Big food is ruining my shopping experience
by: Joanna Rogerson, Innovation Advisor
The Experience Economy (a book published in 1999, written by B. Joseph Pine II and James Gilmore) describes an experiential-based world where a company uses services (rather than goods) to engage customers, creating memories and purchase loyalty. This concept took over the business world for years, with its impact seen in the emergence of hip new stores like Apple’s retail.
In our current “race to the bottom” food retail climate, where already slim farming margins continue to be nickel-and-dimed along the value chain straight to our forks, I can’t help but wonder how the concept of the experience economy might impact that in the future (or has its time passed)?
Consider Whole Foods, the now-Amazon-owned food retailer was founded in 1980 as one of the only retail giants offering “natural” foods, beverages, and other fast-moving consumer goods. We have all shopped at, or at least browsed, the halls of one of their stores. Remember the amazingly dizzying assortment of the latest organic products from fair-trade coffee to unbleached paper towels?
Since their launch in the 80s, Whole Foods has grown their supermarkets into much more than a place to buy goods.
Browsing their bulk section with your plastic bag and SKU-writing pencil, walking over to sample exotic cheeses, and grabbing a craft beer from their in-store restaurants before sitting down to listen to live music in their café is not an uncommon story. They have effectively worked to build their stores into a magical experience well beyond that which you might expect from your nearest Walmart Super Center.
Whole Foods has brilliantly created a unique experience economy around their natural food products foundation for which their target customers pay … extra. But this foundational advantage is in threat. The Organic Trade Association reported that in 2015, the organic food industry grew by nearly 11%, out-pacing conventional food products whose growth rate was only 3%. Responding to this consumer demand, industry behemoths like Walmart and Aldi are increasingly offering more natural products with no signs of stopping. More traditional Whole Foods competitors like private company Trader Joe’s tend to maintain smaller stores with fewer product offerings often specific to their local shopper, limiting their experiences offered but keeping costs low. Remember “two-buck Chuck”?
In recent months Whole Foods has put more emphasis in the 365 product line, where costs and margins can be more-tightly controlled, to the point that entire 365 stores are now popping up throughout the United States. Add this new acquisition by Amazon (and their “AmazonFresh” delivery logistics and “Amazon Go” cardless payment pilots), and it begs a number of questions on the future of our food-purchasing experiences.
Are we seeing signs that we have reached the point where our food shopping is exclusively dictated by geography (“What’s nearby?”), cost (“Who is cheapest?”) or convenience (“Who can get it to me now?”)?
Whole Foods is just one conversation-starter around the next innovation in food retail. Will we see the experience economy return to some of our large retailers? Let’s hope so.
As RTI International’s Innovation Advisors, we are encouraging our clients to take a human-centered approach, especially in transitions to new geographic regions or market spaces. Could your efforts benefit from the same? If you’d like to hear more, contact me directly at email@example.com.
For RTI International’s Innovation Advisors group, Joanna helps food and agriculture companies identify and evaluate new sources of innovation. She also supports a range of sectors including devices / appliances, consumer products, water and sanitation, and waste-to-energy technologies.