Viewpoints

The Real Disruptor for Traditional Grocery

RSS

One of the most talked-about factoids presented at Food Marketing Institute’s Future Connect conference a few weeks ago was a projection that bricks-and-mortar grocery operators would lose 11% of their sales to online purveyors in 10 years’ time.

That statistic, part of FMI’s 2013 Trends report on the future of food retailing, was debated by some in the industry who feel traditional operators are not about to let that happen. In a panel discussing the report, Joe Crafton, chief executive officer of Crossmark, said he believes brick-and-mortar supermarkets will increasingly leverage things like online ordering for same-day store pick-up and other services that help retain shoppers.

In addition, Todd Hale, senior vice president of consumer and shopper insights at Nielsen, pointed out that consumers still prefer to see and inspect perishable product before they buy.

Despite the disruptive power that the Internet has wielded in other industries, from travel to music distribution, Crafton, Hale and many others believe bricks-and-mortar food retail will have much more immunity.

However, an even bigger potential disruptor to the traditional food retailing industry has been percolating for some time, and it, too, was discussed at Future Connect. Call it “food consciousness” — a phenomenon that manifests itself in myriad ways, from the popularity of online cooking shows to increasing preferences for specialty foods labeled natural or organic, or local, or even gluten-free.

Laurie Demeritt, CEO of The Hartman Group, citing research from a study compiled by her company for FMI, noted consumers are becoming much more interested in learning about their food, in being involved with its preparation, and in seeking out healthful and specialty items, even as snacks.

“People are eating in a more thoughtful way,” she explained in a presentation at the recent conference.

It’s become hip for consumers to care about what they eat, and that will also be reflected in where they choose to shop. Operators like Whole Foods Market and Trader Joe’s have raised the bar in that area, and supermarkets will need to step up their games even further as consumers increasingly embrace the “foodie” culture.

“Unless you are a deep discounter, you have to win with ‘cool,’” Hale noted.

That’s sage advice that could help traditional supermarkets retain share against any rival operators, online or otherwise.

Discuss this Blog Entry 3

on May 21, 2013

This is a very important discussion and while it would be comforting to minimize the challenge of competition from online grocery and concentrate on responding to what Laurie calls the growing “food consciousness,” we can’t. The reality is we must learn about and adapt to both influences in the marketplace or risk going the way of the dinosaurs.
- Our newest research at Brick Meets Click suggests that there could be a substantial shift in less than 10 years for traditional supermarkets.
- The challenge of “food consciousness” is a big deal, not simply because consumers are more interested in more “fruits and nuts”, but because a growing percentage of shoppers are beginning to doubt the wholesomeness of the products they eat. As this doubt gains traction, as it likely will for a host of reasons, there’s no question that it will “shake the foundation” of the business as we know it.

The good news is that both of these challenges/influences can be addressed head on by building greater digital engagement with shoppers to help them more efficiently connect with the foods they want/need to eat and in the ways they want to shop.

IMO it’s time for evolution and adaption on both fronts.

Ivan Jackovich (not verified)
on May 24, 2013

This goes along with consumers tired of being lied to or now knowing that food mfg are disguising ingredients that are considered bad, and the consumers are now learning and starting to educate them selves on this.

It more than connecting them with the foods they want to eat, they have to trust it is what it is sold as.

Consumers need to trust the supermarkets they buy from, this means supermarkets need to address this, (example) such as not buying and selling to consumers olive oil that says 100% virgin olive oil and it's only 20% or not olive at all, or Salmon that is sold as wild but is farmed. If you can connect with consumers, and get them to trust that what you sell is really what it says it is, you will get their loyalty and business.

This along with what Bill Bishop wrote above is the answer.

on May 31, 2013

Mark makes some great points regarding 'disruptors' for traditional retailers. In addition to Amazon's encroachment, nay, strike addition, in the immediate future what looms as a larger threat is this topic of GMOs.
Are executive teams well educated on the subject? Are store teams educated? What is the industry's exposure in terms of product offerings for a typical store. Are supply chains being prepared when consumers reach critical mass demanding an alternative to GMOs? It is not a matter of if, it is a matter of when. While California was able defeat mandatory labeling, Connecticut was not. Trust me: the consumer class is becoming very educated, and they are going to demand answers. I read credible estimates that the number of folks protesting Monsanto last Saturday exceeded two million. That's not chicken feed. This issue is like freight train barreling down the track. Food retailers best be equipped with answers--and solutions. Lest they get hit buy this train.

Post new comment
or to use your Supermarket News ID
Contributors

Julie Gallagher

Julie Gallagher’s delicious foray into coverage of the food industry was purely accidental. With a background in technology, she joined Supermarket News as associate editor of its Technology...

Mark Hamstra

Mark Hamstra is the editor of the Retail/Financial section of Supermarket News covering mergers and acquisitions, quarterly earnings reports, executive changes and other significant events and trends...
What's Viewpoints?

In their Viewpoints columns, SN editors give their perspectives on current industry issues.

Blog Archive
Penton Media Food Group and Related Sites

Sponsored Introduction Continue on to (or wait seconds) ×