Almost two years after the start of the pandemic, a broader picture can be drawn for the retail sector: Online retail has increased massively in almost all European countries. In Germany, digital shopping is also booming, with almost 90% of German citizens also shopping online. With this figure, the Federal Republic is among the leaders in Europe. The development in Switzerland and Sweden is unusual, as a particularly large number of people in both countries use e-commerce services and yet growth rates remain high.

Supermarkets without physically present customers

So-called "dark stores" have emerged to serve an increasingly static customer base. These are distribution centers that only offer online shopping and are run by app-based on-demand delivery services, such as the start-ups Gorillas and Flink. They entice customers with the promise of delivering orders in urban areas in less than 30 minutes. According to the consulting firm IGD, which specializes in the food retail sector, the market volume in Germany alone is expected to grow from the original 1.3 billion dollars in 2018 to 3.8 billion dollars by 2023.

The German food market is highly competitive. Rewe has also decided to join the Flink delivery service in order to stand up to its competitor Edeka, which uses mini vans from the Dutch start-up Picnic. The new Turkish provider Getir, which is already active in Berlin, plans to increase its delivery unit to 1,000 employees in other major German cities this year.

Seamless multichannel shopping

A good signpost for developments in virtual and now physical retail is Amazon's innovations. The first major development was Amazon's entry into brick-and-mortar retail and the introduction of just-walk-out technology, which allows customers to avoid the most unpleasant aspect of the shopping experience - queuing, putting goods on the conveyor belt, scanning and paying.

In the physical Amazon stores, this process should be as simple as possible. Customers scan a QR code in the Amazon app or a credit or debit card linked to their Amazon account at the entrance. There are weight sensors on the shelves, which are used in combination with cameras to closely monitor customer activity. When a customer chooses a product and takes it from the shelf, it is simultaneously added to the digital shopping cart. The shopper can then simply leave the store and the item is automatically charged. In March 2021, Amazon opened the first of these checkout-free supermarkets outside the USA in London, under the name "Amazon Fresh".

The idea of a checkout-free supermarket has prompted other food retailers to follow suit. Tesco also opened its first 'GetGo' store in London in 2021, while Albert Heijn experimented with its cashierless tap-and-go concept in mainland Europe. This year, Amazon also introduced Amazon One, a biometric payment service that allows shoppers to pay for goods with their bare hands. Combined with just-walk-out technology, Amazon Prime members who subscribe to Amazon One can walk into any Amazon store and make a purchase with a simple wave of their hand.

Algorithmic optimization and delivery robots

Dark store automation and algorithmic optimization of local inventory will be critical. Retailers will rely on machine learning to model the complexity of demand fluctuations. They will use shelf-scanning technologies to detect empty shelves and misplaced items. Similarly, retailers in logistics centers, such as those of P3 Logistic Parks, will use automated warehouse solutions to speed up the picking process. The checkout-less, touchless shopping experience will increase significantly, and many grocery stores will convert their premises to allow consumers to use just-walk-out.

Experiments and pilot projects are already underway in Germany too. In Heilbronn, the Schwarz Group is currently testing a model that is very similar to Amazon Fresh: a convenience store under the name "store.box". Edeka has also launched a similar service at Renningen station in cooperation with Deutsche Bahn. Aldi also opened its first store without a checkout at the beginning of 2022, albeit only in London for the time being. Rewe is going its own way and has been the first provider to offer its customers in the German food retail sector a hybrid shopping model since the end of 2021: Traditional payment at the checkout or innovative, without a checkout process, using the Pick-&-Go app, which customers can use to register at the new type of entrance barrier. The invoice is displayed and paid later on the app.

More and more stores will act as pure logistics distribution centers to handle online deliveries, returns and click-and-collect orders. Street robots like Starship's delivery robots will gradually become a familiar sight on the sidewalks of Western European cities. At the end of 2021, Starship announced that its robots had made two million deliveries, and the company also partnered with UK grocer Co-Op to deliver goods to customers across the UK.

All of this offers just a taste of what is in store for European customers from 2022 and beyond. The aim of retailers is to eliminate as many inconveniences as possible for the consumer while combining the digital and physical identity of the shopper in one customer profile.

This article appeared in issue 3/2022.