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Three shifts that will shape the future of grocery retail: Study

Retailers should tailor their strategies to the young and the working-from-home
Shutterstock/Trong Nguyen

While life in lockdown gave rise to new buying habits, a new study says the pandemic has accelerated consumer shifts that were already underway.

Before the pandemic, PwC surveyed more than 19,000 people in 27 countries, including 1,000 Canadians in Toronto, Montreal and Vancouver. Follow-up surveys were done in the spring with 1,000 Canadians to explore the impacts of COVID-19.

PwC Canada’s “Canadian Consumer Insights 2020” survey found that urban consumers show greater comfort with going back to previous behaviours at grocery stores (58%) and retail stores (44%), followed by restaurants (33%) and malls (32%). But even as people may go back to their old ways, the study says retailers will need to focus on key shifts when setting out their long-term strategies.

In an interview with Canadian Grocer, Myles Gooding, national retail and consumer leader, PwC Canada, discussed three shifts and what they mean for grocery retailers.

Shift #1: Buying behaviours of gen Z
The report notes that it’s important to pay attention to the buying behaviours of younger consumers, especially generation Z, as their habits will increasingly shape consumer patterns in the coming years. The survey found a number of differences between younger consumers and baby boomers. For example, 68% of gen Zers expect to receive online grocery deliveries within 24 hours, versus 35% of baby boomers. Gen Z consumers also have a higher tendency to use other online food options, such as food delivery apps and meal-kit services.

Next steps for grocery retailers:
Gooding says gen Z’s buying behaviours revolve around lifestyle, so grocers need to satisfy their requirements around meal preparation and convenience. “Grocery retailers should start to think about, ‘Am I a seller of ingredients, or am I a seller of solutions?’ That’s where things like meal prep come into play, so meal kits continue to play an ever-increasing role,” says Gooding.

Shift #2: The work-from-home consumer
The shift to working from home has been accelerated by COVID-19, which will have significant implications for retail strategies, according to the report. Those who work from home tend to be younger and wealthier. They’re also more likely to have an Amazon Prime membership than those who don’t work from home (49% vs. 30%), shop for food in microtrips and be open to alternative fulfillment methods beyond home delivery.

Next steps for grocery retailers:
The study says retailers in general will need to put more effort into online product discovery and adapt their product mix. For grocers, that could mean increasing their fresh food selection for microtrippers. “The lifestyle of the '70s and '80s, where you lived in the suburbs and went to the big-box store every Saturday, is starting to get much more fragmented, especially in core urban areas where people are starting to buy more on demand,” says Gooding. Working from home also drives the propensity to buy more online, says Gooding, so grocers need to focus on things like flexible fulfillment options.

Shift #3: COVID-19’s impact on the future of retail
While many Canadians may return to their previous grocery shopping patterns, this doesn’t free grocery retailers from the need to change, notes the study. It’s still important to adapt to trends that predate COVID-19, like microtrips, by focusing more on fresh items and ready-to-eat meals. Another key area is e-commerce, which surged during the pandemic. In the survey, many gen Zers reported poor experiences with e-comm services during the pandemic, with only 7% agreeing that shopping for groceries online is easier.

Next steps for grocery retailers:
The study notes that retailers must keep investing in e-commerce to address customer pain points and expectations. “It’s a bit of a race against the clock because you’re trying to keep the customers who are grocery e-commerce,” says Gooding. “For retailers, the main area of focus should be on the industrialization, if you will, of the fulfillment channel.” That includes flexible fulfillment options, the ability to fulfill orders, and the ability to deliver on promised times. “Even though you might get a bit of a claw back on those e-comm sales, they will grow... The shift is now in motion.”

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