September 22, 2017


FOOD & DRINK by Ted Nelson // September 22, 2017

The grocery business has been undergoing somewhat of a wrenching period of transformation over the past 10 years. Examples of this most recently include Amazon’s Whole Foods acquisition, the growth of online players like Blue Apron and the farm-to-table transformation.

Over the years, we’ve worked with a major Midwest supermarket chain, a large player in the frozen aisle of grocery stores nationwide and disruptive upstarts such as AeroFarms, a vertical farm company based in Newark, N.J. Throughout those engagements, we conducted extensive shopper research – both quantitative as well as in-depth ethnographic “shop along” interviews.

It’s relatively old news that the big shift has been from the center of the store to the perimeter. People are hitting grocery stores for fresh items and have decreasing interest in the traditional consumer packaged goods “canned and frozen” branded heartland in the center of the store. This has been driven by a number of factors. More educated and higher income shoppers are increasingly health-focused, quickly working their way around the perimeter, picking up fresh items to complement their Blue Apron shipment and also picking up a few items at the local farmer’s market on the way home.

The fact that this once highly profitable segment of educated and upper income shoppers is perhaps only purchasing half of their needs in traditional grocery stores these days creates a real challenge. When the trends are inherently decentralized, it becomes harder and harder to make the case that a one-stop-for-everything model makes sense anymore.

This break with tradition is resulting in the rise of alternative models such as Aldi, in which the shopping experience is highly streamlined to maximize value both in terms of the shopper’s time as well as the price point.

But traditional grocery stores certainly aren’t standing still. They are fighting back by rethinking store interiors and focusing their attention on the perimeter, but it’s likely a case of too little too late. The only place in which grocery stores are still thriving is prepared foods, which have been a profitable bright spot for many higher end markets, especially Whole Foods.

The New Shopper

So, what does the future look like? Think decentralized and digital. Shoppers won’t look to one single source for the bulk of their meal solutions. Rather they’ll satisfy their demanding, multimodal lives (eating at home, on the go, prepared, cooking themselves, small groups, solo, entertaining, etc.) through a continuous set of interactions with a vastly expanding set of physical and digital options. And this goes for the sources of influence steering their choices as well.

We’ve seen these changes through our research on the shopper journey. In the past, that journey might have started at the parking lot of a larger grocery store and concluded after the grocery bags were loaded into the trunk of her car. These days, the journey is much more complex, fueled by digital and physical experiences, reviews, research, and recommendations.

A typical customer journey today occurs over the entire day, beginning with being woken up by a voice activated assistant reminding them of the weather and their calendar. If they are hosting a dinner, they roll onto the edge of the bed, grab their smartphone and check social feeds, noting an especially appetizing photo of a squash casserole their friend was showing off from dinner last night. The customer might recall that the local farmers market is overflowing with lovely summer squash and makes a note to him or herself that squash needs to play a role in the dinner.

While picking up lunch to go at Whole Foods, the customer might observe a Thai fish dish that they almost grab for lunch, but decide it looks so good that they will make something similar for their dinner party and elect not to have the Thai dish for lunch as it might be redundant. They might add “Fish” to their Wunderlist app, as well as hitting Pinterest to find inspiring Thai fish dishes. They quickly find an image of a very similar dish that they’re able to link to on Epicurious.

They pick up salmon, red chili, garlic, spring onion, ginger and lime in the produce section and head back to the office. Still not sure what the squash side dish should be, they post a lovely shot of squash on their Instagram feed, seeking inspiration for a proper squash side dish.

Heading home that evening, they stop at the farmer’s market to pick up the squash, as well as the other items required to make the winning side dish, culling through several inspired suggestions from their Instagram followers. That evening they peer into the box from their latest Lot18 online wine flash sale shipment and happily discover several interesting whites to accompany dinner. All is set to go. And no single store can claim more than an iota of credit for the final meal.