by Cindy Sorensen / founder, The Grocery Group
Unless you were living under a rock in 2020, it was impossible to go an entire day without seeing an article or newsclip about the role of e-commerce in 2020.
Due to the COVID-19 pandemic – and shoppers’ reluctance to fulfill their grocery needs through a brick-and-mortar shopping experience – retailers were forced to either quickly get into the e-commerce game or to improve upon their existing playbook.
Today, a little more than 50 percent of consumers are doing all their shopping online. Questions for 2021:
- How will the change in shopping behavior impact the in-store shopping experience?
- Will online shopping decrease as we begin to flatten the COVID curve?
- Will the number of retail stores continue to grow?
- What will be the square footage trends for new retail?
- What will store design look like?
Grocery store design over the past 20 years has reduced the space allocation for back rooms. Stores are receiving daily trucks from their wholesalers, which means a large back room is no longer a necessity.
However, with the increase of online shopping for delivery or curbside pickup, stores have needed room to house inventory to fulfill these daily orders. Shelf stock is not enough.
Using shelf stock for fulfillment purposes also requires multiple handling and movement of products. I’ve noticed during recent store audits that the absence of back rooms has forced many stores in my area to convert retail floor space to storage and fulfillment areas.
I believe 2021 will bring about the development of two retail and/or fulfillment formats.
The first will be a revision of current retail stores, which will include reducing on-shelf product assortment and shelf stock to allow more floor space to fulfill e-commerce orders.
This will allow grocers to be more efficient by reducing the time needed to fulfill an order and improving shopper experience with fewer out of stocks.
In addition, I think in-store shopping likely will become more experiential. That will include prepared foods, on-site restaurants and cooking demonstrations – more of a social scene as can often be found at food retailers in European countries or in the retailer “Eataly” here in the U.S.
The second format will be a conversion of many retail locations into fulfillment-only centers. This could be an option for lower-performing stores.
Converting these locations into mini-warehouses will allow for improved e-commerce order fulfillment. The curbside pickup experience also can be made more efficient because the pickup area will not be competing for parking space with in-store shoppers.
Retailers also can reduce overall costs since fulfillment centers are not as expensive to operate.
The efficiency of the delivery and/or outdoor pickup experience will become nearly as important as in-store. It will be a new competitive space in which grocers will need to succeed to win shopper loyalty.
As these models change, key performance indicators for success will need to be revised. How retailers measure their success will be determined by how their shoppers define it.
In preparation for any changes – and how to measure their success – be sure to ask shoppers for their feedback. You will be glad you did.
Sorensen’s Grocery Group has a mission to “develop leadership in purpose, people and products” with a specific emphasis on the grocery/consumer packaged goods (CPG) industry. The group also develops programs to connect grocery industry professionals to colleges and universities to help attract, recruit and retain a talented workforce in a competitive employment. Reach Sorensen at [email protected].
