5 Ideas to Steal From Grocery Retailers

CHICAGO -- Our package sizes may be smaller (the footprint certainly is), our lines shorter and our coffee hotter, but the convenience and grocery industries also share many commonalities. That’s particularly true today as both segments face a large cadre of consumer and supply-chain trends that are resonating throughout the entire retail landscape.

The grocery industry is in fact an excellent barometer for the retail climate, stormy or sunny, months before the waves wash up on our c-shores. Not sure how (or even if) e-grocery or subscription meal kits will affect your business? You can be sure grocery has a plan. What about better-for-you, non-GMO, organic or locally sourced? They’re reacting to that, too.

Join us as we take a look at a few of these grocery trends and how they might manifest in your stores ...

Long gone are the days of the singular grocery shopper—largely a mom pushing a cart full of babies and canned goods. Shopper roles and behaviors have been changing, and today, 85% of all adults say they take care of half of the grocery shopping responsibility in their households, according to the Food Marketing Institute (FMI). Only 4% of households with more than one person have a single designated grocery shopper.

This doesn’t make the job of retailing easier. Responding and adapting to changes in shopper demographics is more nuanced than ever, and for the grocery industry that means creating a better overall shopping experience by integrating a thoughtful product mix and creating more destination zones within the store itself, such as dedicated spots for pizza, burgers, bakery and bar. Kroger’s Mariano’s stores will serve customers a glass of wine to sip while they shop.

While food prices have dropped 1.6% since last year, according to the U.S. Department of Agriculture (USDA), expect to see the trend line inch back up next year.

Through 2017, prices will likely rise by nearly 2%. On the outset, that doesn’t seem too drastic, considering the 20-year historical average rate of inflation is 2.5%. But some staples are set to rise even higher. Cereal and bakery product prices will rise 1% to 2% through 2016, followed by another 1.5% to 2.5% spike by the end of 2017. Fresh fruits are up 3% this year over last and will rise by 1% to 2% in 2017. Prices will likewise increase for poultry, dairy and fresh veggies.

But this isn’t bad news. Increases will be a welcome change for grocers, according to The Wall Street Journal, because already low profit margins coupled with low prices are reducing the value of the goods they sell.

Freshness is more than just a buzzword in the grocery industry—it’s a mantra.

The word “fresh” permeates everything modern grocery stores are trying to convey to their customers. To properly communicate their “fresh” stories, many stores are altering how they showcase fresh foods, adjusting their merchandising and store layout to put those areas front and center. New apps can provide grocers and consumers with technology and data that can help validate this mandate.

HarvestMark is one example: More than 400 brands and retailers use the app, including Kroger, Driscoll’s Berries and Coleman Natural. Codes on participating products can be scanned by grocers or the customers themselves, offering added info such as where and how the product was grown and if it’s subject to recall. Putting it all out in the open is reassuring to a public that’s grown hungry for labeling of genetically modified ingredients, artificial ingredients, hormones and antibiotics.

It’s official: Subscription meal-kit services such as Blue Apron, Plated and HelloFresh are cutting into consumer spending at the grocery level, to the tune of 7.6% less at specialty grocery stores and 6% less at more traditional grocery venues, according to purchase intelligence firm Cardlytics. Overall, grocery spending has declined 6.3%, driven primarily by fewer trips in general to the store.

What’s the grocery segment’s response? If you can’t beat ’em, join ’em. Some grocery stores are trying to take a piece of what amounts to the $1.4 billion meal-kit industry. Hy-Vee stores, West Des Moines, Iowa, offer Let’s Dish, a “meal preparation workshop,” in which customers schedule time at the store’s kitchen to prepare or partially cook meals for home freezing or cooking. Giant/Martin’s, Landover, Md., launched meal kits at stores early this year, and it began delivering via Peapod to some customers in markets in Pennsylvania and New Jersey.

Convenience stores aren’t the only ones making to-go foodservice programs more sophisticated, be it through flavor innovation or in the breadth of the offering itself. Fresh prepared foods garnered $15 billion in sales for grocery stores in 2005. Last year, that figure jumped to $28 billion, according to Technomic.

As grocery stores jump headfirst into the prepared-meal market, new issues surrounding food safety are beginning to bubble to the surface. Several high-profile outbreaks of salmonella and E. coli linked to prepared foods at grocery stores last year have the U.S. Food and Drug Administration and U.S. Centers for Disease Control and Prevention on alert. Last year, 23 outbreaks sickened 572 people and sent 42 of them to the hospital—a figure that is more than double 2014’s numbers.

The biggest causes for concern: employees mishandling prepared food and not washing their hands. Last year, the New York Agriculture Department recorded 15,600 prepared-food violations in grocery stores. And 221 of them were because of employees mishandling prepared food or not washing their hands properly, according to an article in The Wall Street Journal.