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Grocery store technology hasn’t changed much in decades, so when the pandemic hit, it served as a wake-up call to the industry, highlighting its shortcomings, especially concerning e-commerce. Grocery stores that don’t adapt will most likely lose out on market share.

The good news for the grocery industry is that technology advancements in recent years, particularly in the area of computer vision, are giving startups a shot at providing grocery stores with e-commerce-like features in a brick-and-mortar setting.

And venture capital is here for it. Investors say computer vision, along with frictionless checkout and inventory management tools, are revolutionizing the grocery industry and will eventually impact the larger future of retail.

Bagging capital and expanding footprints

Grocery tech is attracting VC activity for a few reasons: For one, grocery retail is such a large market — a $1 trillion industry that is poised to grow 3% each year for the next eight years, according to Grandview Research.

Prior to the pandemic, about 3% of that trillion dollars came from online sales. That has now grown to 8%, said Elaine Russell, Greycroft principal and co-lead of the Albertsons Fund, a $50 million fund started by Greycroft and the grocery chain in 2018 to invest in the future of retail and next-generation retailers.

Another is that e-commerce’s share of the grocery market is expected to be between 10% and 20% by 2025, Russell told TC.

“That type of shift in hundreds of billions of dollars shakes up an entire industry and shines a light on glaring holes and issues that large retailers need to fix,” she added. “Change brings about innovation and opportunity, and grocery is a good test, in a way, for the industry because most of the technologies used in grocery can be applied to other retailers as well.”