It's as true now as in the past: grocery is a cutthroat business and there’s no reason to think the future will be any different. Margins will continue to be tight, options for consumers will be plentiful and innovation in the segment will undoubtedly accelerate. In short, grocers will need to adapt to succeed.
Adaptation is good in that it offers opportunity for fresh ideas grocers can leverage. But where to start? Though there’s no single solution, we can look at how consumer expectations are evolving.
For its Grocery Retailing Canada 2016 report, Mintel asked consumers what they’d like to see more of in grocery stores. Based on the responses, it was clear that shoppers want to “try before they buy.” Consumers were most interested in being able to sample cooked versions of frozen meals, followed by pop-up booths in store that allow for sampling different centre-store products. While sampling has been a supermarket mainstay for decades, the finding illustrates that investing in activations in-store is essential in upping the consumer experience.
In-store boutiques for categories such as tea are an extension of sampling, as they provide more catered services related to specific products and brands with the ultimate aim of moving volume. The use of sampling as a traffic driver is important in the centre store with more than half (54%) of shoppers surveyed stating they “prefer to get in and out of the grocery store quickly rather than browsing the aisle.” In other words, the opportunity to experience foods is key in making the centre store a destination rather than an obligation based on the need to stock up.
Integrated technological solutions can help lure younger shoppers to the centre aisles. Nearly half of 18- to 24-year-olds (47%) surveyed said they were interested in an app that tells them where the items on their grocery list are located in the store. Furthermore, 41% of this group said they’d like to receive in-store offers by logging on to store Wi-Fi, while a third (33%) are interested in scanning bar or QR codes with their mobile phones to access detailed product information.
As homes and cars get smarter, it stands to reason that the next generation of consumers will also want to shop at smarter stores offering a more tailored and efficient experience. As augmented reality evolves— think Pokémon GO—look for mobile devices to become
more integrated at retail.
Amazon is, perhaps, on the forefront of marrying the latest technology with the in-store experience. The company bills its Amazon Go concept store as offering “the world’s most advanced shopping technology.” Its main value proposition is the elimination of the check-out line. Linked to their phones, consumers can grab products off the shelf and walk out, having their account billed automatically. Forgot your wallet? No problem! Just don’t forget your smartphone. The net “benefit” is Amazon’s opportunity to reallocate store employees to enhance other elements of the shopping experience. The vision doesn’t have to be a store with fewer employees, but one where employees offer more specialized expertise and added value.
No one can predict the future with absolute accuracy, but grocers and manufacturers can evolve by meeting shoppers’ demands. Leveraging technology to invest in a more personalized shopping experience is one such path of evolution.
Joel Gregoire is senior food and drink analyst at Mintel, the world’s leading market intelligence agency. Based in Toronto, Joel researches and writes reports on Canada’s food and drink industry.