Grocery Shopper Migration Benefits Restaurateurs

Yes, regular readers of this blog know that the line between restaurants and food retailers is growing ever thinner. The fight for America's food dollars continues to intensify as consumers find grocerant niche fresh prepared Ready-2-Eat food options at a wide and growing array of outlets across almost every channel including convenience stores, chain drug stores, restaurants, grocery stores, club stores, vending and even more non-food traditional fresh food retailers like dollar stores but the restaurant sector just may benefit the most from grocery store customer migration according to Steve Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

While manufacturers, retailers, and restaurants worry about choice overload, consumers have embraced their new choices and show no signs of returning to the old ways. This fight is taking place in what is called the grocerant niche.  In 2012 there were 27 restaurants for each legacy grocery stores. Today there are 30 restaurants for every one legacy grocery store and the numbers continue to grow according to Johnson. 

Nielsen’s Symphony Retail Ai has pointed out what our Grocerant Guru® has been pointing out since 1991 that in its new “Supermarket 2020” report that market forces “are driving radical disruption in supermarkets”.  Symphony Retail Ai’s research identified key trends that include:

• Large weekly shopping trips being displaced by online shopping and preferences for prepared foods. The weekly “pantry-loading” shopping trip to the local grocery store is declining, with a 3-4% decrease in large baskets from just a year ago. Consumers are increasingly turning to online shopping when purchasing 15+ items, and online grocery shopping has risen 14% in the U.S. In addition, 76% of consumers report that they are increasingly buying prepared food instead of cooking dinner.
• Amazon’s disruption through its acquisition of Whole Foods. Whole Foods immediately lowered prices on many products on Day One of the Amazon acquisition, and together, Amazon and Whole Foods have a huge logistical advantage. Eighty-one percent of Whole Foods shoppers represent the same demographics as Amazon Prime customers, and 95% of Amazon Prime customers now have refrigerated Amazon distribution centers within 10 miles.
• Growth of private label brands. CPGs are feeling the pressure, too, facing increasing competition from private label brands. Private label is up 18% in the U.S., leading to revenue losses and lower margins for major CPGs and creating headwinds for future growth.
• Continued, fierce competition from discounters such as Aldi, LIDL, Walmart and others. Aldi and LIDL are turning up the heat on traditional supermarkets by rapidly increasing their store count in the U.S. Far more than just discounters, they are expert product curators with highly efficient stores that feature higher-margin private label brands and low overhead. Adding to this, Walmart has declared a “price war” on grocery SKUs, asking CPGs to move all trade promotion dollars into “Everyday Low Price.”

Pallab Chatterjee, Chairman and CEO, Symphony Retail Ai stated “Supermarkets face unprecedented competitive pressures today,” … “In order to compete and win, grocery retailers must transform their outdated store models and become ‘stores of the future’ that are agile and aligned with today’s consumer preferences.”  Hello, the Grocerant Guru® has help retail leaders do that disruption.  What are your waiting for? Is it time for you to Look-A-Customer-Ahead?

Symphony Retail Ai has identified the distinct characteristics of “Supermarket 2020” stores, including the following:

• Stores will have fewer than 10 aisles instead of today’s 15+ aisles, with an average product range of fewer than 10 highly curated SKUs per category to meet consumer needs for convenience and quality. Stores can support this in-store model by offering a million SKUs online as part of their multichannel strategy, offering shoppers virtually unlimited product access.
• Stores should remove the center store aisles to make room for prepared foods, taking advantage of shoppers’ intentions to spend 3-4X more on prepared foods compared to other areas. Symphony’s research indicates that year-over-year growth in prepared foods is 8-9% annually for supermarkets.
• A special products aisle can offer a “surprise and delight” section that engages shoppers with products that change twice a week.
• Grocers can recreate a farmer’s market in every store, supplied by local and regional farms and suppliers that meet strict requirements.
• Private label will represent a much higher percent of SKUs, increasing to 40-45% compared with today’s 18-20%.
• Stores will offer shoppers convenient tools such as click & collect, 3D store-navigation that allows shoppers to connect their shopping list to store layout on their mobile phones and AI-enabled, real-time basket cost reduction offers.

Are you trapped doing what you have always done and doing it the same way?  Interested in learning how www.FoodserviceSolutions.us can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information.