The Design Categories Shaping Grocery
It’s safe to say that we’re living through an economic inflection point that affects our daily lives. Food and other current trends are influencing the future of grocery for the next three, five and even 10 years. Understanding these trends as “breadcrumbs” that influence food and grocery design will help in understanding how they shape the future and prepare us for change.
In the book “Trend Sociology v. 2.0” by Louise Byg Kongsholm, the author notes that change itself is at the heart of trends, and she reminds us that everyone fundamentally feels that change is good, even if it doesn’t affect them.
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Kongsholm explores the significance of six trend types that we’ll apply to grocery:
- Types of society, which last for centuries.
- Paradigms, which guide personal beliefs that last for decades.
- Gigatrends, which are long trends that affect us for 10 to 30 years, radically changing our way of life and conditions. These trends also often have a global effect and usually contain elements of economy, politics and technology.
- Megatrends, which are those medium-length trends lasting three to seven years, and are characterized by spirit, lifestyle and consumption.
- Microtrends, which last six months to three years.
- Fads, which have a longer shelf life by comparison.
Regardless of its timeframe, each trend has three affluential parts: society and culture, consumer trends/behaviors, and the industry’s response to delivering new products or services. Consider these when looking at trends, and you’ll notice a path forward becomes more apparent and a bit more demystified.
These trends have been underway in food and grocery for at least a decade, and the most significant one is the “phygitalization” of retailing, reshaping society, grocery and how we experience commerce. The term “phygital” has begun to be more widely accepted as the accelerated merging of the physical and digital commerce realms — a seamless integration of virtual shopping that’s surpassing the in-store experience. Phygital transformation includes the wholesale adoption of technology by shoppers, merchants and vendors. It truly leverages technology for the full spectrum.
Convenience in commerce is a definite trend. Shoppers have fiercely gravitated toward ease of shopping in the quest for a frictionless experience, as demonstrated by Amazon’s premier platform of Just Walk Out technology. The online Progressive Grocer article “The Incredible Shrinking Grocery Store” detailed this technology and also discussed the increased use of self-scans speeding checkout and benefiting operations labor. Facial recognition and computer vision facilitate these applications.
Hybridization of store format and commerce modes offer a variety of shopping choices. Hybrid commerce allows consumer choice for in-store, virtual or hybrid, permitting buy online, pick up in store (BOPIS). Recent research from PG sister publication Retail Info Systems (RIS) for its annual grocery study indicates that some influential in-store technologies influencing the customer experience include mobile devices, curbside pickup, click-and-collect, shopper tracking and self-serve ordering kiosks. Additional research from FMI — The Food Industry Association indicates that there are close to 40,000 U.S. grocery stores with products and sales of more than $2 million annually, including limited-assortment and supercenter formats. However, this research doesn’t address the more than 150,000 convenience stores now rebounding and increasingly gaining market share with expanded fresh prepared foods. There are also e-commerce fulfillment initiatives from Amazon, Walmart and Kroger that are definitely disrupting grocery — evidence that all of these hybrid options are competing with traditional grocery.
Many of these three- to seven-year trends have been building pre-pandemic. Given the limited term of megatrends, many would likely remain permanent and extend for decades. The BOPIS trend of curbside or customer pickup has become entrenched in shoppers’ behavior, and after being expansively rolled out during 2020, it’s now a staple for most grocers, and growing.
Delivery is in the battle for the next frontier of consumer convenience. Fierce competition is underway from an array of competitors eager to build market share and ultimately deploy autonomous delivery services. During the past five years, we’ve charted numerous companies piloting disruptive technology from Nuro, AutoX and other providers. Retailers also seek to leverage the millions of miles of roadways now recorded by the Tesla network. Level-five autonomy is on the horizon.
Food supply chain track and trace is one of the emerging technologies that operations and logistics rely upon. Several companies, including Emerson, have deployed reliable and cost-effective monitoring via labeling from the point of origin to delivery, assuring product integrity.
Digital shopping apps are robust, with an array of features ranging from loyalty and product transparency to scan-and-go functionality and product information for the shopper. Operations teams and associates also benefit from expansive operational suites and information on mobile applications.
Robotic automated fulfillment, or automated storage retrieval systems (ASRS), are the heart of micro fulfillment. There are many solutions in development today. The most common is the dark store, ideally connected with grocery, where robotics makers and their integrators are design-build systems contractors.
In-store robotics support store operations, scanning for safety and out-of-stock products, and even including aisle cleaning.
These influencers seen within the past three years can be found at a store near you. The recent “welcome back” in-store experience has been paramount as consumers have eagerly returned to shopping and social interaction. With the easing of health concerns, shoppers are eager to resume purchasing items in a physical store.
As shoppers return, however, sanitizing stores and providing a safe environment for employees and customers remain concerns. Operations challenges still exist — such as a workforce shortage, recruitment and retention — along with supply chain impacts on products and facilities. Meanwhile, the trend of vertical farming continues to bring food production centers closer to consumers as a way to increase freshness and reduce shrink.
A Way Forward
Considering that you survived the headwinds and tailwinds of 2020 — competition from an expanding marketplace, economic pressures, e-commerce fulfillment and nontraditional formats — you undoubtedly seek to invest in facilities and infrastructure. Don’t forget to remain mindful of societal influencers like the headlines shaping near- and long-term trends on buying and shopping behaviors, as well as purchasing power. Research shows that in past years, grocers experienced net profits of 3% — double average annual sales — and you want to keep that statistic on the upswing. The trends are there, but how do you integrate them to have the store of the future?
It’s simple: Use those trend breadcrumbs as puzzle pieces to reveal the future formats, and assemble them through a framework to drive store innovation that will meet your customers’ future needs. When combining any of these trends and projecting them forward, we move toward a future state of omni (connected) commerce, the next generation of hyper-convenient food shopping.
Whatever, wherever, whenever and however such a state exists is closer and attainable despite current headwinds. The blurring of lines and what’s possible continue to expand and lie with these three words: phygital, hyper-convenience and hybridization.