Experiences will play a big role in determining which brick-and-mortar retailers are successful at getting millennials and Gen Zers to shop their perimeters says Neil Stern, a consultant with Chicago-based McMillan Doolittle.
“Experiences can still be a driver for visits, as will fresh products and foodservice options,” he says. “These consumers still need choice and want to learn about new cuisines.”
The perimeter, Stern says, will be the main source of these experiences. “It’s easier to create excitement and seasonality in fresh.”
Within the fresh perimeter, all departments — meat and poultry, seafood, produce, deli, bakery and prepared foods — have the potential to draw in younger shoppers, Stern says.
Millennials love experiences, says Lauren Scott, chief marketing officer of the Newark, Delaware-based Produce Marketing Association (PMA) — and, believe it or not, especially experiences they can’t get from their phones or computers. That presents perimeter departments with great opportunities to do sampling and cross-promote within the perimeter.
And if you can work in the values near and dear to younger Americans, all the better, she says. “Merchandise the fresh guacamole made instore with the fresh chips made instore,” Scott offers as one example.
Grocery retailers should also venture outside the box and consider not just products but solutions to millennial and Gen Z needs. When they enter the perimeter, for example, greet them with a promotion or display that answers the question, “What do I need for the party?” or “What do I need for dinner tonight?”
It's also vital, Scott says, to keep in mind that when it comes to helping younger consumers solve their shopping problems, or luring them in with experiences, realize that many millennials and Gen Zers aren’t stocking up for the week like older generations do, but instead “buying for the day.” Maybe they’re picking up one piece of fresh meat, one individual salad and one baguette for that night’s dinner.
California retail chain Raley’s is one example of a grocer that’s bringing experiences to the fresh perimeter that resonate with younger consumers, says Bill Bishop, chief architect and co-founder of Barrington, IL-based Brick Meets Click.
To begin with, Raley’s has an abundance of high-quality fresh foods, and they’ve made it a priority, he says. And they leverage that fresh advantage with their own meal kits and prepared meals that are promoted aggressively via social media and, in the store, often displayed at the front of the store where convenience-minded millennials and Gen Zers can easily and quickly locate them.
“They’ve shaken up the concept of the perimeter,” Bishop says.
Raley’s and other retailers with a good bead on millennials and Gen Z know how to cater to the “time and skill deficiencies” of the younger set, he says. Getting them to buy an uncooked piece of meat, for instance, may be a hard sell. But pair it with other perimeter items and package it as a meal kit and you’re in business.
Or take, Bishop says, a retailer like Chicago’s beloved Mariano’s, where you can pick out your fresh seafood and they’ll cook it for you right then and there. That has “young consumer” written all over it.
Products – and service
“It’s interesting what’s happening at retail,” Bishop says. “They’re transforming from product providers into product and service providers. And as we get further into the digital world, they’re transitioning more to service. Young people want it their way, and they want someone to take care of them in a personal way.”
Perhaps ironically, that new model may resemble very old ones — the butcher shop, for instance, where service was so central to the mission that your butcher would cut your meat into cubes for stew. Many ethnic retailers are paving the way, Bishop says. Customers of some of the country’s top Hispanic retailers bring their pots and pans right into the store and fill them up with whatever they need for that night’s dinner.
“The retailer becomes like a kitchen” in those scenarios, he says, adding that ethnic retailers also do a great job of turning the grocery shopping experience into a multi-sensory experience.
The grilled cheese station in the Raley’s prepared foods section is a perfect fit for younger consumers, Bishop says. It’s customized – you can get it as simple or as complex as you like, with a variety of available fillings and toppings.
It’s also made to order — younger people enjoy the experience of watching their Raley’s grilled cheese being made, Bishop says. They chat with the person doing the grilling. There’s a place to sit down and eat it nearby and, naturally, it comes with a side of free WiFi. “It’s an opportunity to add personal service, and to do it with a little theater. That one-on-one service is very important.”
Many instore prepared foods departments are also catering to millennials and Gen Zers with things like mezzanine seating, Bishop says. That appeals to younger consumers who like to eat alone and have some privacy while they commune with their phones.
Opportunities — and challenges
Perimeter departments start with an advantage: millennials and Gen Zers want many of the things only they can offer.
“All of these departments have opportunity. In just about every case, there are common themes: focus on fresh, focus on local, focus on ingredients and sustainability and focus on new and unique choices,” Stern says. “It works across the board in all fresh areas.”
The perimeter, Scott says, plays a disproportionately important role in ensuring that younger Americans keep coming into brick-and-mortar stores. “The quality of the perimeter departments,” she says, “signals the overall quality of your store.”
But there are also several challenges perimeter departments face when it comes to keeping millennials and Gen Zers motivated to come in to the physical store, Stern says. It starts with traffic.
“If they aren't coming into the store, you can't get them to the perimeter,” he says. “Center-store still remains critical to create a full shop. And price will remain a driver — these consumers will spend more on experiences and food away from home and have fewer dollars to shop for food at home.”
NUMBERS: NATIONAL RETAIL FEDERATION 2018 SURVEY OF MILLENNIAL PARENTS
49% remain loyal to a brand even if cheaper options are available, vs. 30% for older generations
44% only shop at stores that reflect their social or political values, compared to 23% of older generations
78% use their phones to research products, compared to 58% of older generations
86% use same-day shipping, vs. 67% of older generations
NUMBERS: RETAIL FEEDBACK GROUP’S 2018 U.S. ONLINE GROCERY SHOPPING STUDY
Likelihood of buying groceries online:
Millennials: 55% more often, 43% about the same, 2% less often
Gen X: 56% more often, 42% about the same, 2% less often
Boomers: 43% more often, 54% about the same, 3% less often