by Bob Shaw, president, Concentric Marketing
For The Shelby Report
With so much of our business revolving around CPG brands, we spend a good deal of time on shopper insights and conversationally speaking to grocers and brands about where the food business is headed. Additionally, with more than 20 years of experience in this world of the food business, it has become clear to me that tomorrow will be guided by significant macro-trends that are far reaching, beyond the aisles of the grocery store and already happening now. It is said that we do not notice the change occurring around us now until it’s happened.
We are already in the midst of many of the seven trends for the stores of tomorrow, if you look a little closer at today:
1. It’s a Small World After All—Small will become the new big. For more than 40 years, the core grocery format has grown bigger and bigger. The 18,000-s.f. A&Ps of yesterday gave way to the 75,000-s.f. behemoths of the past 15 years. While there will always be a place for the “stock up” store and club formats, new concepts will, in general, get smaller—and not just in grocery. Look at the smaller formats Lowes and Best Buy are already launching. You will see retailers continue moving in this direction, morphing formats like the “hyper-c-store.” Demographics dictate this, aging Boomers will demand this, Millennials prefer it and grocers will see the financial sense in limiting exposure on slow-moving inventory like general merchandise, that can readily be bought online.
2. Hourglass Influence—Sadly, the demographics around a declining middle class are already driving key decisions. Dollar stores and high-end luxury outlets are thriving as chains and formats caught in the middle are feeling the pinch. This will only grow more pronounced over time—both within stores, in the segmentation of formats within chains and ultimately in picking winners and losers. Most of the major brand success stories of recent years have gained share at the higher end as trends like functional, artisan and organic show tremendous growth. The largest CPGs, like Coca-Cola and Procter & Gamble, already recognize this as they create or acquire “boutique” products while shedding older commodity brands. Take a close look at entire categories from beer to cheese from bread to coffee. This will only accelerate in the next decade.
3. The “Custom” in Customer—All of us expect more and more in a world where everything in the world can be yours in less than 24 hours. When leaving the house is not a requirement, the expectation for a more personal experience can’t help but grow when you do venture out. While technology allows for less labor, the stores that differentiate will be higher touch and more personal. Grocers that thrive will combine purchasing economies of scale with greater but reasonable levels of neighborhood segmentation. The smaller formats of tomorrow will require that neighborhood store to feel more personal—in layout, in product mix and even in offers crafted around shopping habits.
4. Stay for the Show—The experience itself will need to continue to evolve. Once again, the power of technology and an increasingly visual and impatient world will be felt. If I’m taking the time to make a trip, you’d better entertain me. Lengthy aisles will cede to the boutique feel of stores-within-a-store. Product and packaging will only be part of the experience. From materials to signage to signature departments, the store of tomorrow will become Food Theater.
5. Finding Your Inner Chef—As cooking from scratch continues to diminish, you will see the rise of two concepts, both dramatic and convenient. Take a trip to Eataly in Manhattan (and soon Chicago) and you will get a sense of the experience mentioned previously as well as a world where restaurant and grocery store collide beautifully. Meal components for the quasi-cook, ready-to-serve for the busy household and even in-store dining will take on a more engaging and center stage presence.
6. Blurred Vision–Distinctive Voice—One of the negatives of the category management movement was the migration toward sameness as everyone viewed the same data, drew the same conclusions and then sold the same product mix. But you can buy the top sellers in at least 10 different channels or formats. Channel blurring, where everyone sells everyone else’s high-volume products, dictates that the grocer of tomorrow must find unique reasons to gain and hold customer loyalty. You will see more products launched as exclusives, greater retailer financial investment in early-stage brands, more and better captive brands and a stronger desire to pioneer new concepts, particularly in fresh and ready-to-serve areas.
7. Practical Technology—Grocers will continue to advance on the practical application of technology. Promotions, pricing, customer experience, inventory management, shop-ahead convenience, smart grocery carts and a whole host of other innovations will migrate from surreal to real as the technology of today becomes obsolete over the next decade.
These are just some of the things we are beginning to see that will continue to accelerate as the shopping experience changes to meet the needs of the consumer of the next decade.
In the feature photo at top is Bob Shaw, president of Concentric Marketing based in Charlotte, N.C.