Food Futures: The Next-Generation Grocery Store

Food Futures: The Next-Generation Grocery Store

With the emergence of meal kit services and other food industry disruptors, what’s next for traditional brick and mortar grocery stores?
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From direct-to-door meal kit and restaurant delivery services to fully automated restaurants, everyone is vying for a spot in the American stomach. With a range of new players entering the marketplace and drastically shifting consumer attitudes, the food industry has never been this competitive.

Many Americans today have decided that going to the grocery store and cooking at home just simply isn’t worth it. In 2016, Americans spent more on food at bars and restaurants than at supermarkets. Spending on food away from home reached $821 billion in 2017, compared with $818 billion on food eaten in the home, according to the U.S. Department of Agriculture. Increasingly, American consumers are placing a high value on convenience and experience over traditional means of buying and cooking their meals.

However, it’s not just the new Thai-Japanese fusion restaurant around the corner that is taking business away from retail grocers. Meal kit services that leverage responsibly-sourced, high-quality ingredients shipped directly to your door are becoming increasingly popular as well. In 2017, the fresh-food meal kit delivery service market in the United States was valued at $4.65 billion, with a projection of $11.6 billion by 2022.

The one common denominator in this perpetually changing market is that traditional brick and mortar grocery stores have taken the biggest hit. For grocers, both growth and profitability have been on a downward trajectory in large part due to shifting consumer behavior and disruptors entering the marketplace, but also higher costs, falling productivity, and race-to-the-bottom pricing. Though meal kit delivery services are not going to fully usurp the retail incumbents, grocery stores need to take a deep dive into what the disruptors are doing right and wrong in order to adapt accordingly.

One thing that these disruptors do better than incumbents is understanding who their customers are. This means not just knowing their purchase frequency, recency and spend but deeply exploring their needs, fears and desires. Grocers can take an in-depth examination of who their customers are to ultimately enable the creation and design of experiences and customer journeys that will bring people back to the grocery store. Doing this, however, requires much more than simply putting customers into segments by demographic or spending factors. It requires analyzing behavior and motivations across different types of consumers—or rather, people. It requires understanding the wider context of their lives, and how cooking and eating fits into those lives.

At frog, we conduct exactly this kind of research for our clients across the consumer space—from clothing retail to big box grocers. In our latest consumer insight report, we outline this research approach. We conducted research with over 2,000 participants across the US to develop five common consumer archetypes that describe patterns of behavior and motivations across different types of shoppers—not just age and spending demographics. Understanding and identifying these archetypes allow brands to create more dynamic products and meaningful customer experiences that can be leveraged across various industries, including grocery shopping.

We know that when a company truly understands their customers, they’re able to design better experiences, products and conveniences that people will love. Leading grocers across the globe are cognizant of this and have started to test new technologies and in-store innovations that satisfy their customers’ needs. In Singapore, habitat by honestbee has rolled out their grocery store of the future concept called “NewGen Retail.” The new retail space invites more human interaction while leveraging technology to remove traditional shopping inconveniences, like checkout lines and handling cash. NewGen Retail then uses in-store checkout and order collection data points to deliver a convenient alternative to traditional retail processes. The company has successfully elevated their business into an omnichannel platform while utilizing data to optimize their customers’ experiences.

There is no doubt that the next generation of grocery stores will have to adapt to changing customer expectations to stay afloat in this competitive food marketplace. To succeed, grocers of the future will have to power the customer experience with data, establish continuous delivery systems, enable platform integration, improve in real-time, and eliminate unnecessary processes with technology. In order to do that, the first step is to actually understand the customer.

For more on understanding customer archetypes, download the full report here.

For more on understanding customer archetypes, download the full report here.
For more on understanding customer archetypes, download the full report here.
Author
frog
frog
frog

frog is a global design and innovation firm. We transform businesses at scale by creating systems of brand, product and service that deliver a distinctly better experience. We strive to touch hearts and move markets. Our passion is to transform ideas into realities. We partner with clients to anticipate the future, evolve organizations and advance the human experience.