How Brands Adapt to Disruption in Retail

By Kaitlin Milliken |  July 25, 2019

Boston’s historic Quincy Market has always been a thriving center of commerce — from its days as a hub for local grocers in the 1800s to its modern role housing clothing stores and restaurants. Last week, Quincy Market also offered a window to the future of food retail. 

Revolution Retail, a four-day-long pop-up, paired food brands and new technology together to simulate the shopping experience of the future. Open to the public, shoppers could peruse shelves of trendy health foods, from Keto brownies to collagen-boosted coffee. Passersby could also purchase items from a voice-powered vending machine, with the ability to answer questions about the products stored within. 

Health products on display at Revolution Retail, a four-day-long pop up in Boston’s Quincy Market.

“Retail [has] always been a fast moving industry but fast moving for the industrial age… [Today,] we’re moving into the technological age. And that group is a whole hell of a lot quicker,” said James McCann, former CEO of Ahold USA, a brand which runs grocers like Stop & Shop and Peapod. “[I]t’s going to be extremely uncomfortable. But for those retailers that make the most of it, it’ll be…rewarding. …” 

To kick off the pop-up, innovators from the retail space gathered to discuss how to stay competitive in the e-commerce era. Here are some trends highlighted by thought leaders with experience at Amazon, Ahold Delhaize, Roche Brothers, and L.L. Bean. 

Using Data and Artificial Intelligence

During a panel on the future of retail, McCann emphasized that understanding data and AI is a major investment for the retail industry. 

“The most investment in any vertical is going to be in the retail space in AI, which is shocking,” McCann said. “Why [so much money]? Because you’ve got so many stores, so many customers, so many products that [collect] so much data. And what you need to make AI work is essentially lots of data to train the algorithms [and] lots of data then to use it.”

However once retailers have developed the systems to utilize AI, McCann predicts that AI will touch every aspect of the retail business — from improving the supply chain, to determining pricing and sale items, to merchandising.  

“All of that is going to be driven with AI,” McCann says. “Today, it’s barely possible. In five years it’s going to be highly possible. In 10 years…you’re dead if you’re not doing it.” 

Mastering Auto-Replenishment Early

Tom Furphy, former Vice President of Consumables and AmazonFresh at Amazon, discussed the role auto-replenishment will play in the consumer goods industry. When connected devices automatically order products once they run out, consumers may end up re-purchasing the same dish soap or laundry detergent indefinitely. 

“There’s actually going to be a land grab in the auto-replenishment world,” Furphy said. “[T]he brands that are the most forward thinking…are going to get an early lead. … [I]t’s going to behoove brands to have a strategy in auto-replenishment, and then retailers to have a strategy to how they’re going to support [auto-replenishment] for their customers…”

Furphy pointed to Amazon’s Subscribe & Save program, in which customers can sign up for regularly scheduled deliveries of certain products at a discounted amount. According to Furphy, brands that adopted the option early gained a lead over competitors.  

He also discussed the changing role of brick and mortar stores. As  consumers shop online for utilitarian, household necessities, physical stores represent an opportunity to explore new products and buy fresh goods. 

“[Purchases that are] low consideration, [and] high frequency… [become] more and more automated. People don’t want to think about those types of purchases,” Furphy says. “The store’s value for community, for richness of experience…becomes more and more important. And I think that the next generation of shoppers are really going to crave that.”  

Knowing Your Customer Demographics, Meeting their Needs

Rick Roche, CEO of Roche Brothers Supermarkets discussed keeping up with food trends and providing services tailored to different customer demographics. Roche Brothers, a chain of supermarkets with 17 locations in Massachusetts, focuses on access to local and fresh products. Organic and health foods are also common sights on store shelves. 

According to Roche, the company’s supermarkets prioritize the shopper’s experience over new technology. “[Customers] want to be taken care of,” he said. “People want service.” 

Roche also acknowledged that the chain tends to attract older customers that can afford their higher prices and regional products. However, the stores also make an effort to meet the needs of their younger clientele. 

“The older generation still loves us because they grew up with us. They’re used to [shopping for fresh food frequently],” Roche says. “But the millennials and the people who are younger, they like to…experiment with cooking, even though those meal kits were attractive for about a month. So they need us to help educate them on how to cook if they didn’t do it before.” 

Staying True to Brand Values

Stephen Smith, CEO of L.L. Bean, also emphasized the importance of authenticity and staying close to the values of the brand. During a live recording of the podcast Retail Tomorrow, Smith discussed the outdoor apparel company’s rebranding efforts. 

“What had happened to [L.L.] Bean over the years was we locked in on a core group of customers in the 80s and 90s who really fell in love with the brand,” Smith said. “So we just added products [for that demographic]… [A]nd you find yourselves ultimately in office wear and things we would call much more refined.”

When looking to reposition the brand, Smith said his team focused on the original value of the company: love of the outdoors. That authentic message, Smith said, has shaped strategy at L.L. Bean. 

“[W]e landed with our really clear customers…which are people who want pragmatic, purposeful products,” Smith says. “They go outside…for joy and for rejuvenation. …[That] generated an entirely new merchandising strategy for…our product line.”