E-commerce, contactless payment options and smaller store formats all are shaping the future of grocery retailing, according to a new report from Packaged Facts called “The Future of Food Retailing: Value Grocery Shopping in the US”
As Amazon has made inroads into consumable products, retail outlets are making it possible for shoppers to order on-line and then pick up items at the store, according to Packaged Facts, a market research firm based in Rockville, MD. Some estimates show brick-and-mortar stores average more than 100 e-commerce orders per week.
“Retailers covet e-commerce shoppers because they tend to be less price sensitive, spending noticeably more than in-store-only shoppers and driving higher margins,” Packaged Facts said. “E-commerce shoppers are also desirable because they tend to stock up, placing two large orders per month on average, with items in their baskets often double or even triple what is typically found in the carts of in-store shoppers.”
As millennials and Gen Z come of age, the ability to pay wirelessly or by tapping a card on a reader will become a growing aspect of shopping convenience, according to the report. Apps designed to speed up the payment process, keep track of transactions, calculate and apply customer rewards, and help shoppers bypass lines are becoming more popular. Wal-Mart Stores, Inc., Bentonville, Ark., launched the mobile app Walmart Pay in 2016. Target Corp., Minneapolis, plans to introduce a mobile payment option in 2017.
A key benefit of smaller store formats is the convenience of getting in and out of a store as quickly as possible. Aldi and Lidl, both of whom employ this tactic in Europe, are expanding in the United States. Wal-Mart’s Neighborhood Market stores are about one-quarter the size of Wal-Mart Supercenters. Target in 2016 opened 32 “flex-format” stores, each one occupying less than 50,000 square feet. The smaller stores allow Target to enter high-rent urban areas.“Food retail is evolving,” said David Sprinkle, research director for Packaged Facts. “The customer is king, and perhaps more than any time in history, the consumers are firmly in control. Competition from multiple channels is unrelenting, and retailers must be creative and innovative in their marketing, products offerings, services and even store designs just to garner even a semblance of consumer loyalty.”