The future of grocery stores is greatly impacted by fast changing consumer expectations and technology innovations. Digital natives are the largest demographic group (and getting larger every day), their expectations and attitudes influence grocery shopping and cooking in unprecedented ways. As a result, large food industry players, particularly grocers, are looking for innovative ways to stay competitive and implement new tech solutions to meet these expectations.

future of grocery stores

A 2018 McKinsey study on grocery retailers found that the use of technology is what sets grocery leaders apart from laggards; early adopters are capturing 2 to 5 percent more in EBIT (earnings before interest and taxes) than slower moving competitors. Retailers are embracing this change by shifting their focus from price and product superiority to privileged insights and enhanced customer experiences. Grocers are coming to appreciate the importance of technology and are seeking data solutions that will help them deliver optimized consumer experiences.

This post will cover the future of the grocery landscape and why advanced analytics and data are necessary for grocers to stay ahead of the game while delighting customers with personalized experiences tailored to their needs and wants. Learn what the future of grocery shopping will look like and what you need to do to help your grocery store stay top of mind for consumers.

1. Focus on the wholistic customer journey

The journey from inspiration to purchase contains multiple touchpoints, yet grocers who focus only on store metrics are failing to capture the consumer journey in its entirety. Grocery’s full potential lies in understanding advanced analytics and monitoring customer signals from purchases, online browsing, and social media posts. Focusing on different touchpoints helps retailers trigger relevant and timely personalized messages across the customer journey.

Some of the most common problems grocer’s face is limited data (e.g. low visibility into wholesale accounts), siloed business units, and under-resourced data scientists and analysts. According to a study by Forrester Consulting, 85% of grocery retailers globally lack the capabilities, technology, people, and processes to use insights to monetize their data and drive customer experience.

Leveraging both the data provided by the consumer and past purchase behaviors can help grocery retailers deliver more personalised and meaningful shopping experiences, thus increasing customer loyalty and basket size.

Grocers should aim to create unique, personalized experiences across all of their platforms (site, apps, and in-store) to provide value and drive engagement and loyalty. To understand the user journey from discovery to purchase, grocery retailers need data in all of these key areas: recipes, store products, and user preferences. Now more than ever, grocers are partnering with external providers to bridge these gaps.

2. Rethinking store experience: curated selection and smaller stores

Smaller players are disrupting the market and changing the retail landscape with personalized and curated selections aimed toward health-conscious consumers, forcing traditional grocers to seek new opportunities for growth. Target, for example, is maintaining its larger store format, but has added 100 smaller-format stores so far and intends to open many more in response to this changing market dynamic.

As more and more consumers shop on-the-go and new store formats arise, traditional grocers are moving away from the hypermarket model towards convenience-focused stores with specialized offerings. They are seeking to tap into new markets and help consumers shop without the extra burden of choice.

3. Enriched in-store experiences for enhanced convenience and inspiration

Consumers are seeking convenience; they want to save time and they want options to be available to them wherever and however they want them. Online shopping, restaurant delivery, and meal kits are changing the fundamentals of how consumers purchase food. As more and more consumers look for ways to save time on grocery shopping and cooking, grocery retailers are looking for new ways to reach consumers on their own terms.

To remain competitive, grocers are looking for ways to improve the in-store experience and are experimenting with technology that enhances convenience and inspiration.

Some grocery stores now feature digital signage that offers extensive product information including products’ origins and nutritional properties. As Millennials are evermore focused on health goals and diet preferences, finding ways to provide dietary information in-store and online is becoming increasingly important.

Others are creating environments that feel as though a consumer is walking through a cookbook, with fully prepared meals on display or cooked on the spot, or carefully portioned ingredients alongside a recipe in the form of a meal kit. For example, grocers like Kroger are testing various meal kit options to respond to increasing consumer demands.

Grocers are also offering a variety of health-and-wellness options, with an unrivaled assortment of specialty, organic, and local brands. According to a new report from the Food Marketing Institute, 71% of food retailers see health and wellness as a growth opportunity for their business.

The potential for ingenious ways to enhance convenience and inspiration in the grocery industry remains high. Those who think creatively, are quick to adapt, and use technology to improve their online and in-store experience are leading the way towards grocery stores of the future. On the other hand, risk-averse grocers who wait on implementing digital solutions will lose a significant portion of the target market. In order to stay ahead of the competition, grocers need to act on customer expectations, continue to use data to inform their decisions, and be present on a variety of platforms to capture the biggest market share.

Whisk helps brands, retailers and publishers monetize their food content, personalize food experiences and create data-driven interactions. Get in touch to learn more.