According to U.S. Census data, 2015 marked the first time that consumers spent more money at eating and drinking establishments than they did at grocery stores. Does anyone cook anymore? And what have grocery stores done to keep up with shifts in consumer behavior?
Although consumers rely more and more on technology to guide their purchasing decisions, grocery stores have remained relatively stagnant in upgrading their offerings. One reason could be the product they offer. When people cook at home, they want to touch the food before they buy it. Choosing a cut of meat or the perfect heirloom tomato is much more difficult to do via an app. Furthermore, grocery store sales have remained strong, offering less incentive to change.
“Grocery stores have been slow to evolve in the digital age. One reason grocery stores may be slower to adjust is because they haven’t seen the same degree of stagnation in sales as traditional retailers. In fact, according to a report published by NRF, the top three retailers going into 2016 all had a food market element in their physical stores,” writes Bill Carmody, CEO of Trepoint, a strategic marketing consultancy.
Even so, grocers are still looking to compete. “Time-crunched consumers are changing the way grocers are thinking about their stores’ formats and products. And luckily, grocers’ small shifts to improve convenience through technology and prepared meals haven’t compromised quality,” wrote James Cook, director of retail research at JLL, as quoted in the firm’s Grocery Tracker.
It’s all about the experience
Some grocery stores strive to compete in the fast food arena, offering pizza by the slice, hot and cold to-go meals and even sushi. Another popular trend (at least in the Chicagoland area) is to put a bar in the grocery store. Whole Foods and Mariano’s both offer bars where customers can stop for a beer, a glass of wine, or sip and shop. Both of these trends cater to millennials and the young, single crowd who are working long hours and don’t prioritize cooking at home.
For years, grocery stores have catered to families, and still do. Many stores offer special events, creating a family destination. Whole Foods offers cooking classes and kids craft projects. Mariano’s hosts trivia nights, photos with Santa and posts a calendar of coming events. These events not only establish a sense of community, but they also get people into the store.
Technology in the aisle
While a good experience is key to creating a loyal customer, the grocery giant Kroger is also exploring new technologies to run things efficiently. One major advancement is digital price displays. Carmody writes, “Installed on store shelves and controlled by software, these replace pricing stickers and allow stores to easily update prices from one, central location. The technology makes staff available to assist shoppers rather than spending their time swapping out pricing information across the store.” He goes on to explain that these digital tags also allow stores to adjust prices quickly. Much like e-commerce companies, grocery stores can now experiment with the concept of dynamic pricing (based on consumer demand).
No line, no waiting
The final area to see upgrades within the supermarket? Checkout lines. For years, self-checkout has been an option in most grocery stores. But Kroger is taking things a step further, according to Business Insider: “In 2012, Kroger rolled out QueVision, a technology platform that uses sensors and predictive analytics to feed managers real-time data — the first and currently only system of its kind in the US.” By tracking customers in the store, QueVision can give managers the data they need to curb checkout traffic before long lines even form.
Despite advances behind the scenes, some consumers still want an e-commerce experience when buying groceries. We’ll discuss the state of grocery delivery services in our next post. From Peapod to Instacart to Target and Walmart, how does the competition stack up? And is this the wave of the future, or are we destined to physically visit the supermarket to choose just the right produce?
Ironbridge Software was founded in 1989 by Mike Dickenson. Mike’s unparalleled expertise and passion for technology led him to create the first-ever analytical solution for the Consumer Packaged Goods Industry. He assembled a team that has more than 50 years experience and Ironbridge Software has been leading the field ever since. Back in 1989, Mike’s vision was to blend database expertise, analytical expertise and software capabilities to produce a complete service for the CPG industry. At Ironbridge, we’re passionate about solving our clients’ problems, one insight at a time.
Written by Kim Kelly Consulting
