KANSAS CITY – The pandemic continues to leave its mark on the retail grocery industry, and the developments that will occur in 2021 will have a lasting impact, according to retailers, their supplier partners and other industry experts.
“Retailers will rise beyond the mere provision of products and seek to become their buyers’ preferred meal solution providers,” said Andrew Moberly, director of category solutions for consulting firm Daymon Worldwide, based in Stamford, Connecticut. “The growing needs for e-commerce and the in-store experience have created the need for an omnichannel strategy that effectively engages the perimeter buyer. “
As consumers slowly return to restaurants, he added, factors such as economic uncertainty and newly learned cooking skills will persuade a higher percentage of consumers to continue preparing meals at home. Retailers that recognize this and engage these customers need to present a mix of products and merchandise that simplifies the experience of home meal preparation while building loyalty through digital platforms.
Shoprite, for example, recently launched its “Fresh to Table” concept, which Moberly said was a pioneering approach on how to engage consumers in the meal solutions space.
From a stores perspective, the lingering effects of the pandemic will have a direct impact on deli / prepared merchandising strategies, Moberly said. While some retailers have reopened their prepared, hot, and salad bars, most have decided to discontinue them for good or change their offerings significantly.
“This has led to an increased demand for prepackaged deli meats, and subsequently replaced the need for self-service deli options at many retailers,” he said. “In 2020, pre-packaged cold cuts and side dishes saw an 18% increase in sales, far exceeding the 1% growth recorded by the total department. “
And look for prepackaged deli programs to support e-commerce efforts, as UPC-based items are easier to market virtually and retailers will want to keep meal dollars earned from foodservice closures in 2020.
Perimeter departments are preparing for big changes
Rachel Shemirani, senior vice president of San Diego-based Barons Market, said there is no doubt that the ‘storage’ phenomenon associated with the pandemic will lead to continued strong demand for commodities from the downtown stores. .
“I think retailers are going to increase their stocks of commodities such as pasta, rice, beans and other canned goods that have a longer shelf life,” she said. “I think this is also true for the frozen category. “
The departments within the Barons’ perimeter, meanwhile, will certainly look different in the future. Take the self-service bulk bins that have been hit so hard during the pandemic.
“The convenience and safety of prepackaging bulk items has become a real hit with our customers, so we’re not sure we’ll ever return to self-service bulk bins,” she said.
In contrast, prepackaged take-out appetizers had an upward trend before the pandemic, and this is expected to continue after the pandemic, Shemirani said. They have been a big hit for buyers who are fed up with cooking at home but can’t or won’t go out to eat.
“Customers loved them as quick meals before the pandemic and relied on them even more when ‘kitchen fatigue’ set in during the pandemic. “
Other areas of the new perimeter that have suffered disproportionately during the pandemic remain question marks ahead of the new normal, Shemirani said.
“We would love nothing more than to reopen our self-service salad bars, hot bars, olive bars and soup bars,” she said. “If you can believe it, customers have asked us when they will reopen. “
While Barons expects to keep its self-service bars closed and continue to supply bars with olives, salads, entrees and other prepackaged foods, the retailer will wait to take the initiative from its customers as to to know if they can reopen and when they will.
“We are optimistic that we will be able to reopen the self-service bars. “
Barons also responds to manufacturers who limit their product selection, which means limited choice for the customer – which, Shemirani said, is not a bad thing.
“Retailers will now have to stock their shelves on the products available to them, which will lead to more creative merchandising. “
The pandemic, she added, has challenged the retail grocery industry in many ways – the barons, she said, have “learned so much while continuing to learn so much” .
Being forced to adapt and change has made the industry more flexible and agile, she said.
“While we try to plan for the rest of the year, we know those plans can change in an instant – and we’ll be ready for it.”
Health in the foreground
Moberly expects some retailers to increase their workforce and equip their hot bars and salad bars with the same level of customization that consumers had before, while allowing their employees to serve consumers to ensure a food security level.
Another area where retailers can engage with shoppers in 2021, he added, is supporting them in their quest for better health. While health and well-being are already major factors in consumer decisions (65% of American adults report eating healthy foods most or all of the time), more and more consumers will seek to adopt more healthy habits. healthy, especially with regard to their immune system.
“Immune support and ‘fortified with vitamins and minerals’ has become one of the most popular health claims on new products in 2020,” Moberly said. “Retailers are expected to make this a goal in 2021, leading communications with the health and wellness message, dedicating physical and virtual merchandising space to it, and focusing on the health benefits of their customers. private label products. “
One department that will have an increasing impact on health and wellness, he said, is the meat department.
“Over the past 12 months, protein departments have experienced some of the most dramatic and long-lasting changes. The meat department saw record sales, shortages, oversupply, inflation and deflation in the same year. “
However, in the midst of all of this, plant protein saw tremendous growth in 2020, with an increase of almost 40% in volume from the previous year. Plant protein will continue to grow significantly in 2021, Moberly said.
“As a lack of availability of traditional proteins, combined with a wellness goal, resulted in a substantial increase in demand during the pandemic, many consumers have decided to make these products a recurring part of their diet,” he said. he declared.
This is reflected in the percentage of self-identified flexitarians, which rose from 10% to 16% during the pandemic. Although plant-based products won’t overtake meat in sales anytime soon, they will start to gain more space and focus on developing private labels, he added.
Persistent Effects: A Retail Watchlist for Deloitte’s Evan Sheehan
- Increased competition in the online grocery space. The disruption caused by CPG companies can put pressure on grocery chains for market share as well as a struggle for consumer data to respond to changes in consumer behavior and tastes in the future.
- Sustained Category Shifts: Just as the SARS outbreak in China led to a sustained change in health and hygiene habits after the pandemic, demand may continue 24+ months after the outbreak in health-related categories.
- Voices for local and sustainability: Concerns over hygiene and contamination of grocery products have led consumers to be aware of where products are coming from, while local vendors have benefited from consumers looking for products costs and supporting local businesses in difficult times.
- Realignment of the store model: Retailers have experimented with new retail models that provide economic incentives when cash is scarce and best meet new consumer needs. Collection centers to avoid queues inside stores, the compact convenience for a cashier-less entry, and dark stores as distribution centers to reduce real estate costs on large formats are some of the models likely to see wider adoption.
- Security concerns fueling the ‘contactless concept’: The current scenario does not favor merchants, who rely on cash and have refrained from investing in digital payment integration. Digital wallet apps and QR payment codes, in particular, which offer a contactless experience or contactless payment options in stores are expected to be the main contributors to a previously perceived ‘gradual shift’ towards ‘accelerated change’ or “seismic” towards a cashless economy.
- Rising Private Label and Portfolio Consolidation: Rising unemployment rates and uncertain economic growth have led consumers to pay attention to their spending habits and seek out products that are good value for money. During the initial crisis period, consumers bought more private labels and entry-level products which have now become their go-to choices.
This story was included in the February 2021 issue of Supermarket Perimeter. Read the rest of the magazine here.