Last month, Robert Schaulis of Andnowuknow interviewed Engage3 COO Edris Bemanian on his observations of pricing pressures from the likes of Amazon and Lidl. “The biggest trend is that pricing and assortments are becoming more dynamic and localized,” Edris says. He notes that e-commerce is now becoming a fundamental part of retailers’ strategies versus just a “me too” approach. Read the full article in Andnowuknow.com.
Drive Through Supermarkets? A Revolution in Grocery Retail
Traditional grocery stores are phasing out and rapidly losing appeal to the 21st century shopper. With millennials at the height of their rule and a growing shift towards online and instant shopping, the existence of the list-making and cart-pushing shopper is moving towards extinction.
According to a report released by the U.S. Department of Agriculture, the greatest change in U.S. food shopping behavior is the extent to which food shoppers now rely on non-supermarkets as a source of grocery supplies. Long gone are the days when you opened your fridge, made a shopping list of necessary items and spent the morning cruising through the aisles of the closest and most cost-effective grocery store.
The changing mindset of the average consumer who demands an easier, faster and more convenient shopping experience has forced several industries to adapt. Conventional supermarkets are not as appealing in a world with a diverse amount of shopping options, and major retailers are actually starting to feel the pressure to adapt and meet a new set of needs.
From smaller store formats to online shopping, big grocers are wiping the beads of sweat off their foreheads and largely divorcing the “traditional” store formats.
Here are the top 3 ways large-scale grocers are innovating to win back their customers:
1. Convenient Store Formats
Large grocers have been creating smaller, easily-navigable versions of their mother stores with the format of a typical convenience store. Connected to gas stations, the idea is to create a quick and easy shopping experience for consumers who are bound to stop for a bite to eat as they wait for their tanks to fill up.
This past month, Walmart has been a huge player in the game and unveiled their newest convenient store, a “C-Store,” in Rogers, Arkansas. The 25,000 square foot building offers a hot food bar with quick to-go meals such as paninis, nachos, hot dogs and sausages. The new store offers a similar format to that of a classic 7-11 with coolers of beers, sodas and other beverages as well as aisles stocked with grocery staples: milk, eggs, frozen meals and pizza. Walmart has experimented with this type of store in the past in Crowley, Texas and other regions in Arkansas.
Kroger, one of the world’s largest grocery retailers, also opened up their version of a C-Store in College Station, Texas last year. Their take on the smaller store format features 16 gasoline pumps, convenient merchandise and a barrage of coffee and fountain beverages. If the goal is to make act of grocery shopping convenient at a variety of locations, then these grocers are hitting the target. Filling up gas will now become part of the same errand as grocery shopping.
Most grocery stores like Safeway, Whole Foods and Raley’s design their deli and hot meals sections to be an easy, sit-down spot for hungry customers to munch on a quick meal. There’s never been anything particularly attractive about the food options in these delis, so grocery stores have decided to switch their focus and hone in with full force on revamping and glamorizing these in-store eateries.
Meet the newest revolution in dining experiences: the grocerant. It’s a hopeful attempt at creating a hybrid between grocery shopping and fine dining by picking high-end restaurants or restaurants with name recognition and incorporating them into the store layout.
The supermarket chain Hy-Vee has a Market Grille Restaurant in over 20 of their stores. A Whole Foods in New York City has a Yuji Ramen inside their store. A Gateway Market in Iowa even has a beer program, where consumers can fill up pints from the in-store bar and shop with a beer in hand.
If the idea is to attract customers back into stores by offering them tasty, well-known dining options, the food has to be tempting enough to get them to sit down to a meal. Grocers figure that customers are probably more inclined to use the time before enjoying their meal or after the calorie boost to shop for products.
Grocers will be able to yield a better experience for the shopper if the shopper can save on time and money and consolidate their day’s errands, like eating, into a one-stop shopping excursion.
3. Online Services
Technological innovations have been one of the most dynamic tools for shopping evolutions. Making a shopping list? There’s an app for that. Comparing prices between similar items? There’s an app for that. Need groceries delivered? There’s even an app for that.
Over the last few years, grocers like Safeway, Raley’s, Costco and Wholefoods have begun utilizing online shopping platforms and delivery systems with the aid of tools such as Instacart or Google Express. These kinds of services completely remove the need for consumers to set foot in a grocery store.
Amazon is the Stephen Curry of grocery innovators, as Amazon has made huge strides in emerging into the grocery retail market with Amazon Grocery, Amazon Pantry and their newest technological revolution, Amazon Go.
Amazon Go is Amazon’s first physical grocery store and has the format of a traditional store but promises the convenience of online shopping. They reel in customers with the tag, “No lines, no checkout- just grab and go!” Customers walk in, scan their phones over a sensor that detects their account within the Amazon app, grab whichever food items they want off the shelves and simply walk out of the store when they’re finished. Amazon’s “Just Walk Out Technology” uses sensor fusion and computer vision to identify the item that was put in the physical cart and adds it to the virtual cart on the app. The Amazon account is later charged and sent a receipt.
The first store opened up in downtown Seattle, and Amazon is eager to announce additional locations for their new stores in the next few months.
Grocers have had to become more creative, strategic and innovative in the way they market to consumers and grow relationships. With ideas such as grocerants and Amazon Go already taking off in earnest, there’s no predicting the upcoming innovations and evolutions grocery retailers will be fighting to bring to the table.
Photo Courtesy: CSNews