Photo: RetailWire
Is the one-stop grocery shop coming to an end?
The days when consumers made one big shopping trip to their local supermarket may be a thing of the past as households increasingly designate specific stores for items such as fresh produce and meat while stocking up on other items such as paper and plastic goods at another.
According to data published on Statista’s website, members of the average American household made 1.6 weekly trips to the grocery store in 2016. The research firm Magid, USA Today reports, has found that half of the grocery shoppers in America make three or more trips to the store every week.
“We’re in the throes of the decline of the one-stop shop,” Matt Sargent, senior vice president of Magid, told the paper. “We’re seeing smaller specialty stores pulling from super centers and traditional grocery stores.”
The newest retailer looking to prove the popularity of small stores is the German grocery chain Lidl, which is opening stores measuring about 36,000-square-feet. The grocer, which emphasizes premium private labels over national brands, began opening its first American locations last month. The chain plans to have 100 stores operating along the East Coast in its first year. Lidl recently announced plans to open a regional headquarters and distribution center in Cartersville, GA. The company’s national headquarters is in Arlington, VA.
While building smaller stores may be the trend in grocery construction today, Wegmans proves that what you put inside the box is key to actual performance. The family-owned chain is tied with Publix for the top spot among grocery stores on Market Force Information’s customer loyalty index. Wegmans’ stores typically run between 75,000 and 140,000-square-feet, with the largest stores carrying up to 70,000 products. The chain has expanded its footprint in recent years, moving up to Massachusetts and down the East Coast to Maryland and Virginia. It currently operates 93 stores across six states.
- Consumers’ weekly grocery shopping trips in the United States from 2006 to 2016 – Statista
- Grocery shopping is no longer a one-stop experience – USA Today
- Lidl US Announces new Regional Headquarters and Distribution Center In Georgia – Lidl
- Why is Walmart so concerned about Aldi and Lidl? – RetailWire
- What makes consumers so loyal to Publix, Wegmans, Trader Joe’s and H-E-B? – RetailWire
- Company Overview – Wegmans
Discussion Questions
DISCUSSION QUESTIONS: What factors are driving multiple weekly trips to grocery stores? What can retailers do to capture greater share of the opportunity associated with this trend? Do you think that the movement to smaller stores will continue in the grocery channel?
Poll
BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Adam Silverman
SVP Marketing, Theatro
I feel like this is a pretty easy one to answer. One, a higher concentration of urban living makes the weekly trip impractical just from a storage perspective. Two, people care a lot more today about what they put in their bodies than they did when I was a kid and I only expect that trend to continue. Three, I think there is some anticipation of the behavior that may come from omnichannel grocery buying. My household is halfway there. We get center-store basics like toilet paper, paper towels, Cheerios and dog food on subscription. It’s not 100 percent of our basics purchases, but it will probably move that way in the future. Because it’s not 100 percent, our family splits between Sprouts for fresh and Target for everything else. And as our basics purchases move to 100 percent subscription, it’s going to be Target that loses — not Sprouts.
Building off Nikki’s comments, multiple trips can relate back to waste concerns. Buy what you need and use it as opposed to emptying the fridge at the end of the week directly into the trash. As an urbanite, I make repeat trips to a local deli for its convenience and buy only what I can actually consume. Non-U.S. populations lived like this for years, buying fresh and consuming immediately. To capture these types of shoppers, retailers could experiment with “express” items far forward in the store rather than placing milk and meat in the back so the consumer has to walk through the whole store.
We consume different products at different paces, so we will increasingly shop based on rapid consumption of some items (fruit, veggies), expected weekly consumption (bread, milk, meat) and long-term (canned goods, cleaning products, etc.). In good retailing we never leave with just our planned purchase, so merchandising continues to be of upmost importance. Delivery to the door — I want that, because time matters.
What if the retailers themselves are changing shoppers’ habits? The default assumption is that retailers are constantly reacting to changes in shopper behavior and that small formats (or conversely, mega-assortment emporiums) are a response. No doubt this is true to an extent but the proliferation of small formats, digital-to-physical delivery mechanisms (even for small orders) and other convenience options also encourage shoppers to eschew time-eating stock-up trips in favor of quick and specific fill-ins from multiple retailers. Retailers are accelerating the convenience trend; opening up opportunities for multiple players to participate in it and attack it from multiple angles (small, large, digital, clicks-to-bricks … ).
Shopping at multiple stores depending upon the products has always been done — staples versus fresh produce, meat, seafood and deli. Every grocery store appeals to different shoppers via different specialties, perceived quality and value. An “on-the-go” lifestyle drives multiple weekly visits as it is not necessary to plan a weekly menu. Most folks make last minute decisions because it’s simply not a priority and it’s easy to run to the grocery store. Given this trend, grocers should present more menu and product adjacencies in order to spark impulse meal and food purchases. New merchandising patterns and planograms could be explored. Prepared foods and deli are rapidly becoming destinations — almost a store-within-a-store.
In all retail industries, we are dealing with more choices than ever and more options for those choices. Grocery is no different. Through the years more supermarket chains have expanded into each other’s territory while new chains opened. Now today grocers are hit with huge competition. Their only solution is to focus on what makes them different, what will attract customers to their brand and offer the niche that’s right for them.
I commend Wegmans for staying the course with their business because they provide excellent quality and service however that’s been their strategy all along. Other chains need to figure out what they can compete for best and find ways to satisfy customers to build loyalty. We can’t change the buying patterns of today but what we can do is find what works best for our business, stop chasing the competition and be the leaders in that niche. For many grocers, smaller stores stocked with the items their customers want will be the right solution.
As the momentum increases to more healthy, holistic, organic and locally-sourced produce and meats, it necessitates multiple visits to the local or smaller-scale specialty grocery store. Lifestyle and healthy living are here to stay. Additionally, these preservative/chemical free products only have a short lifespan and will not necessarily last the entire week. The days of the large-scale grocery store, which was a one-stop shop, may be dwindling, particularly in more cosmopolitan areas.
I do believe that the move to a subscription based e-commerce model for commodity and CPG based products will enable the shift to smaller, more specialized grocery stores. Lidl’s smaller scale model, along with potentially Whole Foods/Amazon’s 360 specialty stores, may just be the wave of the future, which will drive additional revenue opportunities in a far more friction-less shopping experience.
Size of household, disposable income and freshness of produce are all factors. You want fresh, you make multiple trips. If you have the cash flow, you buy certain things at a Costco in large quantities instead of the local supermarket. If you want top quality meats or fish, you may go to your local specialty market. We do all of those.
Price, quality, service, experience and signature private labels are driving shoppers to smaller stores. Most large supermarkets can’t compete in this area. Especially the traditional publicly-held, plain vanilla conventional supermarkets. They have a huge center-store that is boring and unhealthy. There will always be a handful of very well-run large grocers like H-E-B, Publix, Hy-Vee, WinCo, Woodmans and Wegmans. Those kinds of grocers have more flexibility to hire good people and experiment with new trends because they are employee- or privately-owned, have stayed out of debt and have long-term objectives.
I think in the next five years we will see huge bankruptcies, stores closings and mergers with some of the largest and most boring supermarket chains. There is not much the plain vanilla retailers can do. Throwing mud at the wall with loyalty cards, gas programs, coupons, mobile apps and copycat online shopping will be futile and they will fall further behind. It’s very easy to see who the next A&P dinosaur to go extinct will be.
Aldi, Lidl, Amazon, et al. will continue to change food shopping as we know it. In this case, the impact on one-stop shopping is one of the negative effects of these relatively recent players in the market. On the other hand, there are retailers like those mentioned in the article, namely, Wegmans and Publix, who have performed much better than the national trends noted. Why? Each offers a full range of center-store items and outstanding perishable departments complemented by world-class customer service.
“Smaller is better” in food shopping will continue as the U.S. ages and as innovative niche players enter the market. The decline in one-stop shopping will continue to challenge traditional food retailers, requiring them to innovate their offering or shopping experience or suffer the consequences.
I have to admit that I don’t find a lot of resonance in the idea of a major shift to different stores for different purposes. Some PR I see on the idea is dominated by a urban dweller myth where people don’t have demands of soccer practice, music lessons, homework and kids. The demands of raising a family leave little time for experimental shopping.
I don’t think this captures the truth of multiple trips. In my household, we make one one major trip a week to a large Kroger. In between we may go back to pick up something we missed or didn’t anticipate. And on some evenings we’ll do a small trip to a specialty store for dinner (prepared food).
At big event times, THEN we might seek out one store for something special and the Kroger store for everything else.
But is this a big change? This was my family’s behavior in our suburban home when I was a kid. And I don’t think there’s a big dominant format trend change. In our neighborhood, we have a thriving Kroger’s next door to the original New Season’s small format store sharing a lot with Walgreens and near both an Albertsons and a Target. And they ALL do well.
There is definitely a migration of the masses towards more shopping trips per week. And the percentage of revenue of the perishables departments in stores is growing while traditional center-store product movement is dwindling. I think this is a normal evolution, and the innovators in the business are already taking advantage of the customer demand by creating compelling shopping experiences by leveraging fresh food and value-driven, often private-label categories.
We’ve had multiple weekly trips for years now — I remember a 2008 Unilever study showing two to three per week. Retailers need to be the go-to destination and provide a positive experience.
It has always been true, in all societies, and from antiquity, that grocery stores have functioned as “communal pantries.” For a variety of reasons, the process of moving groceries from the communal pantry to your own private pantry at home or office has varied as store access, personal finance and lifestyles have evolved.
One HUGE factor is the move toward food service (restaurants, etc.) I don’t know the exact figure currently, but I’m pretty sure that, in the U.S. market at least, more than half of the food dollar goes into food service rather than for movement to a pantry for later use/consumption. This also points out why the best stores provide both groceries AND food service. Notice the large, and sometimes crowded, in-store “dining” area at Costco.
Never forget that FOOD drives retail, because FOOD drives the human race. Air, water and food are the ONLY things that humans MUST consume on a continuing basis. Air every few seconds, water (beverages) at least every few hours and food every day. To be extreme, you will die in a minute or two without air, a few days without water and a few weeks without food.
Retail is the final mile in how those who produce food and beverages support those of us who don’t. Grocery marketing drives TRAFFIC and led Walmart to become the largest retailer in the world. And when there is a new world leader, FOOD will be their major tool for getting there. Food is the big head of retail. It is also the driving engine pulling the long tail along.
As much as mega grocery stores have tried to become a one-stop shop for grocery, very few shoppers have entered into the spirit of this shopping strategy. It is really a “back to the future” story.
Most consumer have identified their favorite stores for certain product categories like produce, meats, paper products and staple items. With their favorite stores identified, they become a creature of habit and shop a specific list of stores on a weekly basis and have a standard unique shopping list for each store: traditional grocery (discount or upscale), discount warehouses/department stores, specialty produce stores, butchers and dollar stores. Who isn’t going to shop at the local farm stand or get seafood from the source? This trend will continue to increase as consumers make more healthy choices. The Amazon/Whole Foods play will be an interesting game to watch!
Convenience is becoming king for consumers and grocery is no exception. We’ll see an increase in delivery and other convenience services in the short term. New store formats that cater to specific product categories will become more popular as well as consumers are definitely showing a trend to seek out the products they want cross what ever sales channel they can get them. If that means multiple visits to the store (or stores) then so be it.
Grocery retailers have an advantage over other segments in that consumers are more willing to come to the store multiple times per week to get what they want, especially for fresh produce and meats. It’s the super centers and general merchandise formats that will lose in this market over time (watch out Target and Walmart). Consumers are very aware of what makes each brand special and differentiated and they are adjusting shopping habits to get the products they want.
We may be witnessing the advent of specialty grocery stores. Living here in the Northeast congestion, we find cities and suburbs are still segmented into cultural neighborhoods. Many of these neighborhoods are willing and able to support small grocery businesses that cater to the wants and wishes that sustain eating habits and preferences that are not yet commonplace in this cold furnace melting pot we claim. I have found this to be a means to remember the many business journeys of my business past and present. Visiting these specialty stores has allowed me to create meals that are exactly like I have enjoyed while away. This is the good reason for multiple stop shopping. The bad reasons remain the same as in wide range of prices for staple product and produce and, sad to say, out-of-stocks for the imperatives.
No, one stop grocery stores are still thriving, and in a big way. How we measure the size of a store (a small ma and pa store of 1000 or 2000 sq. ft.) has changed, but the model is just becoming more diverse. We have to remember that Amazon and the online shopping experience represent a huge one stop shopping shop. Retailers are just adapting to niche retail opportunities (like Lidl) in the face of the online revolution and the shift away from shopping malls. Smaller specialized retailers have a place in the retail world, but the larger online retailers like Amazon, are a daily reminder that they are growing and discovering newer ways, to make all of our shopping experiences, “the Amazon way.”