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Grocery Store Trends - Convenience is Key

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Part Two in a Two Part Series

Miriam Webster defines convenience as “something (such as an appliance, device, or service) conducive to comfort or ease.” As the world grows busier and time becomes scarcer, there is an increasing emphasis on “convenience.” 

The push for convenience when shopping is seen across a wide range of categories, including everything from pet products to shoes, apparel, office supplies, furniture, household items and anything else that is offered in the retail world, but the recent impact of convenience shopping in the food industry must not be overlooked.

Generational preferences are adding to the big push for convenience when shopping. This was obvious in the 2017 retail reports on shopping during Black Friday and Cyber Monday, which indicated that online shopping is rapidly being positioned to match or even overtake in-store purchases in the years ahead.

The USDA’s Economic Research Service released a report early in 2018 that shows the evolution of grocery purchasing habits are being influenced by a desire for convenience. In fact, the study says that, “Millennials allocate the highest budget shares to prepared foods…that require minimal preparation for consumption.” The study goes on to reveal that 62% of millennials reported purchasing prepared deli food, carry out, delivery or fast food within the last week.

Investing less time on clean up at home goes along with more convenient meal preparation, but the trend includes a more encompassing attitude beyond the scope of grocery shopping. The lure of 24 hour shopping accessibility, not waiting for a table at a restaurant, almost limitless variety, and better prices encourages anyone who wants a truly convenient shopping encounter.

Retailers who are working to retain their brick and mortar customers are broadening their own appeal by offering a complete ‘one stop shop’ experience so that shoppers on a schedule can access groceries, pharmacy items, wine and beer, and other non-food items without leaving the building. And even the in-store systems are changing to accommodate consumers driven by a passion for convenience. Self-check-out or no-check-out may soon be the norm based on the Amazon prototype “Amazon GO” based on ‘just walk out’ technology. Other convenience initiatives will follow in an attempt to address the relentless push for retail convenience.

In an industry where net profit margins are literally pennies on the dollar, how do grocery store owners quickly adapt to these trends?  They are often constrained by vendor pricing as well as the increased competition in the marketplace.  How can one justify passing along price increases to their customers when there is a discount chain down the road still selling similar products for less?  After all, not all grocery store owners have the benefit of the purchasing power of a cooperative that can buy in mass quantities and pass along the savings to its members to help limit the effects of inflation. 

If you talk to any grocery store owner, they will tell you that their largest margins can be found with their prepared foods.  With the changing mindset of shoppers, this seems like a win-win.  Shoppers want convenience and quality prepared meals, so providing this service is a must if grocery stores want to evolve, stay relevant, and more than anything, stay profitable over the coming years. 

The talk isn’t all about “meal-kits” and other prepared foods.  Shoppers are also looking for quality food products at reasonable prices.  “Butcher cuts” of meat are a top trend and international flavors from Asia and Latin America, for example, continue to be a growth area.  Furthermore, sustainability is a key attribute that many shoppers look for when they are choosing not only their produce or meat, but also the grocery stores they choose to spend their hard earned money.  People want to know that stores have conservative environmental practices and limit the amount of waste they are disposing of.

Evan Williams, the co-founder of Twitter said, “Convenience decides everything.”  This translates into “easy is better, easiest is best.” Although the idea of convenience is not new (inventors in the 19th and 20th centuries came up with labor saving devices for the home, like washing machines, and convenience foods like instant cooked cereal), the exponential changes brought by today’s technology seem to have elevated the concept of convenience to one of the most sought after values of society.

Tim Wu, law professor at Columbia summed it up best in his NY Times article, “The Tyranny of Convenience” when he dubbed the situation we are in, “a cult of convenience.”  Since there doesn’t seem to be any antidote to the craving for convenience, retailers – often led by the food industry – will have to continuously identify new ways to satisfy their shoppers! 

Chris Martin, CPA, Sobel & Co.