Synopsis
C+R Research, a Chicago based market research firm, recently surveyed over 2,000 consumers about their grocery shopping habits and experience in the wake of the Covid-19 pandemic, specifically how they have changed since the onset of the disease. The results bode well for food and grocery delivery providers. But for those companies focused on autonomous delivery, significant business, technological, social and political challenges remain which the accelerative effects of the Covid-19 pandemic do not ameliorate.
Salients
Methodology
The research methodology was robust. C+R Research surveyed 2,012 consumers who self-reporting via Amazon’s Mechanical Turk survey platform. 42% were male and 58% were female with an average age of 39. Income: Under $10K: 10%; $10-19K: 9%; $20-29K: 11%; $30-39K: 12%; $40-49K: 13%; $50-74: 22%; $75-99K: 12%; Over $100K: 11%. C+R Research noted that Amazon Mechanical Turk respondents may be more likely to use Amazon services such as Amazon Fresh.
Physical Store Shopping Decreases
According to survey, 60% feel a sense of panic or anxiety when they shop, with the same amount also noting that are fearful to shop at grocery stores. In comes as no surprise then that 73% say they are shopping less at physical stores. As an aside, 35% of the respondents believe that grocery stores are not doing enough to protect their customers.
Food Deliveries Increase
44% of the C+R Research survey respondents indicated that their use of meal kit, restaurant or grocery delivery services has increased with the onset of the pandemic. A full 30% said they utilize grocery deliver services. The most popular grocery delivery services cited were Amazon Fresh (31%), Walmart Delivery (25%), and Instacart (24%), with ‘Other’ coming in at 20%. 27% of respondents said they plan to continue to use grocery delivery services once the pandemic ends and life returns to normal.
Analysis
Covid-19 and Robotics
Much has been made of the impact of the Covid-19 pandemic on the robotics sector, with a good deal focused on the use of robots to for sterilization applications and supporting e-commerce fulfillment operations, (HERE, HERE and HERE, for example). For sterilization work, the social and business need is self-evident. While for e-commerce fulfillment applications, the social imperatives are less straightforward, while the business drivers remain the same as before the pandemic.
All ecommerce retailers, as well as third party logistics providers supporting them, understand that fulfillment operations are a major contributor to the burgeoning cost of online retail sales, with fulfillment costs as a percentage of sales revenue increasing. Profitability, to say nothing of the economic viability of retail ecommerce models, requires that fulfillment costs be reduced substantially.
Automation, and perhaps only automation, including mobile service robots, is the key to online retail sustainability and success. That is why public equity financing has poured into companies developing solutions that support logistics automation for retail ecommerce fulfillment operations. Covid, and the concomitant increase in e-commerce retail that has attended the pandemic, has simply accelerated pre-pandemic trends..
Covid-19 Accelerating Food and Grocery Delivery
As evidenced by the C+R Research study, consumers are making fewer trips to physical grocery stores, and as a result their use of delivery services has increased. Other evidence comes from suppliers of food and grocery delivery solutions, both of which have indicated that since the start of the pandemic, their businesses have increased. For example, representatives from online grocery delivery service Instacart have noted that customer order volume is up more than 500% year-over-year.
On a similar note, according to research by consulting firm Bain & Company only about 3% or 4% of grocery spending in the U.S. was online before the coronavirus outbreak. This is a far different figure than the 30% in the C+R study that said they now utilize grocery deliver services.
Research from micro-fulfillment solution provider Fabric paints an even rosier picture. An April 2020 report concludes that approximately 52% of U.S. consumers have recently shopped for groceries online recently due to the Covid-19 pandemic. More importantly, 20% were first-time shoppers and 50% of all respondents indicated that they plan to increase online grocery shopping even after the pandemic ends.
It is too early to determine if COVID-19 will have a long-lasting impact on online grocery shopping habits, but at the very least it appears that the novel Coronavirus will not have a negative effect on a movement that was trending upwards significantly before the pandemic. It is for this reason that food and grocery retailers are already taking unprecedented steps to provide delivery services (including curbside pickup), and are highly likely to continue offering new delivery solutions.
Covid-19 and Autonomous Food / Grocery Delivery
Of course, food / grocery delivery and autonomous food / grocery delivery are different animals. The impact of Covid-19 on the autonomous food / grocery deliveries is much less clear if only because most delivery services are still in the preliminary stages.
Covid will undoubtedly act as a tail wind for autonomous food / delivery, it is only a matter of degree. For example, there are indications that the demand for contactless delivery is increasing due to Covid. Still, in the long term it is ‘time savings’ and ‘convenience’ (for customers) and ‘cost’ and ‘efficacy‘ (for suppliers) that will still be the primary drivers for food / grocery delivery whatever the form it takes.
Given the existing capabilities and regulations, do these systems reduce labor costs and maximize efficiency? Are they commercially viable? What value do they provide the customer?
Autonomous Food Delivery / Autonomous Grocery Delivery
Autonomous food delivery and autonomous grocery delivery are also distinct, with each having different business models. There are also a set of separate, and significant, business, technological, social and political challenges that must be addressed before the autonomous food / grocery delivery solutions mainstream.
To date, autonomous food delivery implementations by companies such as Starship, Kiwibot (and Rappi) and others, have been focused on hyper-local food delivery in fair-weather cities or highly structured environments like college campuses. Their box-like robots move along sidewalks, climb curbs, travel at night, and can operate in both rain and snow (light)
Autonomous food delivery companies continue to announce deployments as the technology improves and business practices evolve, but questions remain. For example, what are the limitations imposed by governmental regulations and what are the technical limitations of the systems now and the foreseeable future? Also, there is the critical issue of workable business models. Namely, given the existing capabilities and regulations, do these systems reduce labor costs and maximize efficiency? Are they commercially viable? What value do they provide the customer?
Autonomous Food Delivery / Autonomous Grocery Delivery
Although there is overlap between systems designed for food delivery and those intended for grocery delivery, there are distinctions. It is fair to say that grocery delivery systems are larger on the whole, and more automotive in feature and function (traveling over roads instead of sidewalks). Autonomous grocery delivery solutions (and partners) offered by the likes of Nuro (with Kroger), Waymo (and Walmart), Udelv (with H-E-B), Refraction, Meituan and others, provide examples.
Autonomous grocery delivery suppliers face many of the same major deployment challenges as their sidewalk traversing counterparts, including some of the same regulatory hurdles and technical issues. Both concerns, however, are amplified given the delivery vehicles’ greater complexity, on road operating environment, larger size, and capacity to inflict greater damage. It is for these reasons, and more, that proclamations from automakers and others announcing dates for fully autonomous vehicles (often ill defined) are consistently walked back, and why an equal number of sector experts do not expect full SAE Level 4 or 5 driving until 2030, a decade from now.
Drivers for Automation
For the retail ecommerce and healthcare sectors, the Covid-19 pandemic has had a profound effect, acting as a long-term automation catalyst. Even when the Covid crises passes, the success of retail E-commerce is still dependent on further automation for the business model to remain viable. The healthcare sector, too, will continue to use automation systems and approaches developed to combat Covid (for example, autonomous disinfection systems to fight hospital acquired Methicillin-resistant Staphylococcus aureus – MRSA – infection).
Formal studies such as that from C+R Research and other sources indicate a similar effect on the food / grocery delivery companies, and there is good reason to believe that the automated food / grocery delivery providers will receive a Covid boost. The long-term effect remains to be seen, although the estimates for organic growth for autonomous delivery services sans Covid were promising. Still, major hurdles remain for both autonomous food delivery and grocery delivery providers. Each has their own unique set of challenges, many of which the positive, stimulative effects of the Covid-19 pandemic will have no lasting impact on.
Dan Kara Vice President, Robotics, WTWH Media
Dan Kara is Vice President, Robotics at WTWH Media where he chartered with driving the company’s robotics initiatives including online and print publications, and in-person and digital events. Prior to joining WTWH, he was Practice Director, Robotics and Intelligent Systems at ABI Research and Chief Research Officer for Myria RAS, both research and advisory services firms focused on automation, robotics and intelligent systems. Dan also served as President of Robotics Trends, an integrated media and research firm serving the personal, service and industrial robotics markets. He holds an MS in Computer Science from Boston University.
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