What’s coming down the pike for grocery this year? Jim Hertel, senior vice president of analytics research and development for Inmar, provided perspective on topics including store design, online grocery, personalization, the data-versus-privacy conversation and more.
Q: What are your expectations around how 1) grocery pickup and 2) grocery delivery will continue to grow in 2020?
A: “Both will grow in 2020, with pick-up likely to accelerate somewhat faster than delivery as the capital expense to get into pick-up is easier for retailers to manage. It’s important for food retailers to understand that the pickup and delivery customers are different, and so are their needs.
"Store pickup shoppers are typically busy families with kids, while delivery shoppers are often elderly and tied to their homes. Basket items also differ between the groups. For example, according to our 2019 eCommerce SuperStudy report, 23.6% of pickup baskets include Service Deli compared to 10.7% of delivery baskets. Similarly, 23.1% of pickup baskets include fresh chicken whereas 17.4% of delivery baskets include the same item.”
Q: We’ve often heard that people won’t buy groceries online because they don’t want someone else picking their fresh produce. Are we seeing produce be a hindrance in the growth of online grocery, or not? And how are the retailers who are having success with online grocery ensuring the produce meets quality expectations?
A: "Produce is critical to determining where consumers shop, and it’s tricky online. It’s becoming clear that Amazon has come to that realization with many of their moves of the last few years.
"That said, produce represents a real opportunity for online retailers: if you can meet or exceed online customers’ expectations, you can ‘lock in’ their loyalty because you’ve overcome their skepticism. In fact, online retailers who excel at produce hear comments like, ‘Of course it’s better quality online; other shoppers haven’t picked through it.’”
Q: How do you expect independent grocers/smaller chains to respond to the increasing availability of online grocery services through big players like Walmart, Kroger, etc.?
A: “They’ll need to plug the leakage for sure. Most who respond will choose to outsource their efforts to a third-party service provider, a relatively quick and low-risk way to defend. A few will see opportunities to expand their businesses online and leverage unique offerings to serve a wider customer base.”
Q: What will be different about how grocers 1) choose new store locations and 2) design those stores in 2020?
A: “The location race used to be for the next suburban or exurban location where you could locate an even larger store, have ample parking, and wait for the population to move there. Now, as population heads downtown, the race is for urban locations, smaller footprints, and a focus on fresh and prepared foods for pickup and delivery.
"Population density creates some issues, but create opportunity for new services like home delivery. Store design will reflect these new product and service opportunities.”
Q: What are some ways you expect grocers will personalize offers/experiences for their shoppers?
A: “Personalized digital circulars and promotions will continue to grow. Personalized pricing is the next frontier.
"Services like Albertsons’ ‘Just for You’ have shown that personalization works and will be embraced by shoppers. We expect more experimentation on the personalized pricing front.”
Q: What do you foresee as far as the conversation about personalization vs. data and privacy in 2020?
A: “New laws will raise consumer awareness but will also spur new efforts to gain consumer ‘opt-in’ to share their data based on value exchanged, especially when the need for personal data is clear.
"For example, a consumer will get market-best prices in return for letting the retailer analyze their purchase history. The net effect will be an increase in transparency and greater adoption of personalized services.”
Q: What are some other grocery trends you expect to emerge this coming year?
A: “This will be the year plant-based proteins expand to mimic other meats and cuts beyond ground beef. The best plant-based proteins taste good, are good for you, and are seen as good for the planet — a values-based win-win-win.
"Traditional protein producers will become more vocal in response and seek to slow plant-based proteins’ growth. We expect that the overall consumption of protein will expand and both traditional and plant-based protein will benefit.”
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