Progressive Grocer Independent

APR 2016

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6 | Progressive Grocer Independent | April 2016 Ch-ch-changes By all accounts, big innovations are coming in the supermarket industry, and independents need to be ready. I n February/March, I attended the IGA and NGA shows, co-located in Las Vegas. Te biggest take away from both shows was the supermarket industry is changing and change is coming faster than ever. IGA was celebrating its 90 th anniversary, but the focus was really on the next 90 years. Te coming years will likely bring the biggest changes to the industry since Piggly Wig- gly introduced the "modern" supermarket in 1916 when the self-service model completely upended the grocery market. A hundred years without major change is a pretty good run, but independents are going to have to prepare for the big changes that are on the horizon, like e-commerce and the changing relationship between center store and perim- eter departments. And the changes are coming faster than ever before. At IGA, the presenters really pressed responding to change quickly because it wasn't going to come in 90 years; independents have to respond to changes in the next 90 months, 90 weeks and 90 days. Some major players like Amazon and Google are getting in the grocery delivery business and big chains like Kroger are rolling out their own e-commerce systems. Plenty of independents ofer online shop- ping to customers, and many were the frst in their market to do so. For those that haven't yet, the time has come. For those that are already ofering it, it's time to up your game to ensure that you retain that level of service and customer knowledge that independents are known for. Te advantage in being frst to market disappears quickly when competitors get into the game and play it better, said Marc de Speville, founder of Strategic Food Retail, at the IGA show. When an industry or service is new, consumers allow for mistakes, but as it matures, that tolerance disappears and the companies coming into the market later can't make the same mistakes that the frst-comers did. Grocery e-commerce is maturing quickly, so independents need to be ready with a reliable service the day they launch. And while e-commerce is coming, consumers still want to be able to go to a physical store to buy groceries. However, the bricks-and-mortar stores themselves also are undergoing signifcant changes as how customers shop evolves. Fresh departments are taking over space from center store. Center store was built in a pack house style, noted Kevin Kelley, co-founder of Shook Kelley, at the IGA show. People, however, don't like long tight corridors because it makes them feel uncomfortable. Perimeter departments have learned this lesson and become more like piazzas, and Kelley suggested it's time that the center aisles go away as well. In stores he studied that have done just that, sales increased by 18 percent to up to 60 percent. de Speville took it a step further when talking about the store of the future. He envisioned a store that moved all cen- ter store items out of the selling space and into a back room. Customers would use a kiosk or video board to select their center store products, which would then be picked by store employees and reunited with the customer at check out. Te selling space would be devoted to fresh, perishable products that customers often want to see and touch before buying. Te store of the future also will likely completely revamp the checkout process as well, de Speville noted. Some stores are already doing this with their store apps that allow customers to scan products as they shop, but de Speville doesn't suggest getting rid of the staf/customer interaction completely. Instead, use staf to impart knowl- edge and arm them with hand held POS to "check out" a customer wherever they are in the store, much like how the Apple Store works. Grocery retailers are in a good business because people will always need food and the industry will never disappear. However, how consumers shop for that food is changing. Who knows how long it will take for the current grocery model of shopping aisles yourself to seem as outdated and foreign as handing over your list to a grocer to pull the items from shelves behind a counter, but it will most likely hap- pen before we're completely comfortable with it. Tat's what change does, knocks you out of your comfort zone. But good retailers are up for the challenge. PGI By Katie Martin Editor's Note Katie Martin [email protected] Grocery retailers are in a good business because people will always need food and the industry will never disappear.

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