7 TRENDS GUARANTEED TO DISRUPT
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
7 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
7 TRENDS
GUARANTEED
TO DISRUPT
GROCERY STORE
CONSTRUCTION
IN 2018
International Contractors, Inc. © 2017. All Rights Reserved. | 1
7 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
INTRODUCTION
Like any construction project, building a grocery store is more
than simply creating its physical structure. Before the first
shovel hits the earth, the store layout, business plan, market
research, and much more have been in place for months. To
help with that initial phase of your construction project, we
have assembled research from multiple sources demonstrating
industry and consumer trends that will impact your business
when constructing a grocery store in 2018.
International
InternationalContractors,
Contractors,Inc.
Inc.©©2017.
2017.All
AllRights Reserved. | | 2i
RightsReserved.
7 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
1 BRAND LOYALTY IN DECLINE
As your own market research has likely shown, According to Nielsen research, the biggest factor
the days where consumers shopped at one in consumers’ choice in store is, of course, price,
location for all of their weekly grocery needs with 68% of global respondents saying prices
seem to be consigned to the past for good. With drive them to switch stores. However, not far
more options available than ever, including behind is product quality, with a global average
online retailers, customers have a large number of 55% saying that it is a determining factor in
of competitors for their money and attention. their shopping choices.4 While only you can
They are increasingly likely to shop around, decide how you will compete in setting your
finding the best experience for each individual prices and profit margins, product quality and
shopping trip. The “State of Grocery Shopping the convenience of the shopping experience
Survey” administered by the International (important in 46% of store selections4) are
Council of Shopping Centers (ICSC) found that directly impacted by choices made during
the average grocery shopper regularly patronizes construction—and ICI can help. By observing
5.4 different grocery retailers. While 92% use this and the following trends, you can ensure that
traditional supermarkets, there is significant your store provides the quality experience that
competition in many forms, including multi- today’s consumers, including ever-connected
purpose department stores like Walmart.9 This Millennial shoppers, clearly desire.
means that even more than ever, successful
grocery stores must find ways to differentiate
themselves from the competition in order to
stand out in shoppers’ minds.
5.4
AVERAGE NUMBER
OF GROCERY
RETAILERS
CONSUMERS VISIT
International Contractors, Inc. © 2017. All Rights Reserved. | 17 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
2 ONLINE SHOPPING
Online shopping is on the rise, but not in the to the ICSC report titled “Click-and-Collect
way many expected when it originally became Seamlessly Merges Physical, Digital Consumer
possible. While fears first arose that online Channels: What U.S. Retailers Can Learn From
shopping would destroy or damage brick-and- Their European Counterparts,” there is a huge
mortar business models, new research suggests amount of untapped potential for the click-and-
that merging the two may be the future for collect model in the United States. 77% of U.S.
grocery retail. retailers currently do not offer a click-and-
collect service.1 As identified in research from
Nielsen, only 15% of consumers are picking
NUMBER OF CONSUMERS WHO up purchases in the store, 11% are using drive-
74% PURCHASE GROCERIES USING THE
CLICK-AND-COLLECT MODEL
through pickup, and 11% collect purchases
ICI is seeing in-store grocery collection
Of online grocery shoppers, 74% make their gain traction within the U.S. as well.
Within two recent new construction stores that our
purchases online and make use of curbside or team built, ICI worked alongside the owner and
in-store fulfillment—the “click-and-collect” architect to adjust the originally proposed store
model that is quickly gaining traction, especially layout mid-build in order to incorporate the
in Europe. Conversely, only 1% use a solely ‘click-and-collect’ model. In-store fulfillment space
requires minimal square footage and is relatively
online shopping solution, never shopping for inexpensive to include, so it was worth it to these
or collecting groceries in a store.9 The reasons major retailers to test the model. Our experience
behind this are many, but one of the largest is indicated that it only required about 600 square feet
time: online shoppers save an average of 1.6 of space, and the in-store cost of construction
during design or early construction was $55 per
days when using a click-and-collect model over square foot: a minor cost compared to the overall
an online delivery model, according to ICSC project. The construction cost of a pickup area after
research.1 a store was built was almost double.
Planning around the implementation of a click- TIM JACKSON
and-collect model can not only save money Vice President of Operations, ICI
during construction, but ensure the ability tjackson@iciinc.com | LinkedIn
to compete in the United States. According
International Contractors, Inc. © 2017. All Rights Reserved. | 27 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
outside the store (curbside pickup). 57%, 60%, Among the most significant barriers to
and 55%, respectively, reported being willing to implementation, according to the ICSC, are
use these services.3 disjointed distribution networks, inaccurate
inventory/database systems, and expenses.
Inaccurate inventory systems and high-demand
23% NUMBER OF GROCERY STORES THAT
OFFER CLICK-AND-COLLECT SERVICE
items, especially in combination, have led to
shoppers experiencing frustration when an item
is displayed online as being in stock, only to be
Click-and-collect represents a sizeable and as- unavailable in reality.1 If adopting or increasing
of-yet underutilized value proposition that the scale of such a model, be sure to consider
can provide an edge over nearby competition. these factors.
WHY THIS MATTERS
If you attempt to implement a click-and-collect system, consider a car-accessible loading/pickup area separate from the
main store entrance to reduce traffic congestion and increase convenience for shoppers. In addition, ensure there is
sufficient space for employees to assemble and pack customers’ orders prior to pickup.
International Contractors, Inc. © 2017. All Rights Reserved. | 37 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
SMALLER, MORE FOCUSED
3 STORE LAYOUTS
The promise of a quick, convenient shopping trip Along with appealing to time-conscious
is also deterministic in shoppers’ store selection, customers, a smaller, intelligently designed
as a global average of 46% of consumers reported layout can offer decided advantages, including
it as significant to their choices.4 Market research better shopper circulation and increased
shows that consumers are more focused than spending per trip. A study of Japanese grocery
ever on time, rather than selection. Similar to store layouts focused on locations in the store
the appeal of click-and-collect, smaller store influenced by “Magnet 1,” which was defined
layouts allow shoppers to get what they came for by the study as leading product sales sections
and move on. The introduction of the Walmart on either side of the main aisles, and “Magnet
Neighborhood Market reflects that even the 2,” which was defined as sales sections at the
largest department stores have recognized this beginning and end of the aisles. The study found
trend: the Neighborhood Market is an average that customer circulation rates (the number
of 42,000 square feet and carries 29,000 SKUs.7 of customers who followed a designated path
This is not only significantly smaller than a through the Magnet 1 locations) and drop-by
standard Walmart layout and approximately rates (customers who stopped for one second or
equal to the average grocery store (41,300 longer at target locations influenced by Magnet
square feet), it also exhibits a smaller selection 2) were greater when the store conformed to a
than the average supermarket (38,900 items).6 standard layout, with produce paired with daily
With online options and competitors all over, foods like bread and frozen foods at one end of
respecting customers’ time is becoming nearly the store.2
as high a priority as respecting their wallets
when it comes to earning business.
WHY THIS MATTERS
Plan for a smaller, more efficient layout while designing for optimal shopper circulation. Nielsen research reflects that
customers value a quick, convenient experience,4 and the Japanese study found that the average value of items bought
at Magnet 1 and Magnet 2 locations was significantly higher in stores using the optimal layout.2 The next few trends will
go into detail on some of the key layout features to consider.
International Contractors, Inc. © 2017. All Rights Reserved. | 47 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
4 HEALTHY OPTIONS
Healthy eating has increasingly become a reasons for customers to visit a physical store.
priority for consumers in recent years. Trends Despite the rising popularity of online shopping,
like GMO-free, gluten-free, and others, in customers are still reticent to have fresh groceries
addition to a general consciousness of health delivered to their homes. Home delivery of fresh
and an interest in transparently sourced food, produce prevents the customer from inspecting
result in an increased demand for responsible their selection first, and spoilage is also a concern
food, healthy/fresh options, and produce. with delivery of fresh and frozen groceries.
Grocery stores are devoting more floor space Nielsen reports that the percentage of customers
to produce as a result. The Food Marketing communicating an intent to purchase these
Institute (FMI) reports that produce sales are options online in the next year was low, at 16%
up 4% and represent a large revenue source: for fresh vegetables, 11% for frozen seafood, and
customers who buy produce spend close to 10% for frozen vegetables.4 Only 9% of North
$30 more per trip than those who do not.5 This American respondents to a 2016 survey reported
research reflects that produce, already an area of having purchased fresh groceries online.3 Some
focus for most grocery stores, will only become of the least healthy options (processed, packaged
more important with time. food) also tend to have higher shelf lives and are
more conducive to being ordered online and
AMOUNT CUSTOMERS SPEND delivered without visiting a store.
$30 MORE PER TRIP WHEN THEY
PURCHASE PRODUCE Produce and healthy options clearly demonstrate
value to grocery shoppers, both due to current
Not only are healthy options a big draw on their market trends and because they leverage the
own, they also represent one of the biggest strengths of the brick-and-mortar format.
WHY THIS MATTERS
Produce and fresh options are more popular than ever, and also serve as a primary reason for continued use of the
traditional brick-and-mortar supermarket. When reducing the size of your layout and product selection, ensure this
reduction does not come at the expense of produce and fresh, healthy options, which will likely continue to grow in their
appeal to grocery shoppers.
International Contractors, Inc. © 2017. All Rights Reserved. | 57 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
5 READY-TO-EAT FOOD
Following the theme of convenience, another around in that direction.
option growing in popularity is ready-to-eat The study compares a layout with produce and
food. Many stores offer delicatessen, bakery, the deli/bakery placed opposite one another
and even sushi options that can be taken home (the “Standard Layout”) with a format that
and either eaten immediately or reheated later. places the deli and bakery on the same side as
These ready-made, pre-portioned meals are the produce (the “Minority Layout”). Area IV
popular for those doing their shopping after in the Standard Layout, which contained the
work, allowing them to handle dinner and deli and bakery and was placed opposite the
groceries in one trip.7 produce section, attained the highest circulation
rate of either store for both types of shoppers:
In their study of Japanese grocery store layouts, those who started with produce as well as those
Masao Ohta and Yoshiyuki Higuchi found that who ended with it.2
the bakery and deli areas are most optimally
placed opposite the produce section, either Appealing take-home options from the deli and
to the left or the right of the store from the bakery encourage purchases from shoppers
entrance. They observed and tracked shoppers looking for a ready-made meal when they get
who circulated “fruit-and-vegetable-wise” and home. This is especially true for shoppers who
“counter-fruit-and-vegetable-wise,” meaning begin their trip in the produce section, as hot
those who started their trip with the produce food can be picked up at the end of the trip and
section and moved around the store, or those taken straight to the registers.
who started opposite the produce and moved
WHY THIS MATTERS
The optimal layout appears to be to place the deli and bakery areas on the opposite end of the store from the
produce. In addition, invest in high-quality facilities for these areas, as ready-made, restaurant-quality food combines
the consumer priorities of product quality and convenience, important in store choices at rates of 55% and 46%,
respectively.4
International Contractors, Inc. © 2017. All Rights Reserved. | 67 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
6 PREMIUM EXPERIENCES
As stated before, quality is highly important definitively positive. In a survey by Coldwell
to shoppers: almost as much so as price. With Banker Commercial, 74% of respondents said
prices dropping lower thanks to department that experiences like these would increase the
stores and e-tailers like Amazon, competing likelihood that they would visit a store. This
on price is becoming more difficult. However, percentage was as high as 89% for Millennials of
as specialized retailers, grocery stores can ages 30–34.10
offer a quality of food-related experience that
institutions of more general purpose such as Quality is also a draw when applied to the product
large department stores will have difficulty itself, as well as the experiences surrounding it.
matching. This is particularly true for two options we have
already discussed: healthy options, and ready-
NUMBER OF RESPONDENTS WHO to-eat food. As discussed, the deli/bakery area
74% SAY PREMIUM EXPERIENCES WOULD
INCREASE LIKELIHOOD TO VISIT STORE
can draw customers by offering restaurant-
quality food that customers do not have to cook
when they get home. Produce, meanwhile, as
Customers have responded positively to the an area that is important to shoppers, is also an
premium-quality experiences offered by grocery avenue where they appreciate quality offerings.
retailers like Wegman’s and Whole Foods.7 According to the Food Marketing Institute,
These and other grocery stores draw customers demand is increasing for local produce, with
with experiences beyond just buying food, 61% of shoppers expressing a desire for more
including tastings, recipe classes, live music, and locally sourced produce options in their
more. This is a particularly effective answer to stores. The FMI also reports greater demand
online-only competition, as physical experiences for transparency in the sources of customers’
are impossible to replicate in an online produce choices, including not only local but
environment. Consumer response is also organic and “free-form” options.5
WHY THIS MATTERS
In response to the powerful draw of quality experiences throughout the store, in conjunction with increased consumer
demand for produce and premium deli/bakery options, consider leaving additional space in the produce area for
expanded local/organic options, while also allocating space for recipe/tasting booths and other premium experiences in
the deli area and throughout the store.
International Contractors, Inc. © 2017. All Rights Reserved. | 77 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
DIGITAL INTEGRATION
7 & DATA ANALYTICS
In an increasingly interconnected world, click- like in-store WiFi to access information and
and-collect is not the only way to integrate offers (12%), scanning QR codes on products
technology into the shopping experience. As (11%), and using in-store computers to view
demonstrated throughout the research we information about additional products available
have observed so far, convenience is and will online (11%) was low; willingness to use these
continue to be of great importance to today’s tools was 66%, 65%, and 68%, respectively.4
shoppers. Technology presents not only
methods for increasing the convenience of the These tools not only add to the customer
shopping experience by providing customers experience, but they provide valuable market
(especially those from younger demographics research data for retailers. Loyalty programs
like the Millennial generation) with access to and digital engagement tools like QR codes and
more information, but also new market research in-store computers, especially in combination
avenues for retailers. with one another, can help to gauge interest
in products as compared to actual purchase
A large opportunity of this variety lies with numbers, while also providing insight into the
loyalty programs and coupons. Loyalty programs shopping behaviors of various demographics.
are already in place at many stores via cards Such market research can also help you to focus
and emailed coupons; however, engagement your product selection to highlight items that
can be increased by bringing these programs are in higher demand as discussed previously.
and coupons to customers’ mobile phones.
According to Nielsen research, only 14% of Interest in and effectiveness of these kinds
global respondents in 2015 had downloaded of tools remains high heading into 2018. A
a retailer/loyalty program app, while 63% of 2017 report from Nielsen states that “In-store
respondents expressed willingness to do so.4 digital enablement options have been shown to
increase dwell time, engagement levels, basket
Implementation and willingness numbers size and shopper satisfaction.”3
were similar for other digital tools. Use of tools
WHY THIS MATTERS
Technological integration can be achieved and heightened through infrastructure developments and the layout of the
store itself. Investing in store-wide WiFi and using it to distribute promotions and offers; installing computers for looking up
promotional offers and inventory; and installing smart shelves to display pricing and other information are all positive ways
to engage customers while also collecting valuable usage and interest data. Engagement with loyalty programs can also be
increased with layout choices to highlight current promotions and sales, like expanded members-only sales areas near the
front of the store to encourage participation in the loyalty program.
International Contractors, Inc. © 2017. All Rights Reserved. | 87 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
CONCLUSION
Consumer trends and market research show us that customers
are placing increased value on convenience, quality (of
products as well as experience), and healthy choices such as
fresh produce. When planning construction of a grocery store
in 2018, you must factor these trends to compete for a more
connected and less brand-loyal customer base.
Despite the expansion of online options, research reflects
that brick-and-mortar grocery stores will continue to occupy
a central role in shoppers’ grocery-buying routines thanks
to their proximity and convenience as opposed to shipping
and delivery of groceries. By respecting customers’ time and
wallets while clearly demonstrating the value of the in-store
experience, retailers can operate competitively in this new
market.
International Contractors, Inc. © 2017. All Rights Reserved. | 97 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
BASED ON CURRENT RESEARCH,
ICI’S RECOMMENDATIONS INCLUDE:
Planning for a loading/pickup area, Investing in the space and facilities
1 whether inside the store or via a 4 needed to offer premium ready-made
separate entrance, to accommodate options like deli, bakery, and even
a click-and-collect order fulfillment sushi services.
system, if utilized.
Allocating space for offerings to
Reducing the footprint of the store to 5 increase the overall quality of the
2 offer a smaller, intelligently designed customer experience, including
and data-driven layout, taking into locally sourced produce as well as
consideration optimal customer “extracurricular” experiences like
circulation routes and market research tasting booths, recipe classes, and café
data to offer a more tightly focused seating in the deli/bakery area.
product selection.
Investing in a modern infrastructure,
Ensuring the priority of areas devoted 6 including advanced inventory systems
3 to produce and healthy options, (to better enable the implementation
maintaining their size despite of online order fulfillment), store-
shrinking the overall layout of the store wide WiFi, smart shelves, and other
advancements to increase customer
engagement and provide usage data.
Stores that successfully implement these strategies in response to consumer trends will find
themselves better able to compete and thrive in the modern marketplace, and such innovations start
at the very beginning, before the ground has been broken for the first time.
International Contractors, Inc. © 2017. All Rights Reserved. | 107 TRENDS GUARANTEED TO DISRUPT GROCERY STORE CONSTRUCTION IN 2018
SOURCES
1
Report: Tubridy, Michael. “Click-and-Collect 5
Article: “FMI Report: Fresh Produce Growth
Seamlessly Merges Physical, Digital Consumer Driven by Mega Trends.” Food Marketing Institute.
Channels: What U.S. Retailers Can Learn From 22 Jun. 2016. Web. 10 Nov. 2017.
Their European Counterparts.” International
Council of Shopping Centers, Industry Sector 6
Article: “Supermarket Facts.” Food Marketing
Series. 14 Sep. 2017. Web. 9 Nov. 2017. Institute. 2017. Web. 10 Nov. 2017.
2
Report: Ohta, Masao and Higuchi, Yoshiyuki. 7
Article: DeHaven, Kylie. “Four grocery trends to
“Study on the Design of Supermarket Store keep watching in 2017.” BRR Architecture, Inc. 30
Layouts: The Principle of ‘Sales Magnet.’” Jun. 2017. Web. 8 Nov. 2017.
International Journal of Social, Behavioral,
Educational, Economic, Business and Industrial 8
Article: “Consumers Continue to Favor Grocery
Engineering, Vol. 7, No. 1, 2013. Web. 10 Nov. Shopping in Person.” Connect Group Media, Inc.
2017. 12 Sep. 2017. Web. 8 Nov. 2017.
3
Report: “What’s In-Store for Online Grocery 9
Article: “Consumers Continue to Choose Physical
Shopping: Omnichannel Strategies to Reach Over Digital for Groceries.” Business Wire. 11 Sep.
Crossover Shoppers.” The Nielsen Company. Jan. 2017. Web. 8 Nov. 2017.
2017. Web. 11 Nov. 2017.
10
Article: “Trends for 2017.” International Council
4
Report: “The Future of Grocery: E-Commerce, of Shopping Centers. Jan. 2017. Web. 12 Nov. 2017.
Digital Technology and Changing Shopping
Preferences Around the World.” The Nielsen
Company. Apr. 2015. Web. 10 Nov. 2017.
International Contractors, Inc. © 2017. All Rights Reserved. | 11You can also read
