Last year at FMI’s Energy and Store Development Conference, our grocery and refrigeration design team spotted five trends making a big impact on the food retail industry. After this year’s conference, we decided to revisit those trends and assess just how they’ve changed the way we design grocery environments and shoppers experience them.
Convenience is Key
If convenience is the driver that pushes customers to shop online, then the delivery/pick-up process needs to be equally convenient. Enter, micro-fulfillment centers. Last year we posited that retailers would need to get closer to their customers than ever before if they wanted to be competitive in the convenience game. Retailers are now utilizing smaller scale fulfillment centers (40,000 sq.ft.) to penetrate dense, urban areas and increase the speed at which they can deliver to online customers. Now, instead of one large fulfillment center in a suburban location trying to meet the needs of a large customer base decidedly partial to speed, multiple small fulfillment centers can narrow in and serve the closest shoppers in the fastest time. More on micro-fulfillment centers later.
The Future Is In Technology
If the future is in technology, then the future is now. Each year, grocery retailers add more technology to their carts to make the customer experience more memorable and increase the efficiency of their business operations. The grocery industry is embracing artificial intelligence and developing unique ways to utilize its technology. For instance, retailers are testing robots in their stores to aid in inventory management. Stores like Walmart, Schnucks, and HEB are all hiring these AI associates on a trial basis to audit shelves for missing products, monitor SKUs for inventory levels, and analyze shopping data to predict behavior.
*Don’t worry, though, robots aren’t taking over any time soon. These technology applications are meant to free up the time of associates in stores to provide the highest quality shopping experience.*
Bringing New Life To Repurposed Stores
Online grocery sales are expected to reach $29.7 billion by 2021, according to research done by Statista. That’s a giant leap from $14.2 billion in 2017, and competition for a slice of this multi-billion-dollar market is growing too. Last-mile delivery competition, the logistics of getting a product from the transportation hub to its final delivery location (personal residence) as fast as possible, has really heated up since last year. As a result, brick and mortar grocers are reconfiguring their stores and warehouses to compete in this evolving market. Extra space in existing stores is getting redesigned to facilitate fulfillment operations, and as we mentioned before, retailers are bringing fulfillment centers into urban spaces to shave time off delivery for their customers. As the industry grows, speed seems to be replacing price as a differentiator for retailers. And the closer you are to your customer, the faster you can get them what they need. Looking forward, expect to see more micro-fulfillment in creative locations near you.
Regulations Rule The Day
Refrigeration is the foundation on which grocery retail sits. To sell produce and meat that is fresh for shoppers, you need to maintain them in refrigerated spaces. And refrigerated spaces require refrigerants to do their job effectively. Because of their impact on the environment, they’re regulated by federal and state governments. As designers of refrigeration systems, we have to be acutely aware of regulation changes on every level across the country, and so do our grocery clients. Since the Federal Refrigerant Regulations have slowed in the last year, individual states have started to develop and implement their own regulations. California has become the nation’s most progressive state on climate regulations. The Golden State’s decisions are impacting many others, causing them to consider tightening their own regulations of refrigerants. Without established federal mandates, the industry will continue to design grocery environments to meet regulations on a state level.
The Shopper Experience
A year ago, the industry was still trying to wrap its arms around how to design shopper experience-focused grocery stores. Now, it seems, an equation has developed. With the right mix of unique yet high-quality products, an engaging atmosphere, and thoughtful layout, in-store dining options, and top-notch customer service, stores are finding ways to give people a reason to leave the comfort of their couch to purchase groceries. As the shopping experience continues to grow in importance, we must continually adapt our design approach to meet the needs of our clients who ultimately want to meet the needs of theirs.
These new trends are just the beginning of the grocery industry revolution, but #TeamHenderson is staying on top of it all. To learn more about our work, click here.
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