Predicting the Future of Grocery Retailing

As the leading research agency into the attitude and behaviours of shoppers in the grocery sector, and following a large number of projects undertaken relating to channels (both in the UK and Europe) I felt it was time to use this knowledge to try and predict the future.

In this brief overview, I will attempt to demonstrate why it is so important to invest research into channels outside that of the superstore, where, let’s be honest, we know quite a lot!!  For simplicity, I am considering discounters by their store type rather than their business models.

 

 

Superstores are more and more being seen by shoppers as the channel to avoid if at all possible “Can I manage without ever going in one?”….”Who wants to trail round a superstore in their leisure time?”….”I dread the experience”….”We pile our trolley high with things we probably won’t even eat”….people love eating, but don’t particular like shopping.  How different this is from our French neighbours whose mission is to find the best quality food, in the UK it is so much more functional than that. So, what are the alternatives?

The rise of the convenience sector, driven by the increasing store estates of the multiples have given shoppers the wider choice to buy just what they need, when they need it.  This all from retailers they know and trust (most of the time!), where the biggest brands are still available at reasonable prices (although they also recognise they are paying for the privilege, they seem happy to do so).  And convenience really is the key as they combine their commutes with manageable quantities of product, where the consumption occasion is already known…”Maybe I spend a bit more, but I know that it’ll all get eaten with no waste”.

Online continues to grow at above 20% per year, but from a low base, this is still pretty small in the whole scheme of things, but our research suggests we are nearing the tipping point for even faster expansion in this channel.   The introduction of click & collect in the way they have in France (where one can order at work in the afternoon, and two hours later drive to a designated car park – dark store or store car park - and have their goods loaded into their Renaults), will revolutionise the online channel beyond recognition.  No longer will waiting at home for a two hour slot be seen as convenient, and if they forget to order something, they can still nip into the store to augment their online order at the same time.

I also predict a dramatic rise in shoppers using non-standard grocery channels such as Amazon, where they benefit from big discounts on non-perishable produce, and larger SKU’s which they don’t mind storing if the price is right.  Manufacturers will ignore this at their cost, with the opportunity to sell SKU’s that superstores will not stock, there should be no issues.  I believe shoppers will change their mind-sets on where to buy certain products, fresh is one thing…but boxes of their favourite brands is another, and anyway they already have an account!

So in summary, the market will demand less supermarkets, continuing growth in the convenience sector, whilst online will establish itself as the key channel for larger shopping missions with a shift to more click & collect methodology and the growth of non-standard grocery channels (like Amazon).