Let’s quickly say goodbye to 2020 and look ahead to 2021 and what new innovations in grocery retail will emerge from what we learned in 2020.
College was many, many years ago for me, but one of the concepts I learned (and remembered) in my Marketing classes was that of the “Cycle of Retailing”.
The concept is that retail institutions experience the cycle of innovation, growth, maturity, and decline, like the goods and services that they sell.
For example, if we think of the grocery shopping experience from decades ago, one might need to visit several stores to complete an entire shopping list; the bakery, the butcher, the farmer’s market, the drug store, the liquor store, and a dry goods store. With the development of the supermarket, shoppers could fulfill many of their needs in one stop.
Supermarkets in 1930 averaged 6,000 square feet. Over the years, grocers became very efficient with the development and operation of supermarkets. They became bigger and bigger; backrooms shrunk as wholesalers were able to provide daily deliveries with just-in-time inventory capabilities; store assortment grew; and additional goods and services such as dry cleaners, restaurants, spas, and home goods and gift items were added.
In a low, net profit margin operation, the addition of these high-profit departments and services certainly was welcomed as a way to increase overall store profit margins.
And then COVID-19 hit! Consumers’ shopping habits changed quickly. First, there was hoarding by shoppers and grocery retailers struggled to keep essential food and household items in stock. Then there was a sharp increase in online shopping and retailers quickly reacted by redirecting employees to be in-store order pickers, packers, and delivery drivers.
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This increase in online orders created delays in the parking lots as shoppers waited for their curbside pickups. Grocers reacted by creating additional online order pickup zones and parking spots.
What I also witnessed recently in my local store, was the repurposing of the eat-in area where shoppers previously were able to eat food purchased in the store. These dining areas have been closed with the recently mandated restaurant shutdowns in Minnesota where I live.
My local store has turned this area into a storage area for an inventory of essential items. This grocer has virtually no backroom and without the ability to confidently know they can receive these items to refill shelves every night, they reincarnated the “backroom”. They are using the former dining area to store toilet paper, paper towels, and flour.
Seeing how grocery retailers improved upon their model to accommodate a very quickly changing retail situation, got me thinking of the “cycle of retailing”.
Changes necessitated by COVID-19 have thrown us into the next spoke in the cycle of retailing. If consumer research experts are right, shoppers have responded favorably to the changes in the shopping experience and will not return to their “pre-COVID-19” shopping habits.
They will continue to, and increase, their usage of delivery or curbside pickup. Those habits will extend beyond food and will also impact other goods and services for which they previously frequented their local grocer.
In 2021, will we begin to see the downsizing in the floor space allocated to shopping in a grocery store?
With online ordering, delivery, and curbside pickup increasing, there will not be a need to carry a pre-determined day of supply on the shelf, therefore the shopping area can be reduced and the backroom space increased and developed into a fulfillment center for online orders.
I predict in 2021 we will begin to see the beginning of the grocery stores of today becoming order fulfillment centers of tomorrow.