Next-Gen Tech Investments Fueling Post-Pandemic Grocery Shopping

The grocery industry finds itself in the midst of a multiyear transformation, as shoppers and retailers begin to fully embrace the power of digital. As grocers work diligently to infuse operations with the digital firepower that's needed to compete in the omnichannel age, they’re simultaneously investing in their stores to transform them into shopping destinations. But COVID-19 threw a wrench into these plans, igniting some foundational initiatives while forcing others to the back burner. The good news is that grocers were already well on their way toward building the kind of digital next-gen enterprise needed to survive — and in some cases thrive — in the "new normal." In Learning from the COVID-19 Crisis: Post-pandemic Grocery Shopping, a webinar hosted by RIS News and presented by Digimarc, we explore the strategies and technologies grocers must embrace as the industry turns toward recovery following months of near-lockdown conditions. The edited transcript is below, as well as the slides from the presentation. Tim Denman: Welcome, everyone, to Learning from the COVID-19 Crisis: Post-pandemic Grocery Shopping. Joining me today are Bruce Davis from Digimarc and Kirk Ball. Bruce is Digimarc's CEO and chairman of the board of directors and has nearly 40 years of experience establishing, managing and growing businesses with an emphasis on emerging market places. He's a thought leader and visionary known for his keen understanding of the possibilities and pitfalls associated with introducing innovative technologies into new markets. Kirk also has a long history in the grocery industry. He's the former chief technology officer for Kroger, where he helped develop the company's digital strategy. Most recently, Kirk was the vice president and CIO of the Christ Hospital Health Network, where he was responsible for delivering IT and clinical engineering solutions for the enterprise. Mr. Ball has accepted a job at a top grocer and will be back leading a team of grocery technologists very shortly. Many of the points we'll be discussing today was recently covered in-depth in the RIS News Top Grocery Trends in 2020: Efficient Focused and Tech Driven special report, which was sponsored by Digimarc. The report was published just as the pandemic began to spread across the country, and while the industry has certainly evolved quickly over the past few months, the key tenets of the report still ring true, and provide insight into where the industry is headed long term as it looks to recover from the health crisis and build a sustainable future. But before we get into the heart of the webinar, which is going to be centered around a spirited conversation with Bruce and Kirk, I'd like to give a quick overview of some of the key themes of the report. When they were surveyed prior to the pandemic outbreak, around half of grocers said that their current technology is a key concern that was keeping them up at night. And I think it's safe to say that early on days of the coronavirus crisis, that number was closer to 100% as grocers around the country hustled to patch together and implement system designed to limit the interaction between shoppers and associates. Those that didn't have the infrastructure to support next-gen solutions like buy-online-pickup-in-store, or in many cases, pickup at the curb, they were forced to institute patchwork solutions, that while providing shoppers the ability to get food and supplies with limited interaction and exposure, we're certainly not long term sustainable solutions. And as you can see on this slide, last year, RIS surveyed grocery IT execs and they reported that around 17% of sales could be attributed to their digital efforts. Again, during the pandemic, it is safe to assume that that number was two, three or even four times that, and will likely be well above the 20% to 30% mark going forward, as consumers were exposed to digital shopping out of necessity, and a large portion of them will certainly remain long term users of the services. The majority of these new digital embrace is centered around getting products to customers as quickly, seamlessly and safely as possible. While the initial scare from the crisis is starting to fade and shoppers are returning to their local grocery stores, albeit donning a face mask and face shield and hand sanitizers in their pockets, there's still a large portion of the population — either because it's concern of exposure to the virus or simply because of the convenience — are interested in and would welcome some form of automated machine-based fulfillment. And to meet the needs of those early adopters, industry leaders like Walmart, Kroger and Stop and Shop have been piloting autonomous delivery vehicles, and nearly 10% of grocers report that they plan to invest in the tech. In addition to leveraging autonomous vehicles for last mile fulfillment, the most tech-savvy grocers are also experimenting with automation in their DCs and warehouses. About 42% report at least some interest in the technology, and that number is clearly poised to rise as grocers look to comply with social distances mandates, not only in their stores, but in their supply chains as well. Now Walmart, for example, is already experimenting with warehouse automation with this Alphabot technology used in their microfulfillment centers attached to the super stores. The autonomous cars retrieve items customers ordered online, and then that bot goes to the workstation where an associate can check, bag and deliver the final order. The three axes of motion that the bots use provide a more flexible system than what's typically found in fulfillment centers and warehouses. While the cart's ability to move horizontally and vertically without lists or conveyors translates to fewer space constraints, and Walmart believes both of these advantages will make the tech easier to implement in small scale fulfillment centers. But where's all this money coming from to pay for this next-gen social distinct solutions? Well, according to research conducted by RIS at the start of the year, retailers are planning to increase store tech spend by about 4% year over year, and it's safe to assume that that number should go up even higher considering the investments many retailers, especially grocers that had to make as COVID-19 spread. Now a lot of that money came from discretionary funds so we'll have to wait till next year to see what percentage went up. This was just a quick look at some of the key things examined in this report but we encourage everyone to check out the full report after the webinar. Right now, I want to bring in our experts who have been patiently waiting to get into this conversation. The first question I have is for Kirk. Kirk, you're heading back to retail after a few years in the healthcare industry, and you certainly picked an interesting time to make your return. How will your experiences in healthcare inform your return to retail? Kirk Ball: Yeah, Tim, that's a good question. In the past, I worked with a great retailer and I'm soon going to be working with another great retailer, and I'm very, very excited to be heading back into the retail industry. I enjoy the pace of change, the demand for innovation, and the focus and attention to the customers. So that's exciting; it's an exciting industry to be part of. I think from a healthcare perspective and learnings that I'll take forward, certainly I think healthcare has reinforced how important it is that retailers focus on the health and safety of associates and customers. And that obviously is one of the very top priorities. And also that with proper precautions and process, it's very possible to curb the spread of the current virus that we see out in society, and even in the retail environment. So it's a manageable solution, assuming that we adopt the precautions and we manage the environment appropriately. Denman: Absolutely. Bruce, coming from Digimarc and the world of automatic ID and data capture systems, how has your background shaped your perspective on the current situation for retailers? Bruce Davis: Much of our work in building a software platform that provides for a successor to the barcode was based on the early experience in the commercialization of that auto-identification technology, and became the foundation of global supply chain. So our work has been mostly focused thus far on efficiency and quality of data generated. But the pandemic now has brought safety into focus, less handling, easy access to identification become much more important than prior to the pandemic. And so that is shaping our work with customers and our development now. Denman: As the COVID-19 pandemic has turned, it turned retail — and grocery specifically — kind of on its head. What impacts have really stood out for you guys, and were there any surprises? Davis: I had an experience yesterday that is telling. I went to Best Buy to buy a replacement device for my home network, and they only allowed customers in the store by appointment. And so, I went there, stood in line, told them what I wanted, they shopped for me and brought it out. It was a bit shocking to feel firsthand the impact on the perceptions around safety in shopping. And those will create tremendous margin pressures in the industry, grocery industry, which already has thin margins to develop new models of shopping that will be safer, more efficient, and yet still enjoyable for the shoppers. Ball: I think from my perspective, one of the things that has really struck me about the grocery retail industry is just how important the local grocery store is to the community and how connected people are and how important the services, the goods that are provided by those grocery stores are to the community. It's also very important, obviously, for the retailer to be agile and adaptable to changing customer preferences. And you saw with the COVID-19 pandemic, you obviously saw associate and customer preferences change dramatically, still needing to get their shop done, but do it in a safe and effective manner. And then the importance of having a flexible supply chain that can adapt to, in some cases, significantly large bursts in demand. I think those are things that from my perspective, have really stood out. Denman: Absolutely. What do you guys see the biggest changes in shopper behavior that you've seen and how have grocers adjusted their operational models to address to those changes? Davis: One massive change for grocery, of course, has been the inability of restaurants to compete in the manner that they had prior to the pandemic. I think much of that will be enduring for at least the foreseeable future where lower density restaurants will be permitted and the old densities not allowed. That's causing more people to eat at home, but the problems posed by the pandemic have also brought to the fore of their consciousness, healthy eating. So I think they'll be eating healthier, they'll be eating more at home. That's very good for the grocery industry. I think that they will be focused more on value than ever before, those private brands will prosper, and they'll be shopping from home. So, e-commerce will increase. However, as Kirk just said, these groceries are the bedrock of the community. It's a place to gather, it's a place to see friends, it's a place to feel the joy of shopping for healthy meals and snacks and getting out of the house, all of those virtues. So the stores have to operate very efficiently, and thus we see among retail leaders, efforts to implement at a much more rapid pace omni-commerce strategies that allow the consumers to do all of these things while trying to figure out what the long term cost model looks like. Ball: I think I would just add to what Bruce said, is that clearly preferences of customers have started to focus on distance from others during the shopping process, in some cases, obviously, in a lot of cases, that significantly drove up the utilization by customers using online grocery shopping capabilities that many of the retailers have. It also significantly changed the physical process in the store. Some retailers have gone to one-way aisles, changing hours to have certain segments of the population come in and get time that might be more susceptible to the disease. So, there has been a lot of change I think in shopper behavior. Just to go back to the point regarding adoption of online, I've read reports that estimates are that the pandemic has accelerated the adoption of online shopping by two to three years, and that will be a permanent shift. So, obviously, significant influence on consumer behavior. Davis: And the safety concerns, pardon me, the safety concerns have driven people to want to make less shopping trips, buy more when they shop, shop at fewer retailers. So these all have significant effects on strategy for retail operations. Denman: And as grocers look for innovative ways to comply with all these new social distance mandates, and also the ideas you're talking about this now, a lot of the focus and attention has been placed on checkout. How do you think retailers have handled this challenge and what else might they consider to make checkout not only faster, but safer? Davis: I think this is the toughest dilemma of them all. One of the great virtues and competitive strengths of physical retail is having many stores in local markets. So in the nominee commerce environment where online has a bigger share of the business, the market leaders have been working hard to use those stores as distribution centers for pick and pack curbside delivery and home delivery. What that means is that the store operations changed fundamentally into what has been referred in some cases as a hybrid warehouse. And yet we all know unpleasant warehouses can be for people and shopping should be pleasant. And so, you have now a density requirement that requires fewer people in the store at the same time that you want shoppers in the store, store associates shopping for online customers and contract shoppers from companies like Instacart, competing for the space within the store. How do you match that all together with a heightened concern about safety in a way that does not significantly impact on profit margins? To me, that is a big question for the industry. Ball: It's been interesting to watch. I've seen a lot of different things within grocery stores as I've gone to shop that they're trying to adapt to changes in shopper behavior. I've seen things moving to pinpad farther away from the bagger so that you're trying to create distance at the front end, obviously, the Plexiglas barriers, cleaning the checkout area of each customer, elimination of reusable bags so that you don't have folks bringing bags in at multiple times to the store. Then think about how challenging it can be once you get a process, a front end checkout process down, that you want to then standardize across a large number of stores and the operational education and training that has to go on in a very short timeframe. So, pretty impressive. The retail operations components of retail grocers and getting all of these changes done in very quick order across a large footprint and how do you quickly come up with what the right thing is? So I think the flexibility and agility that the grocers have come up with has been pretty actually impressive. And then obviously, from an online perspective, I think there's a lot of things that are being done to maybe take the checkout process to a virtual space, increasing the number of delivery slots per store, expanding fulfillment capability, expanding the hours, which people can execute, I'll say the generic term of click and collect, expanding home delivery. I will say I do think things that can be done to minimize the handling of product, and I think this is one area where Digimarc can definitely enable some of that by minimizing having to pick up product and turn it to a UPC. I certainly think that there's capability that Digimarc can provide to eliminate as much touch on product as possible. So, those will be some of my observations in that area. Denman: Well said. And you mentioned, associates and frontline workers with training itself, but obviously, frontline retail workers have been among the many unsung heroes of the pandemic. How can they be better served during this crisis and what role can technology play to make their jobs easier? Davis: I'd pick up on Kirk's point in answering this question, Tim. As he noted, cashier-assisted checkout has changed materially and there are now Plexiglas barriers between the customer and the cashier. Dovetailing that with the point about handling, the cashier typically handles lots of packaging because they have to manipulate to find the barcode and present it to the scanner. They also have to deal with bottom of the basket, and they used to sort of sometimes aim over the edge of the counter to get to bottom of the basket. Now, how are they going to do that with the Plexiglas? Are they going to walk around and get extra long cords for their scanners and so forth? All that leads to stress, additional work, and a reduction in the empathy created, which is a core part to me of the grocery experience between the cashier and the customer. I think it's going to drive customers to self checkout both front of store and in aisle. The people are going to be reluctant to handle the product more than they need to so they've got to have a very efficient checkout experience. And if they're checking out in aisle, that needs to be coordinated with the other means of commerce that are being conducted in the aisles that I mentioned earlier. So, a lots going to change in grocery retail. It's a very complicated, very difficult technical landscape. I'm looking forward to getting Kirk back into the game here to address all these challenges because health and safety are foremost in the values that the technological change will foster. Ball: I think the first thing that has been really kind of need to watch has been the recognition that the commitment of the associates to continuing to do their job and serve their customers, getting that recognition has been really awesome to watch. Not only are they having to do their job, they're also having to help the public understand that they're safe and to continue to maintain those relationships with people many times. Going to the grocery store is one of the few times at least when we were locked down in this area, they actually got to talk to other folks in a physical setting. The associates in retail groceries have absolutely done a fantastic job. I think obviously, continuing to focus on the safety of the associates and customers, coaching customers on how to wear masks and make sure they're wearing masks, one shopper per household, providing more time to associates to stock shelves without customers, and continuing to focus on identifying additional ways from an operations perspective that safety can continue to be improved I think are all things that can be done. And then obviously from a technology perspective, we talked about it earlier, but anything that can be done to reduce the amount of touch points by associates and by customers, so whether it's the implementation, scan, pay and go, we talked about capability of something like a Digimarc helping reduce the amount of touch required to find the label to find the UPC. And then obviously, we talked about it earlier, potentially the expanded use of robotics and automations in stores and in warehouses, I think are always in which technology can have an impact on keeping those frontline workers safe and healthy. Denman: It keeps coming up in our conversation the idea of home delivery and curbside and byline pickup store. Do we expect those services to remain popular post-pandemic? Davis: I think it's irreversible. The convenience associated with it is going to drive enduring value. So again, the economics of home delivery and curbside need to be worked out in a value conscious shopping environment. So, how will retailers provide the lowest everyday prices to their customers while bringing essentially more value to them through the support of these new means of taking delivery. And I also think that the countervailing factors is one that Kirk was just talking about, which is, and I believe is so important, is that people establish relationships in retail. It's a nice place to go, go see your friendly local grocer, go to superstore and get everything you need them in one place, shop for value, compare items, find out about specials. So, curbside delivery will serve some of the customers very well. But others will want to go into the store and want to have as much of a pleasant experience as they can under the change circumstances. Ball: Certainly in a word, I think the answer is yes. And I agree with Bruce, I think the increased pace of adoption of online grocery in grocery shopping, it's had a precipice and I think it's definitely going to continue to be more mainstream. I think much like how the pandemic has forced a lot of folks to work from home, the interesting question will be certainly during the key parts of the pandemic, utilization of online grocery was absolutely through the roof. I think it'll be interesting to see where it settles in at, but again, everything I've read saying a two to three year acceleration and adoption of online grocery. I think the opportunity is for grocery retailers to figure out how to significantly eliminate friction of the online grocery shopping experience. How can I give people an easier experience? How can I better anticipate their preferences by what I presented them through their online grocery shopping experience? Things I've read say it's three to four times for you to have an online grocery shopping experience with the retailer before you get kind of your cart pre-populated from your previous shops so you're not having to spend so much time getting your basket filled. So I think there's still a lot of opportunity for grocers to mature their online capability to continue to accelerate that adoption. Denman: Along the same lines, as retailers are adjusting to a world in which customers have less face-to-face engagement with the actual brands, how should retailers be thinking about that? How could they keep their relationship with the customer strong without having them in the store? Davis: They've got to accelerate their progress in omnichannel. There is going to be less interaction with the store associates, then there's got to be a lot more communication that happens in some other way. And it may happen in the stores by making the packages more informative through design and through mobile activation. I think mobile is going to be increasingly important for retailers. Their mobile apps, facilitating shopping in and out of the stores. So, if I'm in the store and I want to get some information on product again, I don't want to pick it up, I don't want to call a store associate. I want to get educated sufficiently about health, about safety, about provenance. Social causes are at the forefront as well as health concerns right now. I want to know a lot about my product without having to do a lot of work to get there. Also, when I'm at home, whether I'm online with my computer or perhaps looking at the Sunday circulars, I need to shop efficiently. I need to learn effectively in order to really be comfortable within the omnichannel environment, and then allow the retailer to figure out how to best serve me in terms of delivery. But shopping changes as much as delivery changes. And there's been a lot of press about delivery and not as much about the shopping experience changing. It's going to change a lot. Ball: Yeah. I would say, for me, it's always a value proposition between the retailer and the customer. So even though physical interaction may not be at the volume that it was in the past. If you create an experience that gives the consumer what they want, when they want it, how they want it, ensuring safety, creating a unique experience, whether or not that experiences is in a physical store, or whether that experience is in a click-and-collect kind of fashion, or whether it's delivered at home with your own delivery service or third-party delivery service. If you create an experience that's frictionless and it creates maximum value and safety for that consumer, I believe there's opportunity to drive the loyalty up, the shopper loyalty to your brands. I think it's going to be interesting to see the creative ways in which grocery retailers figure how to continue to enhance that value proposition for consumers. But if you can do that, I think there's a lot of opportunity. You would think one thing, retailers obviously are going to have to continue to focus on, is continuing to drive the profitability of online grocery to even greater heights as it becomes more of a percentage of their sales. So, how do you an increase in profit margin for those online orders versus the physical shop orders? I think that'll be a key area of focus for grocery retailers moving forward. Denman: Kirk, even more retailers are transitioning into recovery mode and lifting some restrictions, there's still a lot of talk about a potential second wave of the virus. How can grocers be better prepared for a resurgence of COVID if it comes or any other future pandemic? Ball: I think that's a really good question. Some of my thoughts are, obviously, for the things that were put in place in a very quick fashion to address consumer and associate concerns, identify the adjustments that were made and determine which ones just need to be made permanent to the process in store or online. And what technology should just stay in place. I think continuing to firm up your flexibility and capacity in supply chain, ensuring your relationships with your suppliers is rock solid. I think we want to continue to improve the online shopping experience. If you can continue to enhance and create a frictionless experience and make it even more seamless than what it is today, I think that's certainly another way. And then I think expand the design and implementation of checkout that minimizes contact with your product. The last thing I'll talk about is I think establish strong relationships with your federal state and local health agencies, your local health networks, and work with them to create a process by which businesses and those agencies and those entities can come together to quickly manage those folks that come down as a second wave. And if a second wave resurfaces so that we can maybe be a little bit more targeted in how we manage those folks that come down with the COVID-19 in a second wave. We can be a little bit more targeted so that we don't have to shut everything down because we can't target and identify and quickly manage those cases in a quarantined fashion. That's one thing I would definitely suggest. Denman: We have one more question before we start to field in some questions from the audience. And this last one's for you, Bruce. The list of disruptions converging on the grocery industry simultaneously is extraordinary. Besides the COVID pandemic, we're seeing massive social unrest across many communities, which has both direct and indirect impacts on grocers. Meanwhile, the industry is also contending with new regulatory climate around food safety, supply chain, sustainability. How can grocers manage all these external pressures and are there any larger lessons to be learned? Davis: It's truly an extraordinary time for grocery retail. As the tentpole of communities, the retailers have a great deal of responsibility. And in order to establish the rapport and the enduring loyalty of their customers, they need to demonstrate their sensitivity to these issues at all times. The health crisis has overwhelmed American culture for the last couple of months. We've seen no mitigation in food safety risk. That will continue to be a concern and now heightened concern because of concern about health and safety which flowed from the virus. So, there'll be a lot of pressure on visibility of supply chains, and about communication regarding the sourcing of products. The sustainability question has not got mitigated; it's got aggravated. Plastic is a wonderful product. There's much more plastic now than there was two months ago. It's everywhere. And yet, the problem of managing the after effects of the production of those products has not changed in the last couple of months. It has gotten more serious. And so, the retailers and their suppliers now have to deal with the simultaneous challenges of virus propagation, food safety and sustainability. I think that it all gets wrapped into a values scheme of caring about customers caring about society. But it's creating more of a sense of global community, which now is leading to changes in shopper behavior as introspection and reflection have I think hit high notes in our society, I certainly hope they have. People are thinking that they want to be good global citizens. So I think they're going to buy products that are consistent with the values that will serve not only them as individuals, but the planet. And so, there'll be an increasing emphasis I think on value, and on communication, and on sourcing, and all of that within the context of the highest unemployment rate since the Great Depression, which means people are looking for value, they're looking for low cost. So I think all of this converges on a revolution in packaging of products. So, the packaging will have to be very communicative but also sufficiently inexpensive that it communicates the values of the shopper and helps with the margins pressure that flows from the increasing operational expense of omnichannel. I think a lot of this converges around the nature of packaging, and we've been using an expression internally of responsible package design. And I do think that everyone and global brands have to rethink how they package their products and serve those values better. Ball: I just wanted to add a couple things on what Bruce said. With all this disruption and all this change, I think it presents opportunities for retailers to really continue to drive home their connection with their customers, the ability to respond to all these changes provides an opportunity for us to drive even greater loyalty as we address all these changes in a responsible manner that gives our customers what they're looking for. Davis: Well, I just had one other point, to Kirk's supplementation, is going back to the store associates and the role they played in dealing with this virus outbreak. They are the bedrock of business. I want to give them all the credit they're due. And they will be the foundation of the strategy that Kirk just described for continuing success in retail, and leading us to a better place. Denman: Now we're going to take some questions from the audience. This question plays right into what you guys were talking there at the end. How do you see private-labeled brands playing a larger role in the new normal? Will we see Kirkland's, Simple Truth and other brands winning their fair share of consumers? Davis: I think the private brand well done represents all the right values that I just summarized. It's giving you the best product at the lowest possible price. And standing behind it, not only standing behind the supplier in the typical global brand sale at retail, but it's the retailer's product, it's their brand. They're standing behind it. So they represent all of those values in every way in which they operate. And the product embodies those values, which makes it very attractive, and particularly importantly, a value purchase in a time of great unemployment. Ball: I don't think you could have said it any better, Bruce. Again, I think with the economic distress that many households are going through, clearly they're looking for the best value. I think that's where you're going to see consumer preferences go towards the best value to meet the needs of their household and stretch the dollar as much as they can. Denman: We have another question here, a little bit on economics. For communities and neighborhoods that do not have a high rate of tech adoption, what other strategies do you envision or recommended in those situations? Davis: That's a tough one. I think that mobile is a substantial part of the answer because even in the most economically challenged families, they generally have smartphones today. There are people who don't and need a different means of shopping. There have been programs instituted, which I think will endure providing special opportunities for shoppers who are at risk health wise, many times in advanced age. And perhaps there's a special sort of opportunity to provide personal service within the stores, that's where the associate interaction would I think be critical. But they need help because they're not technology capable, either economically or because of other circumstances. Ball: Yeah, I think certainly many things we talked about didn't have, there were some things we spoke about that didn't have anything to do with technology but more process, the ability to continue to have that relationship from an in-store perspective between grocery worker and the community. Certainly helping the community understand regardless of the socioeconomic background of that community, that the grocery store is there for them. It is there to help. Back to Bruce's point, I do think that obviously puts more of a focus on the mobile platform and certainly make it easy for people to, making it easy for people to interact with people's perspectives. Denman: We have another question here, a product-specific question. Do you see any change in how fruits and vegetables are displayed and sold in the future, and how about other areas for stores such as bakery? I guess that's really a question of how to make vegetables safe, whether you could pick them up and they're out in the open. Davis: There's been some movement, although I wouldn't call it the profound at this point in time toward the packaging of fruits and vegetables, pre-packaging in safe conditions, rather than the select what you like out of the bin. I don't know how much change will happen there but if handling products is risky that's about as risky as you get. We do know from our work with some produce manufacturers that if you're going to package fruits and vegetables, they need to be very visible through the packaging. And so, to the extent there's more packaging in that category, plastic will play a critical role again. And so, how do you responsibly improve the safety of the produce shopper without unnecessarily being detrimental to the planet and to our long term well-being. Ball: I think there's a couple of additional factors, continuing to learn and understand what the scientific community is telling us about the transmission of COVID. Continuing to obviously pay great attention to that and use that to at least help inform the processes selected for the display of fresh fruit and vegetables. And then obviously a lot of what I've heard is around maybe packaging and again, the use of plastic as Bruce mentioned. So, I think those are probably a couple of additional things. Denman: We talked a lot throughout the webinar about contactless, specifically contactless payment and contactless fulfillment. We have a question here: Have you seen any new ways for stores to manage in-store markdowns in a contactless way? Davis: Yes. There's work underway on using extended data as a means of allowing freshness to be more easily managed as a primary determinant of price. And so, if the labels on freshness-based products can communicate freshness date to all the relevant AIDC interfaces, smartphones, associate mobile and front of store POS, then it's possible to have a more dynamic markdown strategy. That has been the case historically. And by being able to manage pricing like online does, which is real-time dynamic pricing, it’s possible to reduce food waste and offer the lowest possible price to every consumer every day and improve profits all at the same time. So it's a very exciting area of opportunity for grocery retail. It will happen. And when it does, it's going to be a very significant factor in addressing margins as well as social concerns about food waste and improving the customer experience. Ball: I think maybe the one additional, as you see, obviously the advent in the implementation of digital shelf edges, I think that provides a medium as well to provide real time changes to price of product without having to touch products or touch the shelf or change tags or things of that nature. That in conjunction with the interaction with mobile devices that Bruce mentioned, can provide a pretty compelling way in which to manage dynamic price changes, markdowns etc. Denman: I would imagine that anyone with even a rudimentary knowledge of the grocery market could probably rattle off half a dozen to a dozen technologies that grocers need now or will need in the future to kind of fight COVID spread in their stores. How do we expect all of these changes to impact the cost to the consumer? Davis: Prices have to go down. That's the challenge. How will we do these things in a way that improves margins? So, it's not feasible to just increase costs, to provide more services to customers and then raise the prices, it's not going to work. There's too much economic suffering right now. Now that's going to go on for a while. In the longer term, the strategy of low prices is at the top of mind of the new generation of shoppers. They're very value conscious. And so, that's the challenge for executives like Kirk: How do you create a higher level of service in an omnichannel model while improving your margins? Ball: We talked about automation or I think potentially the ability to use and accelerate use of automation. I think scouring, obviously grocery retailers are pretty good at being lean and mean, but continue to find ways to drive down costs, whether it's non-traditional ways of interacting with your technology vendors, different models for payment and cost with them. And so, I think those are maybe an additional couple of ways, but it's a massive important challenge. There's no doubt about that. Denman: When we talk about grocery, a lot of times we end up thinking about the large-scale multi-chain grocers. But obviously, the community grocers are facing all the same challenges. And what are your recommendation for these community-based grocery stores so they can remain relevant, efficient, profitable and viable in a post-COVID world, where they're facing all this relentless competition from the Amazons, Walmarts, Targets of the world? Davis: They have more than their fair share of challenges but I think the foundation of continuing success is in the local relationships with their customers. Working on means that they are safe to stay close to the local customers, and that loyalty is to me the foundation of local grocery. And many local grocers have joined a buying group, which helps to give them some economies of scale while maintaining their local presence at a relatively small scale. I don't have any magic bullet for them, but I think that those two notions are what come first to mind of how to maintain a local grocer and how to prosper in the long term and to manage through these short term extraordinary challenges. Denman: I believe we could probably slide in at least one more question here. So, we talked a little bit about the increased use of plastic and packaging and things like that. So you have a question here, it's a little specific to the actual person, but all my pre-packaged fruit this week was delivered and it had a mold, not visible because they were packaged. Would be interested to know how to solve for that if you're using plastic packaging. Davis: Yeah. Having lots of visibility, but also making sure to have responsible suppliers. This is where there's a correlation between the freshness visibility, if you like, and produce. If it's going to be packaged, it's going to perhaps be less obvious in some ways because of visibility through the package of the state of the product. But it can be more visible with respect to the age of the product because the package can communicate information that can't be communicated in a bin. So I think there's a solution in there for a responsible supplier at retail to cooperate to make sure that freshness is delivered each and every time to every customer. Ball: Yeah, I think having great custodial control over each and every single package from field to shelf to delivery and being able to obviously be very focused on manage expiration date. And then obviously, back to the relationship with the supplier, developing processes with them to help ensure that product gets as most expediently to the shop and is managed appropriately in that journey from field to shelf. Denman: Well, we are out of time. I’d like thank our panelists for a great conversation. Thanks for joining us today. I thank everyone for listening and for your questions. Until next time, everyone out there stay safe.

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