Progressive Grocer

FEB 2017

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T he rumors of the death of the brick-and-mortar store apparently have been greatly exaggerated. Digital retailing continues to gain momentum, enough to visibly erode in-store sales, most recently demonstrated in the 2016 holiday shopping period, when stalwarts like Target reported softer-than-expected sales in their physical locations. But even the likes of Amazon recognize the value of actual stores, suggesting that a balance of digital and in-store offerings will most likely be a winning formula over the long haul. Traditional grocery retailers have been expanding their omnichannel presence, with operators like Kroger, H-E-B and Walmart leveraging their infrastructure and brand prow- ess to expand their reach. We look at some ecommerce success stories in this issue, in our Profiles in Progress feature starting on page 47. Meanwhile, some really good news for the physical store came out just ahead of last month's National Retail Federation (NRF) show in New York (PG 's Randy Hof bauer was there — he recaps the event, starting on page 101). Despite expectations that the first "digitally native" generation would want to shop online, a new study from IBM and the NRF found that al- most all members of Generation Z (teens through age 21) prefer to shop in brick-and-mortar stores. "ey appreciate the hands-on experience of shopping in a store," says NRF President and CEO Matthew Shay. "With technology constant- ly evolving but some shopping habits remaining the same, retailers need to be agile enough to serve both needs. Retailers are constantly focused on experimenting with new innovations both online and in-store to remain relevant to evolving consumer demand." So that doesn't mean that everything old is new again. "With the global Gen Z population set to reach 2.6 billion by 2020, retailers need to create more interactive engagement around their brands to serve the always-on, mobile-focused, high- spending demographic," the study notes. IBM General Manager of Global Consumer Industries Steve Laughlin elaborates: "Gen- eration Z expects technology to be intuitive, relevant and engaging — their last great experi- ence is their new expectation. is presents a significant challenge for retailers and brands to create a personalized, interactive experience with the latest digital advances, or risk falling behind. is kind of innovation is not linear or a one-time project — it is a new way of think- ing, operating and behaving." e "Uniquely Gen Z" study, conducted by the IBM Institute for Business Value, is based on findings from more than 15,000 consumers aged 13 to 21 from 16 countries. ese consumers are important to retailers because they're expected to bring as much as $44 billion in buying power. According to the study, they care the most about retailers "getting the basics right," with 66 percent saying product quality and availability are the most important factors when choosing one brand over another; 65 percent, meanwhile, focus on value. It looks like brick-and-mortar stores are going to remain in style. But retailers need to keep pursuing ways to enhance the shopper experience before, during and after the visit. While retailers can be relieved that Gen Z has an affinity for the tactile, they must continue to aggressively innovate, expand and engage. Independent Means Effective with this issue, Progressive Grocer will include more coverage of independent grocery operators, content that had been featured by Progressive Grocer Independent, which has ceased production as a separate publication. We believe we can more effectively report on issues covering the wide spectrum of the gro- cery industry in one convenient publication. We kick things off with our Outstanding Inde- pendent Awards, starting on page 26. e awards were spearheaded by Katie Martin, who, just as she was as editor-in-chief of PGI, remains committed to her coverage of independent retailers. PG On Solid Ground While retailers can be relieved that Gen Z has an affinity for the tactile, they must continue to aggressively innovate, expand and engage. Jim Dudlicek Editor-in-Chief [email protected] Twitter @jimdudlicek 8 | Progressive Grocer | Ahead of What's Next | February 2017 Note By Jim Dudlicek

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