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Other Ordering kiosks In-store mobile product scanning Store-supported home delivery Third-party vendor home delivery (e.g. Instacart, MyWebGrocer) Curbside delivery Click & Collect Mobile shopping apps Source: Progressive Grocer, "85th Annual Report of the Grocery Industry", April, 2018 What Omnichannel Services Do You Offer? 2018 2017 • Most eCommerce does not bypass brick & mortar stores • Omnichannel— multiple ways of interacting with customers
- 19. Many barriers to ordering on-line ● User interface challenges ● Consumer selection preferences ● Inventory/substitution hassles ● Internal organizational tensions (operations, technology) ● Additional costs A few companies are seeing rapid growth (off a small base), but industry wide, roll-out will be slower
- 20. Option 1: Store-based fulfillment ● Dominant model today ● Walmart claims to now employ over 35,000 pickers in their stores ● Expensive, doesn’t scale ● Niche customers or stop- gap measure until market demand justifies greater investment
- 21. Option 2: Micro-fulfillment Center ● Convert portion of existing store footprint to semi-automated fulfillment ● Multiple partnerships beginning to roll out ● Relatively low barriers to entry: ~$3 million investment and 2 months
- 22. Option 3: Warehouse fulfillment Center ● UK company with very advanced technology ● Partnership with Kroger’s to build 20 FCs ● Much more expensive and requires higher volume to be profitable
- 25. Will any one option dominate the market?
- 26. Will any one option dominate the market? ● Most likely room for many models ● Roll-out will depend on: ○ Geography ○ Customer segment (income, age)
- 27. Many new technologies being developed
- 28. Alphabet Wing
- 31. Pick-up and traditional driver delivery will dominate
- 33. New Prepared Food Home Delivery Platforms
- 34. Conclusions ● Impacts on existing grocery store jobs will be modest ○ Fewer cashiers, more pickers ● Grocery stores are here to stay ● Many of the new jobs (drivers especially) have poor wages and working conditions
- 35. Conclusions ● Substantial opportunities for existing grocery stores ○ Location and existing real estate matters ● High-road and low-road options both expanding
Editor's Notes
- #3: https://www.washingtonpost.com/business/2019/04/10/retail-apocalypse-now-analysts-say-more-us-stores-could-be-doomed/?noredirect=on&utm_term=.e7c747e3664c
- #6: https://brandongaille.com/27-retail-grocery-industry-statistics-trends-analysis/
- #11: https://en.wikipedia.org/wiki/Piggly_Wiggly#/media/File:Piggly-wiggly.jpg