Grocery has been slow to adapt to digitalization, primarily because online food shopping is expensive to fulfil and offers little margin. However, the pandemic highlighted its convenience and safety, as socially distanced customers turned to online ordering for the first time. Some of these customers will continue to favor online, while others may prefer to return to browsing in-store.
Either way, retail grocery shopping will change in the coming years, and stores aren’t likely to completely disappear. What’s clear is that stores will need to change in synch with consumer demands for even more convenient shopping experiences. Grocers need to think less ‘unexpected item in the bagging area’ and more like a service, akin to a personal shopper in a luxury department store.
In-store grocery retailers give customers greater choice
As customers opt for online and smaller top-up shops, grocers have the opportunity to turn their large format stores into “mini malls” with services like opticians and pharmacies, farm-shop style food counters, artisan bakeries, and coffee shops.
The huge spaces of the past will likely become “dark stores” for picking bulky, weekly grocery staples ordered online. The customer simply comes in to pick up their order which is placed straight into their car boot. They might pop into the stores for an eye test, to choose a perfectly ripe avocado for that evening’s guacamole or place an order for a birthday cake at the bakery.
Steve Ingram, director of retail at Deloitte, doesn’t think this sheds-to-dark-stores concept will be an overnight change. He predicted an evolution of the current grocery format, starting with health and well-being.
“We’ll see in-store nutritionists available to help with various diets, such as celiac disease or diabetes, or maybe you just have a goal to eat healthier,” he said. “The next step would be for the grocers to buy a chef meal kit company, then the food boxes based on your dietary preference are there ready for you to pick up.”
Ingram saw customers splitting their shopping journey into selection, ordering, and fulfilment.
“Grocers will need to give customers the choice to fulfil it themselves, have it delivered, or be ready for pick-up,” he said. “During the pandemic, people moved back to one weekly big shop, and that will continue to push online demand. No one wants to drag two or three kids around a big store anymore.”
Technology simplifies the customer experience
Internet of Things (IoT) could make customer shopping convenience even more exciting. IoT-enabled devices can capture and analyze data throughout the customer’s home, replenishing items in the background.
Customers could opt in to automatically add products to their weekly online shopping list, and have online grocers deliver them before they even know they’re about to run out. Washing machine sensors could track when someone is about to run out of detergent based on the number of cycles completed. The machine could place the soap tablet order as needed.
This is similar to copiers that reorder ink when sensing that the toner supply is low. But whether this translates to a smart fridge re-ordering milk and vegetables, Ingram was skeptical. Customers may not be as rigid when it came to buying the same ingredients for meals every week.
Grocers meet the sustainability challenge
Sustainability has been at the forefront of customers’ minds for many years, and grocery retailers have stepped up with carbon emission reductions. Some of the big sustainable wins will come from supply chain innovations.
Retailers might rely on electric vehicles and use technology to optimize delivery routes and improve spatial planning, ensuring lorries are packed efficiently so they’re not transporting air up and down the country.
Ingram advised retailers to communicate efforts with customers.
“Provenance is going to be really important,” he said. “Customers want to know where their food has come from, how it was made, and that it’s fair trade and organic, with no abused labor involved. Blockchain could be a solution here.”
Winning the grocery battle
To upgrade the customer experience with these and other emerging grocery store innovations, companies will need strong collaboration with suppliers. The last thing a customer wants to see is a gap on the shelf where their favorite product would normally sit, or a substitution sitting on their doorstep when their online delivery arrives. These seemingly small frustrations can push customers to the competition where they can easily pick up that missing item.
There’s no question that retail grocers have played a major role in keeping people fed during Covid-19. Now they need to go one step further and delight customers with greater convenience and experience excellence to remain top of mind.