Kroger, Sprouts Farmers Market on the future of the grocery store
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How does the retail grocery industry adapt to the challenges wrought by e-commerce, and the consumer's propensity to shop with their mobile devices and wanting access to more information about the food they buy?
|Diana Leza Sheehan asks Sprout Farmers Market's Amin Mareida about home delivery and click-and-collect.|
It's a tall order, to say the least and a topic a pair of retail grocery executives tackled in a session at the recent ShopTalk conference at the Sands Expo Center in Las Vegas.
Amin Maredia, CEO of Sprouts Farmers Market, and Yael Cosset, chief digital officer at Kroger, agree the grocery store of the future will be more experiential and visual. As to what this store will specifically look like still remains uncertain, however.
The two executives were interviewed in the panel by moderator Diana Leza Sheehan, vice president of retail and shopper insights as Kantar Consulting.
Home delivery and click-and-collect
Sheehan wasted no time asking Maredia about two of the hottest retail trends — home delivery and click-and-collect.
Maredia said the future for home delivery and click-and-collect is foggy for the grocery segment. He acknowledged that these are critical areas and that no retailer wants to be left behind. But he also explained that most food e-commerce is in commoditized, non-perishable products as opposed to the categories that his company focuses on — fresh food.
While e-commerce is expanding, there is another consumer trend taking place in the grocery segment that favors physical retail: the rising importance of fresh product.
"There's a movement toward fresh since everything's shrinking back down in the (homeowner's) pantry," he said.
Mareida said his company is testing click-and-collect, but noted most consumers are still in the habit of visiting the store for fresh food.
In response to the rising importance of fresh food, supermarkets are focusing more on understanding the consumer's mindset and simplifying the customer's experience than on pursuing a "sales" approach, he said.
Integrating physical with digital
Sheehan shifted focus to another hot retail trend: the integration of digital and physical commerce.
|Yael Cosset of Kroger cites the need to integrate digital and physical commerce.|
Asked how his company is addressing integrating the two, Cosset said using digital tools to enhance the physical experience is both a challenge and an opportunity for supermarkets.
One immediate way retailers, partnering with brands, can make the shopping experience more personal is by leveraging consumer data in developing recipes, Cosset said.
He noted that enabling curated experiences through digital channels will involve more data than ever used before.
"It's really bringing the two (the physical and digital) together," Cosset said.
Asked to specify what technologies will make this happen, Cosset said augmented reality and virtual reality are two that will provide opportunities to use data in ways that impacts the physical store.
"The technology is an enabler and the data is the fulfiller," Cosset said.
Digital and physical support each other
The more digitally engaging a grocery is with the customer, the more they shop the physical store, Cosset said. He cited this as one of the most fascinating discoveries about the physical versus digital issue.
"We do have to invest significantly in the digital," he said, adding customers are demonstrating daily that they aren't choosing one (physical or digital) over the other. It may be a counter-intuitive observation, he said, but it is a reality. He said over three quarters of Gen Z consumers desire access to a physical store when shopping for a specific brand.
Cosset said he wished e-commerce was happening faster for groceries and noted that younger consumers tend to spend more time shopping through digital channels. The U.K. which is further ahead in grocery e-commerce than the U.S., offers some guidance for U.S. grocers, Cosset added.
Elliot Maras Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.