The Impact of Technology in UK Supermarkets


Bachelor Thesis, 2021

58 Pages, Grade: 2.1


Excerpt

Table of Contents

Acknowledgements

Abstract

Chapter 1. Introduction
1.1 Introduction to Digitalisation
1.2 Background of retail technology
1.3 Problems

Chapter 2. Literature Review
2.1 Introduction
2.2 Digitalisation
2.3 Business digitalisation
2.4 Grocery Industry
2.5 UK Supermarkets
2.6 Sustainability
2.7 Coronavirus Pandemic Impact

Chapter 3. Methodology
3.1 Research Overview
3.2 Aims and Objectives
3.3 Research Method
3.4 Planning
3.5 Research Design

Chapter 4. Findings
4.1 Statistical data
4.1.1 Figure 1 Percentage of how many respondents did their shopping online
4.1.2 Figure 2: Age of Respondents compared to if they shop online
4.1.3 Figure 3: frequency of which online grocery provider was used
4.1.4 Figure 4: How often people shopped compared with online provider used
4.1.5 Figure 5: What service respondents used compared with their age
4.7 Public opinions
4.7.1 Has technology impacted the way people buy groceries?
4.7.2 Do you think that being able to shop online has helped Supermarkets during the pandemic? If so, how?
4.7.3 Why do you prefer to shop in-store?
4.7.4 What made you decide not to use those services in-store?
4.7.5 Does technology within the supermarket industry help the way that you and/or your colleges work?

Chapter 5. Discussions
5.1 Comparison to literature review

Chapter 6. Conclusion
6.1 Objectives
6.2 Analysis
6.3 Findings
6.4 Critical reflection
6.4.1 Planning
6.4.2 Research
6.4.3 Analysis
6.4.4 Limitations

References

Appendix
Figure i Survey (Basic Information)
Figure ii Survey (Online Shopping Section)
Figure iii Survey (Shopping instore section)
Figure iv Survey (work Experience Section)
Figure V (Additional Question about facial recognition)

Acknowledgements

First, I would like to express my gratitude to all of the lecturers at the University of Wales Trinity Saint David in Carmarthen, who have been invaluable during my three years of study. I want to express my appreciation to Glenn Behenna, my dissertation supervisor, for his help and support during the process, from helping to select a suitable dissertation topic to showing me the direction to go with my thesis.

Participants in my survey are also people to whom I want to express my gratitude for filling out the questionnaire and returning it in such a short amount of time. With their input, I was able to gain a better understanding of how technology has impacted the supermarket industry.

I would also like to thank my fellow peers and family who have given me support throughout this dissertation and general study at university.

Abstract

The grocery industry is constantly changing due to the rise in new technologies. To stay relevant in today's society, Supermarkets are having to adapt their businesses. This can be hard for certain businesses as introducing new technologies into a business can come with many risks, such as cost. This research's primary aim was to find out how the rise in technology has impacted the way businesses operate and how they have adapted to new technologies, with a clear explanation of digitisation and the impact of its development. This study aims to research the impact technology has had on UK supermarkets. Primary information will be collected via surveys distributed to the public, including employees and customers. Other information will be collected using various sources such as the Internet. Different approaches can be taken to collect information depending on the wanted or needed outcome. The research carried out for this paper requires responses from a broad range of people of different ages and backgrounds. Research, a quantitative approach will be used as it will allow for a larger audience. It would also provide faster responses as surveys can be completed by more than one person—the results and finding identified that technology mainly had a positive impact on the grocery industry. Several respondents said they felt that home delivery services and click and collect allowed them to access shopping services when they could not shop in-store. However, some of the respondents expressed their opinion that technology had not helped and that shopping the traditional way was better.

Chapter 1. Introduction

1.1 Introduction to Digitalisation

The word "digitalisation" refers to the digital transformation of culture and the economy as a whole. It defines the transition from an industrial age marked by analogue technology to an age dominated by digital technologies and digital business innovation, characterised by knowledge and creativity (innolytics.ag, n.d.). As artificial intelligence, advanced robotics, and cyber-physical systems take the digital revolution to new heights, technological change is reshaping the economy's growth (Qureshi, 2020). Business technology is on the rise, and the business world is learning and adapting to innovative technologies. Trade and commerce have increased as a result of the role of technology in business. As a consequence of technological advancement, business concepts and models have been transformed (bookfresh.com, 2020).

1.2 Background of retail technology

Retail has a long history that dates back hundreds of years to become what it is today. With the emergence of online shopping, brick and mortar stores can no longer compete solely on price and quality. Retailers must now have a compelling purpose for customers to visit their establishment. The idea of a nearby convenience store may not be as appealing as it was a decade ago. The physical space and overall experience must differentiate brick and mortar stores from online stores. Additional services and amenities, leisure provision, and price are some of the factors that affect customers' decisions. According to IGD research, the top ten global online grocery markets are projected to produce total revenue of nearly £145,479 by 2023. Four of these supermarkets are based in Europe, The United Kingdom, France, Germany, and Spain (Askew, 2018). The significance of the retail environment is projected to grow in the future (Deloitte, 2017).

Grocery stores to the high street face increasing competition both physically and digitally, so the retail industry must continually adapt and evolve to a digitising environment (McCarthy, 2019). The transition to online shopping has been one of the most dramatic retail industry developments in recent decades. Every year, the online market evolves, with a higher percentage of sales being generated (McCarthy, 2019). As technology has progressed, so have the applications that are now readily available. The gig economy has allowed more effective delivery services, artificial intelligence developments have resulted in the self-checkout machine, and IoT breakthroughs have laid the groundwork for cashier-less stores (Smart Sense, 2020). The growing value and use of the Internet and other technological advancements significantly affect marketing strategies and enhance the size and reach of consumer self-production (Oghazi, et al., 2012). The idea of having customers take on a partial employee role during a transaction has broad appeal and is highly advantageous for service providers (Curran & Meuter, 2005). Self-checkout is increasingly being used as an alternative to recruiting and educating workers, and therefore as a possible source of cost savings (kara & Orel, 2013).

1.3 Problems

According to consumer research conducted by Phononic last year, 50% of consumers felt that grocery stores had not yet figured out how to use technology as other retailers have (Bandoim, 2019).

One of the biggest problems of introducing technology into supermarkets is the risk of security. Shoppers are becoming more relaxed with providing their personal and credit card information. In contrast, other shopper's concerns are holding them back from online shopping (Hudson, 2018). Other problems include theft. Theft is a growing concern in the modern era of shopping as the more self-service is provided, the more risk there is for theft as there is less supervision. Customers can easily switch price tags or fail to scan every item. A study conducted by the international study revealed an average 4% loss based on the total merchandise value (Heil, 2018). A study conducted by Voucher Codes Pro, a sales coupon website, quizzed 2,532 shoppers about their supermarket habits and found that close to a quarter had committed theft at a self-checkout machine at least once (Moshakis, 2018)

One of the other technology issues is the cost. Self-service systems, for example, are many times more costly than conventional cashier lanes. The average cost of a setup is £90,747.93. There are also the costs of integrating the systems with existing technologies – software and other systems for tracking inventory and sales – as well as the continuing costs of breakdowns and maintenance (Harris, 2017). The two largest UK operators, Tesco and Sainsburys, have said they expect to make around the same profit this year as last despite a vast transfer of food consumption from restaurants to home and a property tax holiday. One of the main reasons is the high cost of expanding online delivery operations (Eley & McMarrow, 2020).

The global grocery e-commerce market is expected to rise at a compound annual growth rate of 13.5% over the next decade, from €43 billion in 2017 to €135 billion in 2025. According to analysts, e-commerce companies are attempting to develop a presence in the United States and Europe. Still, they face significant challenges because the current grocery market is crowded (Tomra, 2018)

Chapter 2. Literature Review

2.1 Introduction

The purpose of this paper is to present research on how technology and digitalisation have impacted businesses, with a particular focus on supermarkets. This will be accomplished by gathering information from public surveys and secondary sources such as websites, articles, and previous research

2.2 Digitalisation

(Gartner, n.d.) describes digitalisation as

"The use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business".

Digitalisation is becoming increasingly important in emerging business ecosystems. Adapting to technology has proven beneficial by making work systems more manageable and less complicated, allowing people to focus on their work and be less preoccupied with external factors (The Enterprise World, n.d.).

2.3 Business digitalisation

Several factors drive a degree of digitalisation within a business that includes the following: Technology, technology has many potential benefits on operations within a business and difficulty level of digitalisation. The demand comes down to the customers. Some customers like it the old-fashioned way and others like adapting to new things. The consumer's behaviour also plays a big part in the digitalisation of a business (Consolidated Technologies Inc, 2018).

While there are many advantages of integrating technology in a business, there are also disadvantages, such as investing in digitalisation, which takes a lot of time and money. (Bossard, 2020) The speed at which technology is developing can also negatively impact businesses, especially high street retailers who may struggle to catch up. Although digitalisation has a beneficial impact on the environment to a certain degree, it also has a negative impact as certain technologies can cause CO2 emissions, negatively affecting the environment (Pettinger, 2020).

2.4 Grocery Industry

The growth of technology in the grocery industry is reaching a fever pitch because of growing consumer demand for everything from online grocery shopping to more targeted ads. Phononic, a cooling solution provider, found that 89 % want to shop in a supermarket that understands how to make grocery shopping more efficient. At the same time, the Food Marketing Institute and Nielsen recently estimated that in as little as five to seven years, 70% of grocery shoppers would shop online (Crowe, 2020). Consumers have traditionally made purchase decisions at the store shelf, giving institutional brick-and-mortar retailers great power to learn about and influence behaviours and preferences. With the rise of e-commerce, mobile shopping, and most recently, smart technologies, new competitors threaten this long-standing supremacy (Reinartz, et al., 2019). The new dynamics of the modern world and the speed at which the new technological, social, and information revolution impact consumers' way of having has become a reality for companies (European Business Magazine, 2020). In 2020 Nestle reported its best quarterly growth for nearly five years. This was mainly caused by customers stockpiling due to the coronavirus lockdowns. Nestle Chief Executive Mark Schneider noted E-commerce as a "Key Area" (Morrison, 2020).

There are several different types of technology that are changing the way we shop. More and more supermarkets are now offering online ordering, allowing customers to shop in the comfort of their own home. Offering online ordering and delivery shopping has become more accessible for many people, such as the disabled, the elderly, and those who want to avoid contact due to the current pandemic caused by the coronavirus (The Grant County Beat, 2020). Other revolutionary technologies are self-scanning and self-checkout. Using a company's mobile app to scan and pay for products means that there will be no queuing to pay (epc, n.d.)

2.5 UK Supermarkets

Many retailers in the United Kingdom have begun selling groceries, beverages, meal kits, and other goods and services online. Morrisons, Ocado, Iceland, Amazon Fresh, and several other businesses are among the companies that British customers are buying from. Tesco, on the other hand, is one of 2020s most popular store brand. In the last 12 months, nearly half of online shoppers in the UK said they had ordered groceries from Tesco. (Statista, 2021)

The United Kingdom has gone further in embracing internet retail than any of its Western peers at the moment; 20% of UK shoppers buy totally or partially online. For UK retailers to stay relevant and profitable, they must adopt new technologies and advance analytics to meet changing consumer needs. (Blachandani, et al., 2020). A survey conducted by Deloitte Digital Found that digital technology influenced 33% of in-store retail sales in the UK, equivalent to almost £100 billion. (Deloitte Digital, 2014) The transformation of the UK's traditional grocery and store scene by online providers is looking to grow. Amazon already provides free grocery delivery to millions of consumers in a major expansion of its fresh food operation. Traditional supermarket stores are struggling to catch up, with Tesco making a follow-up announcement promising free delivery to holders of its Clubcard Plus Reward Program in an attempt to compete with digital rivals. Meanwhile, Marks & Spencer has recently become Ocado's primary retail affiliate – perceived to be the next step in the expansion to catch up with rivals (Gupta, 2020)

Although technology has improved UK supermarkets' operation, it has also come with some disadvantages, for example, a trial with involved facial recognition in the UK supermarket coop. The software 'Facewatch' would notify staff if a customer has had previous experience of theft or anti-social behaviour. This caused privacy concerns. In an open letter to the retailer, privacy international questioned the legality of the technology used in stores. Facial recognition has proved to be a controversial subject, with questions over how well it recognises darker shades of skin and ethical concerns about invasion of privacy (Wakefield, 2020).

2.6 Sustainability

Over the years, sustainability has become a cause for concern within the supermarket industry worldwide. This is partly due to customer demand for a sustainable and environmentally friendly shopping experience. Technology has played a big part in the improvement of sustainability. For example, an app called Ubamarket offers a creative and simple solution that puts customers in charge of their shopping experience. (Ubamarket, n.d.) Ubamarket's technology provides a solution for both retailers and consumers to maintain safety protocols while also prioritising sustainability. The app has a 'plastic warnings' feature that allows consumers to check every product's packaging for details on whether it is recyclable. At checkout, customers will see an overall sustainability score that allows them to see where they can make changes (Broome, 2020)

A study from The Guardian suggested that supermarkets in the United Kingdom are responsible for nearly one million tons of plastic waste. However, digital innovation provides supermarkets with vast amounts of data that can generate accurate customer demand predictions and dramatically reduce the amount of food waste generated (Drinkwater, 2019).

2.7 Coronavirus Pandemic Impact

When the pandemic first started in Europe, google searches for "Food delivery and "local food" reached an all-time high. Supermarket giants such as Ocado and Amazon Fresh became overwhelmed due to the high demand for home delivery services (Shveda, n.d.). Since the beginning of the Coronavirus crisis, grocery retailers have had to adapt to consumer demand, both in-store and online. Supermarkets have had to scale up operations while also putting precautions in place to protect staff and customers (Darmody, 2020). Many businesses have had to adapt their business model or implement new technologies to help customers feel more at ease and encourage shoppers back into the store (Baldwin, 2020). Many technological solutions are emerging or gaining prominence that promise an improved, smooth, and Covid-19 safe in-store shopping experience, ranging from digital signage and QR codes to scan, pay, and go technology. Depending on their success, many of these innovations could become a part of the "new normal" retail experience in the long run (Sentance, 2020). The most significant change to the grocery industry has been the rise in online ordering. Many stores were already providing click and collect as well as delivery services. Due to the pandemic, many businesses have had to introduce these services to keep up with consumer demand (Morgan, 2020).

According to a recent study, since Q1 of 2020, there has been a larger growth in online shopping behaviours among Generation Z and baby boomers as well as consumers living in rural and suburban environments (Gorman, 2020).

The pandemic has seen sales in stores rise rapidly. Over 12 weeks, Iceland's sales were up by 28.6%. This was due to the rise in customer demand as lockdown started. To achieve this, Iceland had to increase its online capacity and extend available delivery slots (Perkins, 2020)

Chapter 3. Methodology

3.1 Research Overview

This study aims to research the impact technology has had on UK supermarkets. Primary information will be collected via surveys distributed to the public, including employees and customers. Other information will be collected using various sources such as the Internet.

3.2 Aims and Objectives.

This research's primary aim was to find out how the rise in technology has impacted the way businesses operate and how they have adapted to new technologies, with a clear explanation of digitalisation and the impact of its development.

1. Explanation of digitalisation within a business
2. Evaluate the impact it has had within the Supermarket industry.
3. Provide information from previous research carried out.
4. Explain both positive and negative impacts.
5. Obtain secondary data for analysis.
6. Compare both primary and secondary data.
7. Present findings
8. Provide recommendations.

3.3 Research Method

To complete the research that is required for this study, a suitable method must be selected. Several different types of approaches can be taken to collect information depending on the wanted or needed outcome. The research carried out for this paper requires responses from a broad range of people of different ages and backgrounds. There are two main types of research methods which are quantitative and qualitative data. Quantitative research collects numerical data to find patterns and averages, make predictions, and generalise results to a broader population (Bhandari, 2020). Quantitative research can be broken down into three main categories depending on the outcome that needs to be achieved.

1. Descriptive
2. Correlational
3. Experimental

Descriptive research is defined as a method for describing a population's characteristics or a phenomenon under investigation. This approach emphasises the "what" of the study rather than the "why" of the subject. Descriptive research focuses on explaining a demographic segment's nature rather than investigating why a particular phenomenon occurs (Question Pro, n.d.).

Correlational studies aim to determine if there are differences in a population's characteristics depending on whether or not its subjects have been exposed to an event of interest in the naturalistic setting (Lau & Kuziemsky, 2017).

Experimental research is research that uses two sets of variables and is conducted systematically. The first set serves as a constant against which the second set's differences are measured (Question Pro, n.d.).

In the early 1930s, Paul Felix Lazarsfeld introduced research through the use of surveys by conducting a study about employment in Marienthal, a small industrial town near Vienna. By careful assessment, Lazarsfeld transformed qualitative data into quantitative analysis, a breakthrough in research survey methods (SoGoSurvey, 2019).

Qualitative data focuses on obtaining data through open-ended and conversational communication (Question Pro, n.d.). Qualitative research usually is recognisable via the use of methods that include in-depth interview and group-moderation techniques; researchers who offer expertise and knowledge to cover the procedures they use and the interpretations they derive; a particular objective to answer 'why?' and 'how?' questions (Bailey, 2013)

Although a qualitative approach would provide more opinions from people, it would also limit the amount of research that can be analysed. For the purpose of this research, a quantitative approach will be used as it will allow for a larger audience. It would also provide faster responses as surveys can be completed by more than one person, whereas with qualitative methods such as interviews, only one person could respond at one time.

3.4 Planning

Upon completing the literature review and gaining a clearer image of what questions need to be answered, a quantitative approach in the shape of a survey is created and distributed through various online social media platforms to gather information from the relevant sources within the specified timeframe. By sharing the survey through the different social media platforms, it allowed access to a broader audience of diverse backgrounds as well as the option for the survey to be shared by others allowing for even more exposure. As the majority of data from the surveys will be statistical, it is vital to include questions that require different opinions and experiences. This will allow for a more in-depth analysis of data.

3.5 Research Design

Basic questions such as sex and age were asked, allowing for categorising data for analysis. When asked if they do grocery shopping online, three options are available "yes", "no", and "sometimes. Depending on the chosen answer, the respondent is taken to different sections, meaning that the questions will be relevant to the respondent. One section includes questions that involve shopping experiences such as services that are used and thought-provoking questions such as How technology has impacted the way they buy groceries online and how technology may have helped supermarkets during the pandemic. Respondents that said that they did not shop online were directed to a different section that involved questions about in-store experiences surrounding technology as well as questions about why they decided not to shop online.

Both sections asked if they worked or have ever worked in the supermarket industry. Questions in that section included what role they played and how technology has helped within their employment experience and any changes they may have noticed.

Chapter 4. Findings

The results of the questionnaire review are discussed in this section. The data will be presented in pie charts, each with a summary. Multiple software applications were used to provide the most precise analysis possible, including Google forms for producing and sharing questionnaires and SPSS for analysing the answers. SPSS was primarily used for crosstabulations and frequency analysis of the responses. Upon receiving the responses, it was clear that there were some duplicate answers that would make it more challenging to analyse. This will be included within the analysis. To avoid these problems in the future, restricting the answers that can be given would help prevent answers that were not relevant to the research purposes. Giving the choice of "other" in the questions meant that unique answers were given. This provided both advantages and disadvantages. Having more unique answers has allowed for more analysis. However, it has also meant that some of the responses were not particularly relevant to the question asked; this has made analysis a lot harder.

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Excerpt out of 58 pages

Details

Title
The Impact of Technology in UK Supermarkets
Course
Ba Business and Management
Grade
2.1
Author
Year
2021
Pages
58
Catalog Number
V1066432
ISBN (eBook)
9783346478610
ISBN (Book)
9783346478627
Language
English
Tags
impact, technology, supermarkets, uk online grocery
Quote paper
Shannon Jones (Author), 2021, The Impact of Technology in UK Supermarkets, Munich, GRIN Verlag, https://www.grin.com/document/1066432

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