Independent grocery stores are hustling to stay afloat these days. The industry is brutal.
Consumers often look for the best deals, so they head straight to big-box retailers like Walmart, Kroger, and Hyvee, often leaving the smaller guys to fend for the scraps.
But it's not all doom and gloom for these small to medium-sized grocery stores.
There are some industry trends they can execute to help them grow their store and increase their already razor-thin margins.
One of the top and most lucrative grocery retail trends in 2021 is implementing grocery automation software. It's a technology that helps grocery stores automate their manual tasks and processes, reduce human errors, and price products accurately. Typically stores see a 1-2% increase in their margins less than a year after installing.
If you're a small to medium-sized independent grocer looking to improve your store and increase your margin, continue reading. We’ve found five grocery retail trends shaping the grocery industry in 2021 and over the next five years.
- Trend #1: Consumers Still Love Shopping Local But Demand More
- Trend #2: The Rise of Online Grocery Ordering
- Trend #3: Technology Is Now a Requirement to Stay Afloat
- Trend #4: More Emphasis on Meal Kits and Pre-Packaged Food for the Home
- Trend #5 Healthy Eating & Wellness Are On Consumers Wish Lists
Trend #1: Consumers Still Love Shopping Local But Demand More
You'd think that since COVID the majority of consumers want to shop online more. That's not always the case.
ServiceChannel conducted a “State of Grocery Report,” in which 1,505 grocery shoppers were surveyed. A majority said they actually still enjoy grocery shopping in person.
But here’s the kicker: consumer expectations have increased. It's becoming more evident that store owners will need to step up their game to survive. High customer service levels used to be a nice thing to have, but now it's a necessity if stores want to grow.
Here are some of the typical demands consumers expect at a grocery store:
- Speedy checkouts
- In-store dining options
- Ample parking space
- Friendly & personalized service
- Organized store & shelves
- Clean bathrooms & floors
In the study ServiceChannel conducted, they noticed that over "one-third of shoppers report that a grocery store they recently visited didn’t measure up to their standards." That means a majority didn’t have speedy checkouts, organized shelves, and even clean bathrooms!
The in-person customer experience will be the key to success for small to medium-sized grocers because it's one point that Amazon or Walmart cannot match.
The physical store is still predominant in 2021, but the consumer has little tolerance for a bad experience.
Trend #2: The Rise of Online Grocery Ordering
The majority of consumers still want to shop in person, but that doesn't mean online grocery shopping has declined in popularity.
Some consumers view grocery shopping as a chore, and small and large grocery stores note this trend.
It's estimated that in 2021 and 2022, grocery stores will offer between two and four delivery options to customers. Online ordering is one option that many retailers are increasingly thinking about due to its convenience since COVID.
Source: Food Business
Before implementing an online ordering system, store owners and managers should consider a couple of things, like software compatibility with their POS systems and choosing the right service provider.
Setting Up Online Grocery Ordering Platform 101
First, you need what's called an "e-commerce platform." This will attach to your website.
Shopify is popular with small stores, while larger chains like Albertsons have their proprietary software systems. Another option is to use a provider like Mercatus, an e-commerce platform that helps independent stores offer online shopping.
An e-commerce solution of any kind will allow your customers to place orders at your website and your store staff to manage the process from the backend.
What you choose will determine how much control you have over the ordering process - some platforms allow customers to shop by category while others require them to create a shopping list first. This is a big project, so take the time to vet out the providers.
Use our FREE Technology Solution Worksheet to determine if it’s reasonable to implement an online grocery platform for your store. It takes 5 minutes to complete. Click the red button below.
Trend #3: Technology Is Now a Requirement to Stay Afloat
The most significant trend we see in the grocery retail industry is grocery stores using technology to improve efficiencies, reduce waste, and increase profit.
Here's a list of how some stores are using technology:
- Grocery automation software (replaces most manual spreadsheets)
- Updated POS & back office software
- Mobile grocery apps (for customer orders)
- Kiosk ordering (at the checkout, for example)
- Shelf-checkout lanes (expected to increase by 2021, with an estimated 50% of all retail locations having them by 2021)
Grocery automation software is an incredible technology that helps grocery stores automate their manual tasks and processes, reduce human errors, price products accurately, and more.
Typically, stores see a 1-2% increase in their margins when they invest in grocery automation technology in less than a year. Most grocers even see immediate results within 60-days after implementation.
Here's the truth: You might not be catching everything that's happening in your store. Managing TPRs, ordering products, ensuring products are stocked, providing customer service: it can be a lot.
With a whole team working together to ensure all these tasks are completed, we just miss things. Important details like out-of-stocks, the difference between your TPRs to your in-store prices, and more can easily slip through the cracks.
Grocery automation software is what “big box” stores like Walmart, Kroger, and Target use to achieve profitability and reduce losses. They utilize machines and automation to organize their sales data which automatically makes updates to their pricing, ordering, and more. They understand the importance of having a data-backed system to cut down on human error.
At Storewise, we built a powerful grocery automation platform small and medium-sized grocers can use. Read more about our grocery automation software by clicking here. Or, schedule a quick demo with us by clicking here.
Trend #4: More Emphasis on Meal Kits and Pre-Packaged Food for the Home
A new trend we see in the grocery store is an emphasis on meal kits and pre-packaged foods. Consumers are looking for convenience, and many retailers are happy to oblige!
The data shows that meal kit meal sales have increased by an annualized rate of 58% since 2013. What's more, a whopping 25% of these meal kits are purchased in grocery stores! It's also a great way to increase your profit margin and shopper basket size!
Meal kits are becoming more desirable as growing families have less and less time to cook themselves dinner every day of the week.
These meal kits are not restricted to dinner either; breakfast meal kit options, lunch meal kit options, and dessert meal kits are all great ideas. They also should fit the needs of everyone; millennials, busy families, and individuals.
Trend #5: Healthy Eating & Wellness Are On Consumers Wish Lists
Small to medium-sized grocery stores should prioritize sourcing healthy foods for their customers. Why? Because Americans are becoming healthy-eating obsessed.
According to the U.S Department of Agriculture, healthy eating is now at an all-time high, with more than 46% (over 120 million people) following a healthy diet in 2018.
Many American's still don't have access to healthy food options as they live far from traditional supermarkets like Walmart, Kroger's.
While demand for healthy food options is on the rise, many independent grocery stores struggle to provide these options. If grocers can take advantage of this healthy-eating craze, they can acquire new customers and increase margin.
As an independent grocer, it’s essential to stay up-to-date with the trends that matter and affect your margins.
One trend you should be hyper-aware of is using technology. Technology will directly help your store reduce waste and increase margin by automating manual tasks like pricing, TPRs, potential out of stocks, generating data insights from customer purchases, and more!
Request a demo of Storewise’s grocery automation software and see how it works for yourself! It's time to margin up and fight back against the big box retailers!