What Food Retail Innovation Means Now
Change was happening at a rapid pace throughout the retail world prior to the COVID-19 outbreak. But when the virus happened, food retailers gained a new perspective on what an accelerating pace of change really looks like. Health officials imposed new policies that altered the lifestyle and behavior of every American, while essential retailers acted with ingenuity, instinct and a sense of purpose to serve shoppers and maintain safe operations under extraordinarily challenging circumstances.
- The coronavirus pandemic has accelerated the already rapid pace of change in the retail industry.
- The public health crisis also revealed how innovation has become, or must become, a core competency for every retailer that hopes to be successful in the future.
- Various food retailers are meeting the pandemic innovation challenge head-on, and flourishing as a result.
It was a display of innovation unlike anything the food retailing industry has ever seen, and it highlighted the speed at which retail leaders are capable of moving, especially when lives are at stake. COVID-19 revealed how innovation has become, or must become, a core competency for every retailer that hopes to be successful in the future. However, it tended to be a reactionary type of innovation. Moving forward, as COVID-19 hopefully soon fades, retailers will resume the more purposeful and strategic type of innovation that was gaining traction throughout the industry.
What that means can vary widely from retailer to retailer, but rest assured that innovation is alive and well, and happening faster than ever, as grocers transform their operations and the way that Americans discover, shop, buy, consume and experience food. Here are 20 retailers that are meeting the pandemic innovation challenge head-on, and staying ahead of what’s next.
Store Experience Evolution
1. Wegmans Food Markets
Rochester, N.Y.-based Wegmans Food Markets has just made a move that tells you everything that you need to know about the future of grocery innovation. The grocer with 101 locations is famous for its massive stores — some span more than 150,000 square feet — with quality dine-in foodservice departments. But with the COVID-19 crisis, how many consumers want to sit in a restaurant wearing a mask and positioned 6 feet apart from the next human? Now Wegmans has become one of the first food retailers to press the pause button on in-store dining post-COVID-19. In June, the retailer said that it would close all 12 of its Pub by Wegmans in-store restaurants, setting off what could be the start of a wave of grocerant closures. Wegmans is ahead of the game by pivoting its foodservice offering to be more focused on e-commerce at a time when the pandemic shows few signs of abating.
2. Stew Leonard’s
Norwalk, Conn.-based Stew Leonard’s was doing one-way aisles way before anyone had ever heard of the word “coronavirus.” Each Stew Leonard’s store, including the newest one, in Paramus, N.J., has a rustic, farmers’ market-style feel, with a single one-way aisle winding through the store in a zigzag. The company says that shoppers have always liked the one-way aisle (even before social distancing was a thing), because the design gives them an immersive food experience. The grocer prides itself on carrying an abundance of fresh food and stocks an assortment that’s more than 60% private label, another disruptive grocery trend. Stew Leonard’s adds that it’s growing its store-brand assortment to leverage skyrocketing demand.
3. Publix Super Markets
Lakeland, Fla.-based Publix Super Markets’ newest format, GreenWise Market, reflects the latest thinking on how to serve natural and organic shoppers. The stores, which are opening slowly across the South, have an expanded foodservice offering, with custom-made pizzas, sushi, burrito bowls and artisan sandwiches all available for delivery or pickup. At the front of the store is the “Finds” department, where shoppers can purchase specialty cheeses, charcuterie and a wide range of wines, with some bottles costing upwards of $200 merchandised horizontally in a chilled glass case. GreenWise Market strives for a highly differentiated assortment, with about 70% of products designated as natural or organic, another 25% characterized as specialty items, and 5% considered traditional brands. This savvy mix of products enables Publix to take an innovative approach to natural.
4. Albertsons Cos.
Boise, Idaho-based Albertsons Cos. gave fans a hint of how it’s thinking about its next-generation format when it opened a 100,000-square-foot-plus store in Meridian, Idaho, last year. Albertsons Market Street features a popcorn station and one of the largest wine bottle collections in the state. The concept also features an expanded seafood and meat department, made-from-scratch bakery items and deli salads, four aisles dedicated to pet food, and even a drive-thru pharmacy. At a time when Albertsons is also investing in micro fulfillment centers and other digital innovation efforts, the company is still committed to delighting in-store shoppers with a whopper of a store.
Grand Rapids, Mich.-based Meijer, builder of massive supercenters in its Midwestern market area, thinks that going smaller is the way of the future in attracting urban shoppers. The retailer debuted its Woodward Corner Market format earlier this year, and even at a quarter of the size of a traditional Meijer store, it still packs a punch. The smaller store features fresh and prepared foods, and an estimated 2,000 local, artisan items. It will also offer a Great Lakes Coffee shop; an extensive beer, wine and liquor counter; and an expansive international food aisle catering to eight ethnic backgrounds.“Our small-format stores like Woodward Corner Market and Bridge Street Market provide new ways to serve our customers,” asserts Meijer President and CEO Rick Keyes.
Ask any Texan: What's the best place to get food and gas? The answer will more than likely be Buc-ee’s. The Houston-based chain of convenience stores has developed a cult-like following with its nearly 50,000-square-foot stores and assortments offering everything from toilet paper to local beer to buckets of bacon grease. The 37-store chain is now taking its unique operating model to new markets, hoping to capitalize on the cult-like devotion that it has inspired at home. Buc-ee’s is in the midst of a multistate expansion, having broken ground in Alabama, with further stops planned for Florida, Georgia, Tennessee and the Carolinas. Watch out, Wawa!
Business Model Transformation
7. Casey’s General Stores
The nation’s fifth-largest pizza chain isn’t Papa John’s or Little Caesars. It’s Ankeny, Iowa-based c-store chain Casey’s General Stores, which has been going all in on foodservice innovation, as evidenced by many of its newest hires and efforts to expand e-commerce and assortments. The company, which operates more than 2,200 stores in 16 Midwestern states, just hired a new CIO, Adrian Butler, who was previously CIO of Dine Brands Global, parent company of IHOP. The CIO role is new at Casey’s, and one that the company believes will lead its effort to advance next-generation technology. Butler’s hiring follows the addition of Steve Bramlage as CFO. He was previously CFO for eight years at Aramark, the $16 billion food, facilities and uniform services provider. His hiring followed the April appointment of Michelle Wickham, a former executive for national burger chain Red Robin, to the role of VP of foodservice.
8. The Kroger Co.
If anyone has a winning formula for the future, it’s The Kroger Co., whose digital investments and unconventional partnerships are poised to pay off amid unprecedented pandemic demand from consumers. The Cincinnati-based grocery giant just logged record-breaking digital sales in its first quarter. Everyone is watching the company’s automated grocery partnership with U.K. e-commerce provider Ocado as they look to transform the world of digital grocery and the traditional operating model of grocery stores. And then there’s Kroger’s Pickup partnership with Deerfield, Ill.-based drug store operator Walgreens, a venture that solves many of the problems associated with grocery delivery. Considering that Walgreens has stores within five minutes of 75% of the U.S. population, Kroger may have solved the last-mile problem in a way that rivals will have difficulty duplicating.
9. Dollar General
Americans can expect to see a lot of black and yellow in the coming years as Goodlettsville, Tenn.-based Dollar General opens thousands more stores on top of an already impressive footprint of 16,368 locations. Late last year, the company revealed plans to open 1,000 new stores, remodel 1,500 others and relocate 80 stores in 2020. If Dollar General is able to follow through on its store expansion plans amid unprecedented COVID-19 demand, it will mark the company’s greatest increase in store expansion ever. Dollar General has been transforming itself from a discounter to a corner grocer, adding fresh and frozen food items to thousands of its stores through a cooler door expansion program and a multiphase shift to self-distribution of frozen and refrigerated goods. The company has also been accelerating the expansion of its produce offering, which provides the top 20 items typically sold in traditional grocery stores, and is focused on enhancements to its app and e-comm offerings.
Service Delivery Disruption
Walmart is working to change how many products and services are delivered to consumers, but no service offering may be as critical in the middle of a pandemic than health care. The Bentonville, Ark.-based company has recently launched four Walmart Health clinics in the South as it looks to “innovate, transform the industry and create significant health care savings for customers.” The health care concept is bound to expand to more of the company’s stores across the country as Walmart repurposes space at its massive supercenters to engage with shoppers in new ways. Last month, Walmart acquired the intellectual property of CareZone, including an app that helps patients manage health information and access health services. The partnership gives the company more ammunition in the retail health arena against competitors such as Seattle-based Amazon, which owns online pharmacy PillPack.
11. Choice Market
This grocery store/fast-casual restaurant/upscale c-store chain based in Denver features a chef-driven kitchen, prepared foods, fresh produce, groceries, beer, cashierless checkout, fuel pumps, and supercharging stations for electric cars. Choice says that it works with local farmers to source a majority of its products, including organic produce and antibiotic- and nitrate-free proteins. Last April, the retailer launched a campaign to remove all single-use plastic water bottles from its stores by 2021. Refill stations mean that Choice customers can now refill their reusable water bottles and other containers safely and never have to buy another plastic water bottle again. Choice currently has two locations in the Denver metro area, with three additional locations set to open by the end of 2020.
12. Thrive Market
Online grocer Thrive Market is, well, thriving. The membership-based retailer with headquarters in Los Angeles told The Wall Street Journal in June that sales were up 110% in May compared with a year ago. When Americans couldn’t find peanut butter or toilet paper at the local supermarket (or they just wanted to avoid going to the store), they rushed to their computers to buy groceries. Thrive, which is privately held, now has more than 800,000 members, who pay $60 a year. The company notes that it has seen more than 100,000 people sign up during the pandemic. Although Thrive doesn’t disclose sales, CEO Nick Green says that they’re in the hundreds of millions of dollars annually. This past June, the grocer responded to demand from quarantined shoppers for frozen foods, entering the category by rolling out its own branded Paleo and Plant-Based Bowls.
13. Instacart and Shipt
The rocket ship known as Instacart recently got another infusion of fuel. In June, the San Francisco-based grocery delivery company was valued at $1 billion after securing $225 million in new funding to scale its operations as it races to keep up with shopper demand for online grocery. Instacart says that it expects to deploy the new capital by continuing to support its growing shopper community and further scaling its operational and technical teams. The company, which has hired about 300,000 new workers since March, is now accessible to more than 85% of households in the United States and more than 70% of households in Canada. The new cash infusion comes at a pivotal time for Instacart and for the online grocery space in general. More and more shoppers are buying groceries online due to the pandemic. Instacart and Shipt have benefited from that trend over the past few months. Birmingham, Ala.-based Shipt, which is owned by Target, has hired more than 70,000 new shoppers during the public health crisis. According to Minneapolis-based Target, Shipt’s sales grew 278% in its first quarter ended May 2.
14. Ahold Delhaize
For Dutch retail conglomerate Ahold Delhaize, disrupting its core selling strategy is key to building the e-commerce experience that customers want. That’s why the company is focused on adding more warerooms, or dedicated areas attached to Ahold Delhaize USA stores such as Giant Food or Stop & Shop that allow for centralized distribution supporting efficiency and accuracy in order fulfillment (similar to micro fulfillment centers). This month, Quincy, Mass.-based Stop & Shop revealed that it will add three new warerooms and at least 50 more pickup locations in 2020 to support increased e-commerce demand and make it easier for more customers in the northeastern United States to have Stop & Shop groceries delivered to their doors.
Seattle-based Amazon is reimagining a lot of things, but the self-distribution model seems to be priority No. 1, with the growth of Amazon Air. In June, the company said that it would invest in the speed of its supply chain by leasing an additional 12 Boeing 767-300 aircraft ahead of next year’s opening of the Amazon Air Hub, near Cincinnati. The 12 new airplanes will join a fleet that has grown to 70 aircraft since its launch in August 2016. Amazon broke ground on the Air Hub in May 2019, and when fully operational, the facility is expected to employ 2,000 people. The combination of a fleet of more than 80 aircraft and a major air hub in a centralized location gives Amazon a new and different type of speed advantage, and more direct control over its supply chain. According to the e-commerce giant, its air fleet expansion comes at a time when people in communities across the country continue to adjust to an unprecedented time, with many relying on having the items they need delivered directly to their doorsteps. Now, with expanded cargo capacity to come, Amazon will continue to meet evolving demand and a growing customer base.
16. Raley’s Supermarkets
The pandemic has forced many food retailers to respond to massive customer demand for online grocery delivery and pickup. But West Sacramento, Calif.-based Raley’s Supermarkets is responding to a different kind of pandemic-related consumer demand: a demand for food transparency. According to a new report from FMI - The Food Industry Association and Label Insight, “Transparency Trends: Omnichannel Grocery Shopping from the Consumer Perspective,” 81% of shoppers say that transparency is more important to them now, during the pandemic, than ever before. The grocer’s latest move involves opening a new concept called Raley’s O-N-E Market, which is focused on food transparency and education, with a highly curated product selection. Raley’s O-N-E Market says that its assortment of products is nutritious, organic when possible, minimally processed and sustainably sourced. In every department, the items on the shelves are selected to exclude ingredients from the Raley’s O-N-E Market banned-ingredient list.
In every city in America there’s a 23-year-old in need of last-minute snacks at 1 a.m., but who wants those snacks delivered. That’s why there’s Philadelphia-based goPuff, founded by two college students in 2013. For a flat $1.95 fee, a consumer can order candy, soda, toilet paper or a pre-made salad and get it delivered in under 30 minutes. The company operates in more than 500 cities across the United States and works with distributors to deliver snacks, drinks, ice cream, personal care items, home essentials, baby products, alcohol, over-the-counter medicine, and more. Last year, goPuff opened its 150th distribution facility, nearly tripling the number in one year.
18. Basics Market
There’s an innovative grocery retailer in Portland, Ore., that’s resonating with consumers who are looking for more local and less processed foods. Basics Market, which opened its fourth location in Portland’s Hillsdale area last February, was founded by natural food pioneer Chuck Eggert and works with local producers “to provide high-quality products at lower prices, while preserving nutrition and minimizing distribution costs and waste.” The retailer designs its stores with a small-format layout where shoppers can find ingredients organized by recipes that were developed by award-winning chefs and vetted by staff nutritionists for optimal health. Stores also offer a Discovery Kitchen classroom with state-of-the-art cooking facilities and a full schedule of free classes, including hands-on workshops, interactive demonstrations, and nutrition classes taught by Basics Market’s culinary and nutrition mentors.
19. PCC Community Markets
The PCC Community Markets cooperative has a deep and long history of being at the forefront of sustainability innovation. Last year, the Seattle-area grocer and largest community-owned food market in the nation became the first grocer in the world to pursue Living Building Challenge (LBC) Petal Certification, the most rigorous green-building standard. The retailer also became among the first to launch compostable deli containers, thus removing 8 million pieces of single-use plastic from the waste stream annually. Yet while PCC is perhaps best known for its environmental work, it’s also a formidable competitor within the grocery industry, consistently raising standards across all aspects of its business. At PCC, the produce department is 98% organic, the coffee bar is Fair Trade, and the locally sourced, premium-quality private label program is seeing double-digit growth year over year. In 2018, PCC contributed 50% of its after-tax earnings to its members and its surrounding communities. The co-op has also donated 430,000 meals to food banks and given to more than 600 community organizations and schools.
Texas grocer H-E-B is helping the hurting restaurant industry and tapping into pent-up consumer demand for foodservice with an innovative program. In April, the San Antonio-based retailer teamed up with local restaurants to prepare meals to go for H-E-B’s Meal Simple program of chef-inspired grab-and-go meals. Participating restaurants prepare and deliver the meals to a limited number of H-E-B stores, the restaurants set the price for each meal, and H-E-B pays them for what’s prepared. At the same time, the grocer isn’t abandoning dine-in foodservice. In June, the company confirmed that it’s adding a food hall, a bar and an outpost of restaurant chain True Texas BBQ to an Austin store this August. Could H-E-B be signalling that grocerants will come roaring back?