#grocerant

“One of the latest examples is “grocerant,” a word combining “grocer” and “restaurant.” The term has been around for a few years, but it seems to have gone mainstream in recent months. Or at least it’s a term most of us will be hearing more often.

But as trendy as it is, the term “grocerant” is also in fact quite relevant and accurately captures what is happening in the food industry these days. In short, a grocerant is a grocery store that sells prepared meals, to either eat on site or take home.

The numbers are staggering. According to NPD Group, a research outfit in the U.S., grocerants generated 2.4 billion new visits and over US$10 billion in sales in 2016 — a massive shift. 

SUPERMARKET GURU |  PHIL LEMPERT  |  NOVEMBER 2015

This year, more than ever before it is critical to take a look at just how consumers and retailers are changing the food world as the battle for the American Meal heats up.

Trend #1.  Agnosticism: Whose customer is it anyway? Consumers are becoming brand agnostic. Retailer agnostic. Daypart agnostic. Amazon started it all as they own the customer experience and the brands they offer have little or no relationship with the buyer. Brands like Hilton or Starwood know less about you than Expedia or Kayak. Because of the sophisticated online tools, consumers no longer care which hotel brands they book. Their preferences are stored and become richer in data and proactively make suggestions to insure each experience is successful. This is the trend you should be most worried about as retailers lose their relationships with food shoppers to brands like Instacart and Uber who are making the retailer or restaurant practically invisible as they continue to offer choices from multiple outlets.  They own the customer.  For supermarkets to win back the relationship they must become a one-stop “eco-system” similar to Yelp’s Eat 24: offering reviews, recipes, selection, ordering, ePayment, tracking and delivery. It’s time to fight for that shopper relationship

Trend #2.  Have It Your Way: This trend goes well beyond the Burger King slogan as segmentation and personalization continue to grow in importance. Shoppers want retailers to recognize and inspire them. Every shopping trip. Every product. Hartman predicts that by 2020 mid-market consumers will become more selective and continue to upgrade their culinary and healthy eating skills. Not just for food seeking Millennial’s, or the top 1% - personalization will become pervasive; finally bringing to reality the concept that Martha Rodgers and Don Peppers first wrote about in The One-to-One Future back in 1993. Food retailers will need to curate their offerings, and understand what all of their customers’ wants and desires truly are if they will remain in business and grow and compete with online sellers who continue to hone their algorithms and offerings based on purchase history. Preemptive distribution will begin to take hold as shoppers become more familiar with the same price, hand delivery, expert benefits from retailers like enjoy.com. Personalization moves from being a plus for some to a must-have for all.

Trend #3.  Bioregions: “Local” has been one of the biggest trends in the supermarket aisles for almost ten years. It is an unsustainable trend as weather conditions and climate change force changes to the sourcing of foods. Think bioregions. Nature defines the regions for what crops and livestock grow and thrive best in which climates, and we will see changes accordingly. Think about this: California farmers moving to Georgia because of the cost of water, and more wines coming from South Carolina. Produce growers moving to Peru. A recent study by A.T. Kearney found that women and children – are willing to pay more for locally produced food. The ultimate in local? Growing lettuces, herbs and yes even kale in your own kitchen year-round without herbicides. Perhaps the ultimate in bio-regions? The Urban Cultivator and Grove is coming to your home very soon.

Trend #4.  Micro Stores: Far from the everything-and-the-kitchen-sink hypermarkets, look for more small, neighborhood grocers to spring up. These stores, such as ALDI (with over 1,400 locations in the U.S. and counting), Bfresh in Boston, Green Zebra in Portland are more relaxed, attentive and curated, with a heavy emphasis on products that Millennials year for, and buy. Excellent private and exclusive brands with prices that this generation can afford. Think about how Lunds & Byerlys’ Kitchen with 17,000 square foot that includes a 4,000 square foot sit-down restaurant and scores of local beers on tap.  The grocerant trend will continue as more supermarkets look to share of stomach vs. market share against their traditional competitors. These retailers are proactive offering benefits to their shoppers to build that relationship across many touch points. One example is how ALDI announced their decision to remove certified synthetic colors, partially hydrogenated oils and MSG from all its exclusive brand foods by the end of 2015. Look for these micro-stores to take a stand and dispel the belief that you need to stock 50,000 SKUs to be successful, or that you have to serve everyone everything.

Trend #5.  A New Way of Eating: Beware of Dr. Google. Your shoppers now rely on search engines to find out about diets, health issues, nutrition and what they should be eating. The internet is the number one source for nutrition information and as almost 50% of people in the U.S. say their diet could be healthier, this trend will continue – unless your store can disrupt the pattern by offering retail dietitians, health fairs and a 24/7 source of unbiased food and health information. In 2016 we will see new kinds of proteins that are more sustainable and affordable than animal sources. Algae, nuts, vegetable, yeast and even insects will be used as ingredients to up the protein punch as well as seeing development of new healthier profiles such as Thrive – a cooking and salad oil made from algae that has 75% less saturated fat than olive oil and has the highest level of monounsaturated fat. Look for an emphasis on “less is more” – fewer ingredients, and many more products touting their  “free from” claims – free-from growth hormones, free-from GMOs and even stoic brand like Kraft Mac & Cheese and kids’ breakfast cereals highlighting their free-from “artificial” claims. 28% of shoppers want minimal processing and one-quarter say they want a short list of ingredients. IFIC’s Annual Food & Health Survey reports that 36% of shoppers say they worry about chemicals in their foods; and foods labeled with a health attribute has enjoyed a sales increase of 13% in the last year, vs. overall flat sales throughout the store.