There’s an odd comfort to the restart of the conference circuit in Las Vegas after a year and a half of the pandemic – and many cancelled events – which signals some return to normalcy. In that spirit, like in past years, we aim to provide a quick recap of some key themes we heard throughout the day to pass along to readers unable to attend. Send us a note or add a comment below should you have any questions or reactions throughout the week.
Consumers started cooking more at home during the pandemic and that’s expected to continue going forward
As the country went into lockdown last year, Americans cooked at home and shared more meals with family. TikTok and Instagram videos with new recipes fueled a surge in meal planning and people started baking in droves – look no further than the yeast shortages from last year as an example of how things changed.
Kroger’s CEO, Rodney McMullen, and several other speakers, noted how they believe this isn’t just a short-term trend but rather a shift in consumer behavior. As customers cook more at home – and want to share those newfound skills with friends and family – how do retailers adjust their approach in terms of merchandising and marketing to meet the shift? We heard from Nielsen’s Harvey Ma who laid out changing customer expectation in key product categories where price is no longer the top consideration but factors such as quality are starting to win out. Retailers that help the customer build complete meals – and serve up new products that meet shifting category needs – will grow in the long-run.
Grocery ecommerce sales doubled in two years and digital retail be a key enabler of continued sales growth
This primary theme is likely familiar for readers: the pandemic accelerated grocery ecommerce purchases by doubling digital sales by 2x in two years. The acceleration has created a series of ripple effects for grocery retailers from expanding in-store picking operations to remodeling stores for delivery or click and collect purchases.
The explosion of grocery ecommerce creates new investment decisions that vary based on the scale of the ecommerce business: dark stores, microfulfillment centers (MFCs), real-time inventory, picking software, and item data/product information, to name a few. The overarching theme, though, is that investments in technological improvements that improve the speed and convenience of digital orders – or, as Albertsons’ Chief Digital Officer, Chris Rupp, said, “the quality of the digital order” – are critical.
We will try to devote more time in the future to better articulate our view on evaluating investments in this space. However, for the moment, what we would add is that foundational investments in real-time inventory and item availability are great investments to both increase sales to customers as well as reduce the cost to pick items by reducing substitutions or stockouts.
Convenience vs. Experience? Both will be key to physical stores going forward
As Andrew Lipsman, of Insider Intelligence, pointed out: almost 50M new customers first tried grocery ecommerce during the pandemic and now stick with it because of the convenience. The same expectation of convenience has carried over to in-store shopping with customers now having less patience than ever to wait in long checkout lines. To this end, there were several references to Amazon’s self-checkout technology which is set to debut in two Whole Foods stores. Automated checkout is seen as perhaps the greatest enabler of in-store convenience and, according to Matt Nichols of Commerce Ventures and Anne Mezzenga of OmniTalk, should be at the top of any retailers’ technology investments.
At the same time, retailers will need to think about offering a great experience for customers that come into the store – which are still the majority of grocery sales. Some grocers are expanding their prepared foods sections – or integrating local foods concepts in the store – to provide a great experience for customers. (James Cook of JLL cites Don’s Food & Market in Chicago as a great example of how grocers can elevate the experience for customers). Over the next decade, stores will have to balance convenience – both in checkout as well as fulfillment of online orders – while elevating the experience in the store.
The Navio Group works with retail leaders who want to transform their business. Interested in discussing these or other insights? Shoot us a note at carlos@thenaviogroup.com.
