New Food Stores

New Food Stores
March 11, 2018 No Comments Blog Richard Kochersperger

What will new-built grocery stores look like in 2023?

 by Bill Bishop

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Many areas of online shopping have evolved and grown, but in most cases the in-store experience hasn’t changed much, especially in grocery shopping. Change is coming, however – and soon. We often hear retail leaders ask “What will the grocery stores of the future look like?” While no one can predict the future with certainty, it’s possible to develop a good idea of what it will look like if you read the trends. That’s how we created this vision of the grocery stores that will be opening just five years from now in 2023.

3 ways grocery stores will be different in the future

Grocery stores that open in 2023 will be different in three key ways.

1. Smaller footprints

New-built grocery stores in the future will be smaller to allow for lower break-even levels.  Most will have a total footprint of less than 30,000 square feet, and some will be even smaller – less than 12,000 square feet.

2. Competitive shift: Every meal, every day, every week

These stores will compete more aggressively for “every meal, every day, every week,” as well as for share of wallet. They will also furnish comfortable seating for eating in the store.

  • Fresh food will be the main appeal. Exceptional vegetables, fruit, meat, seafood, and floral, will be combined with a range of fresh prepared food designed to appeal to a cross-section of eating occasions.
  • An assortment of unique private brand and local products chosen to appeal to customers living around the store will be refreshed frequently to draw customer interest and maintain the fun of discovery.

The combination of fresh and unique packaged products will be what makes the store a destination.  These stores will encourage frequent shopping and deliver a great shopping experience.

3. Rebalanced layouts

New stores will offer a complete range of packaged groceries, but these won’t be presented in the traditional center store layout.

  • Pantry replenishment products will be displayed in the “background” of the fresh department so they don’t draw a lot of attention, much the way grocery products are displayed in Fresh Market stores.
  • Most of the replenishment grocery section will be housed in a “dark zone” instead of on the sales floor. Many customers will order these products online (or via in-store kiosks in more automated operations). The traditional grocery products offered in the store will be supplemented by a broader range of items that customers can order for pickup or delivery.

Trends that are driving these changes

Shopper, retail, and technology trends are combining to drive these changes.

Consumer shifts

Consumers are moving toward two key shopping occasions: fresh/discovery and replenishment.

  • Fresh/discovery is about engaging with products and store associates. On this occasion, customers are shopping fresh products; they want to see, touch, and even taste before buying, and they are open to and interested in discovering new ideas and products.
  • Replenishment is about buying familiar products that are used regularly, so they can be purchased with confidence.

This change in shopping behavior is reinforced by:

  • A preference for smaller stores that enable faster in and out shopping.
  • A growing willingness to shop more frequently for fresh food as part of a healthy diet.
  • The increasing use of online grocery shopping combined with resistance to buying some fresh products online.

Retail pressures

Retailers face increasing pressure to reduce operating costs and sharpen their differentiation versus competition.

  • Strong fresh offerings will increase traffic and open the way for greater differentiation.
  • More tailored packaged goods offerings will reduce costs by lowering labor and inventory expenses – and increase sales by reducing out of stocks and offering more unique items for customers to discover.

Technology developments

Several developments will enable a retailer to efficiently serve either or both shopping occasions.

  • More efficient store-specific plan-o-gram tools will help lower inventory investment and increase inventory turns across the store.
  • Online shopping platforms will make it easier for consumers to think about “replenishment shopping” as a distinct, almost automatic way to handle this part of the task.
  • Robotics and automation will reduce the cost of product handling and assembling customer orders.

Looking Ahead

The trends driving the grocery store of the future – shifting customer preferences, the pressure on retailers to improve profitability, and improving technology – are already making themselves felt in the marketplace. As new stores are built in response to these trends, the majority of existing stores will need to make adjustments to accommodate the same needs and economic pressures.

Making the shift to the store of the future, whether new or remodeled, will be easier when both retailers and suppliers work from the same mindset – one that that enables them to:

  • Adopt new technology more confidently
  • Build the needed new capabilities more completely
  • “Test and learn” more quickly
  • Implement change more rapidly

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