It’s an interesting time to be in the grocery industry. With massive competition and a hyper focus on customer experiences, supermarkets are responding to the need to evolve.
E-commerce is one of the biggest threats to the grocery industry. It’s why customer experience is by far the number one trend and focus for grocers in the coming years. Supermarkets are feeling the shift to online shopping and the best way to combat this is to create custom experiences shoppers can’t get online.
Similar to movie theaters evolving and adding unique experiences for customers, supermarkets need to do the same. No longer content with a boring or stressful shopping experience, customers are looking for fun food experiences. In the past few years, Americans have spent more on food at bars and restaurants than at supermarkets. To recapture that audience, supermarkets are transforming into social hubs that combine necessities like groceries with entertainment. This could include creating custom community interactions for their customers like wine bars in store, personalized experiences with build-your-own trail mix bars, or full restaurants.
We’re seeing a decrease in the super-sized stores of the past with new supermarkets being built with a smaller footprint to allow for lower break-even levels. This size also is more appealing for customers, allowing for a faster shopping experience.
An even smaller version are the pop-up grocery stores that are appearing in food deserts (low-income locations without access to grocery stores) to offer fresh and healthy food to locals. These mini stores are also popping up in urban areas that don’t have the footprint for a full-size supermarket. These urban pop-ups can appear on a weekly or bi-weekly schedule in trailers and community events can even be planned around these times.
Retailers are seeing a big opportunity with consumers actually buying local, not just saying it as lip service as previous generations might have. Grocers are putting an extra focus on particular tastes of local communities and the importance of supporting local companies. They’re curating an assortment of local products that also gives them a chance to rotate frequently to increase customer interest and add a fun element to shopping.
Private label products continue to show massive growth in supermarkets. No longer just the cheaper non-brand option, stores are creating private labels that reflect their own mission and values. Organic and natural labels will continue to see extra growth. Millennials are a big driver for this explosion, as this generation has proven to show less brand loyalty than previous generations.
Research is showing that customers are less likely to shop only once a week at one grocery store. The big shopping trip to fill the fridge and pantry is more fractured than in the past. There are more shopping options than ever before the shoppers are taking advantage with quick trips to a variety of stores. Convenience is key and these more frequent shopping trips are based on needs and occasions. It’s not unusual for shoppers to stop by a different store 3-5 times a week for a few things in particular. Consumers today have busy lifestyles and are looking for stores that complement their on-the-go mentality. To accommodate this trend, stores will be competing to offer more food options that can accommodate every daily need and eating occasion. A big piece of this is an expanded prepared foods section in which shoppers can feel like they’re eating a gourmet meal for a fraction of the cost with minimal cooking time.
Retailers are being looked upon from consumers to offer the latest flavor and product trends on their shelves. Retailers are expanding salty snack offerings and adding shelf space for on trend items, while also seizing opportunities in the perimeter of the store. Functional foods will continue to be a big trend on the product landscape and vegan is showing the biggest growth for claims with plant-based items exploding in retail. Demands for clean packaging are an industry standard and packaging materials have started showing an increased impact on buying decisions. Along with healthy ingredients, grocery shoppers are demanding sustainable packaging and looking to retailers to offer them options.
Retailers are under pressure to improve transparency. WHERE a product is made and WHO makes it matters to consumers. Both the brands and retailers need to be connected to their community and honesty and authenticity still rule supreme. Consumers are demanding much more information about products than retailers have historically had to give in the past. There will be major innovation in the coming years to improve traceability in supply chains and it’s a unique opportunity to communicate the value of food from farm to fork.
Technology is helping brands and retailers form more personalized connections to consumers. Interactive websites and digital resources are vital to let shoppers conduct pre-shopping research online. Mobile apps are being used to educate consumers and send them personalized in-store messages for better experiences. Look to retailers to invest more into their digital footprint, even becoming similar to media companies with original content like cooking videos and expertise pieces.
Major retailers are already testing automated grocery vending machines which tie into online orders. This will expand to smaller stores looking to create a full experience for the customer that seamlessly moves form online to in-store. This innovation will continue to streamline the customer experience from product to purchase.
For an industry as long-standing as grocery, these coming years will bring more change and innovation than ever before.
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