As 2017 approaches, supermarket retailers continue to adapt as consumer demands shift, and businesses adjust to new technologies, regulations and products. I expect Supermarkets continue to expand into new markets while others mass customize to enhance the consumer experience. Some are doing both.
Competition continues to grow and expectations are high in terms of quality, convenience and transparency.
Here are my five disruptive trends that I predict for supermarkets and grocery businesses in 2017:
Home delivery of groceries to grow exponentially. Amazon’s grand vision is to build 2,000 supermarkets over the next 10 years which will include a facet to run smaller supermarkets acting as food distribution centers. Don’t be surprised that their stores become warehouses where consumers log into Amazon, order groceries and have them shipped to their front door.
Walmart spent $3 billion dollars to purchase online retailer jet.com anticipating this trend. Other supermarkets like Trader Joe’s, Whole Foods, H.E.B. Publix, etc. should be thinking how they can deliver groceries home on a larger scale, — not just for elderly customers, but for the masses.
Side note: After Amazon.com, gobbled up Whole Foods in June for $13.4 billion I expect the company to buy additional supermarkets like Winn Dixie located the SouthEast US that is closing about 70 stores rather than building one from scratch which can take up to nine months.
2. Food prices drop thanks to lower oil prices and competition, thus margins will be slimmer. If the trend in oil prices continues to be lower, the saved cost may be passed on to the consumer, — hopefully. So expect food prices to decrease next year. Hopefully, food manufacturers will not deceptively shrink package sizes too. Check out my blog post on how Bird’s Eye Steamers shrank their packages size from 12 to 10.8ounces, — a decrease of 10 percent. As margins are going to become slimmer, supermarkets and food manufacturers must find ways to make up the lost cost, better ways of packaging and reduced packaging may do just that.3
3. Supermarkets to begin offering a virtual reality experience. Imagine going to your supermarket and knowing what’s available even before you walk in the store, well this will happen as consumers become more aware and use Virtual Reality VR to view what is in your supermarket, in advance of going to your supermarket. Also look for technologies that utilize Artificial Intelligence in the supermarket like an Amazon Echo to tell a customer where they can locate a product.
4. Customer service will improve and be mass customized. In order for supermarkets not to get caught up in a price war to the lowest value or fro products to get stuck in a “commodity trap”. retailers need to step up and grow their loyal customers and thank them with premier service. Whether you are a GenXers, Millennial or Gen Z consumers expect to be marketed regardless of what generation they are part of. This is one of the differentiating factors that separate supermarkets. Expect more interaction from your grocery clerks to provide your premier customer service as a way to add value to your shopping experience. Thus, it’s imperative that retailers acknowledge and reward their best and brightest workers, both full and part-time. One bad shopping experience can immediately result in a customer going right down the road to a competitor, or just shop online
5. Digital coupons and advertising to expand. Advertising is done by supermarkets in an attempt to get you into the store once. Getting you to spend money in your store the first time with the hopes of becoming a long term customer is the vision. With more supermarkets entering new markets, expect the advertising to ramp up too on TV and online. In addition, the competition will grow for your disposable income by providing coupons digitally to use and save money. You may save time using digital coupons rather than cutting them out of your Sunday paper.
It is an exciting time to be a supermarket. Consumers should be getting more for their money on groceries in 2017 so it will be interesting to see how supermarkets will pull you in and get you to fill up a shopping cart. The best is yet to come in 2017 and beyond as mass customization of what we eat will put positive pressure on both retail supermarkets and food manufacturers to perfect the grocery experience for you.