The new in-store environment
In the pre-COVID-19 world, talk of the “store of the future” was kind of exciting. From interactive touch screens and in-store greenhouses, to wine bars and guest chefs, retailers could transform the boring chore of getting groceries into a food and shopping adventure for their customers.
As we ushered in the futuristic-sounding 2020, no one could have imagined that supermarkets would soon resemble a scene from a dystopian film. But, here we are: mask-wearing shoppers keeping six feet apart as they line up; security guards at the door controlling traffic and enforcing the use of hand sanitizer; floor stickers indicating which way to walk and where to stand; cashiers wearing plastic face shields behind Plexiglass barriers; and an undercurrent of stress and anxiety permeating the store.
By all accounts, Canadian grocers have adapted quickly to the global pandemic, implementing measures like the above to ensure the safety of customers and employees. The questions now are: How different will the in-store environment be in the future? And what pandemic-related trends will lead to lasting changes?
“As we figure out what the new normal looks like in grocery, what we know for sure is customers feeling safe is the most important priority,” says Marty Weintraub, partner and national retail lead at Deloitte. How long that will be at the top of retailers’ agendas is anyone’s guess. “Until we have a solution for the virus, whether that be a vaccine, a treatment, or a curve that’s significantly flattened, people are going to be preoccupied with safety and convenience,” he says.
It may be far from the pleasant, experiential wonderland many retailers had envisioned, but there are still plenty of opportunities for grocers in this new retail environment. Here’s a look at what’s changed, what’s coming, and what might be here to stay:
Product assortment
While things like panic buying and panic baking will be just blips on the COVID-19 timeline, many changes in product needs and assortments will be more permanent. Giancarlo Trimarchi, partner at Ontario-based Vince’s Market, says no department in the grocery store will be left out. “I think every department, as a whole, has pretty significant adjustments coming their way,” he says.
In the centre aisles, COVID-19 could mark the end of the era of endless consumer choice. Beginning in mid-March, many food manufacturers focused on core SKUs to streamline production and keep up with a surge in consumer demand. A U.S. survey by Food Industry Executive found that nearly three quarters (72.5%) of processors have changed their business strategies in the wake of the pandemic, with many focusing on core brands, best sellers and more local suppliers.
“Different flavourings and different sizes have fallen off big time, as
Gone too are self-serve food options, due to concerns about contagion and germs on surfaces and utensils. Like most grocers, Vince’s Market locations have closed their hot bars and salad bars, and are serving up pre-packed ready-made meals and salads instead. In the bakery, the practice of packing your own buns has also been bagged: items are now sealed and pre-packed.
“The days of bun bins and open-air croissant racks—I can’t imagine those coming back,” says Trimarchi. The same goes for hot bars and salad bars, as new safety habits will be hard to break. “That will probably be a long-term effect,” says Trimarchi, adding that the shift to ready-made meals has actually been good for business. “You can protect your shrink when you’re not in a service environment, so it’s a good thing.”
Product assortment is also shifting toward more local food—a trend that’s been around for years but kicked into overdrive during the pandemic. A May 2020 article from Nielsen notes that local origin has become an important accelerator in brand/product decision-making during COVID-19 and will remain a major choice driver into the future. “Much of this has been due to interrupted global supply chains, as well as the need for local transparency and trust of ingredients and sourcing,” the article states.
A recent survey by Deloitte found 47% of Canadian shoppers plan to buy more locally sourced items going forward, even if they cost a little more. In addition, 41% said they will purchase more from brands that have responded well to the crisis. “The notion of the socially-conscious shopper is going to be an important and emerging trend, as well as buying and sourcing locally,”says Weintraub.
Price is also going to be important, as many Canadians are faced with loss of income and the country stares down a recession.“We’re seeing the return of bargain hunting,” says Weintraub. “Private label has been resurging for some time, and we’ll see that curve steepen because of recessionary buying.”
Store layout & merchandising
As consumers want to minimize the time they spend in stores, store layout and merchandising can play a big role in helping customers get in and out of stores safely and efficiently.
“The way that guests shop has certainly changed,” says Joey Bernaudo, senior director merchandising, retail food service at Longo’s. “The leisurely stroll up and down aisles to discover new ingredients has been eclipsed by the need to find the essentials for the week and get home.”
A merchandising concept Longo’s introduced last year is well-positioned to cater to in-and-out shoppers. “In 2019, we launched our meal kiosk pilot inside Longo’s Maple Leaf Square, which features a recipe and the coinciding ingredients for easy meal planning and preparation,” explains Bernaudo. “We expect this type of concept to continue to expand across stores as we revisit the traditional model of the grocery store.”
By now, most grocers have made changes to store layouts to encourage physical distancing and limit interactions between customers and employees. That includes adding one-way directional signs and widening aisles so shoppers can keep their distance from one another. A Retail Council of Canada report, “Road to Recovery Playbook,” notes that it’s “critical for stores to think about flow of traffic through the store and change store layouts to avoid congestion.”
For now, Deloitte’s Weintraub doubts we’ll see a major overhaul in store layouts because of the complexity and cost involved. “We might see that in proofs of concepts or in certain parts of the store, perhaps in fresh,” he says. “But I’m not sure we’ll see a wholesale rewrite of how grocery stores are laid out quite yet, until we learn more about how this pandemic plays out in terms of length and severity.”
One area that’s set to undergo change is the check-out area, as the world goes touchless to minimize the spread of germs. “As consumers become more comfortable with tap-and-go payments, and retailers adopt frictionless technology such as automated checkouts, we’ll see a very different front of store,” says Amar Singh, principal analyst at Kantar Consulting.
In addition, impulse items will likely have to find a new home. “Right now, these are tough times for the front-of-store categories because of the safety measures and people wanting to get out ASAP,” says Singh. “So, categories such as confectionery and magazines will have to find locations within the perimeters or even the centre of the store.”
Even when COVID-19 is behind us, in-store safety measures could be here to stay. “The whole practice of sanitization and social distancing has now become part of our DNA. It’s not going away,” says Jean-Pierre Lacroix, president and founder of Shikatani Lacroix, a Toronto-based retail design and experience firm.
Not only are epidemiologists predicting more waves of COVID-19, Lacroix notes there’s been an acceleration of pandemics and epidemics in recent years, such as H1N1 and Zika. “They were happening every 20 to 30 years, and they’re now happening every two or three years,” he says. “So, I think people are becoming a lot more cognizant of safe distancing as a normal rule.”
In-store technology
COVID-19 may usher in a new age of in-store technology, as shoppers want an experience that’s safe and seamless, whether in the aisles or at the checkout. While in-store tech isn’t new, the pandemic is expected to accelerate adoption among major grocery retailers.
“It’s not that retailers have got a major change of course, they’ve just got to accelerate the course they’re on,” says Lacroix. “For example, people don’t want to touch PIN pads, so we’ll see a bigger investment in technology, especially touchless payment, mobile wallets and facial recognition payment technology.”
Deloitte’s Weintraub says retailers also have to think about associate safety, not just customer safety. “We’re going to start to see a doubling down of all types of automation,” he says.
For example, digital price signs could replace one of most labour-intensive processes in stores: manually changing thousands of prices every week. That will make it safer for employees, as they won’t be next to customers in the aisles, and it will be more cost-effective for retailers, says Weintraub. “There are technologies that for a long time either weren’t business-case eligible, or just didn’t get the right attention, but now they will.”
When it comes to creating a more seamless and convenient shopping experience, navigation will go mobile. Kantar Consulting’s Singh says grocery retailers will look to interactive apps that have a layout of the store, tell shoppers where products are located, and how to get to them. “While we’re still combating the COVID-19 crisis, shoppers are trying to find items in the most efficient way possible to spend less time in the grocery store,” says Singh. “For retailers, it’s a more efficient way to guide consumer traffic
Two in-store developments will stem from the rise of online shopping, which spiked during the pandemic. First: the rise of robots. While a few U.S. retail chains are already experimenting with in-store robots to do tasks like counting inventory and cleaning floors, robots could one day be deployed to pick customers’ online orders. “It’s not going to happen in the next year or two, but in the long run, a retailer’s investment in these technologies will be more justifiable instead of paying associates,” says Singh.
The second shift arising from e-commerce is that in the long-term, lower-margin SKUs will only be available online, says Singh. That means—retailers rejoice—the store will be more experience-driven once the pandemic is behind us. “Transactional buying will shift online and consumers will go to the store to experience new things,” he says.“It will be about discovery, finding new items and innovations, more sampling and more interactive opportunities ... The store is truly going to be the hub of experiences.”
This article appeared in the June/July issue of Canadian Grocer.