From Last Mile to the Aisle
Revitalizing grocery stores as purveyors of experience and discovery
What would it mean for a grocery store to be captivating? How can these traditionally straightforward retail spaces create delightful, dare we say, mouthwatering experiences for their patrons? If questions like these aren’t top of mind for owners and executives of grocers large and small, they need to be.
Why should a business that provides something as essential as food have to think beyond the products they sell? At a time when convenience is king and it’s increasingly difficult to compete on price alone, bricks and mortar retail needs to play up its chief advantage: direct experience.
On-demand services are engrained in nearly every aspect of our lives, from the way we brush our teeth to the way we get our meals. While food delivery currently only represents a sliver of consumers’ food purchasing, drastic change is coming. Online grocery sales alone are estimated to jump to $86 billion in 2022 from $17 billion in 2017, a 406% increase in only five years. While that sounds like cartfulls of dollars headed their way, as it stands now this change could actually be quite costly for food merchants.
Brands in the grocery business are appealing to this shift in consumer behavior by either offering their own delivery services or utilizing the services of tech-based systems. But neither method has proven to be profitable. On average, for every ten dollars that supermarkets spend on delivering food to customers, they only recoup eight. The biggest player in the third-party delivery game, Instacart, did $2 billion in sales in 2017 but still lost money on its orders.
Major grocery chains like Kroger, Target, and Walmart are all shelling out cash trying to create their own profitable delivery systems through acquisitions. Meanwhile Amazon, the reigning champ of ASAP, is planning to open new grocery stores in major cities after struggling to crack the code of profitable food delivery.
But foodies fear not! We’ve seen retailers of all kinds battle back against digitally enabled convenience by embracing a simple yet effective strategy: be what e-commerce cannot. Most recently retailers like Showfields, Neighborhood Goods, Bulletin and B8TA have tested out new ways to bring the digital into the brick and mortar world, creating specially selected, Instagram-worthy spaces of products you could once only find online. They’ve put an emphasis on building moments of exploration and discovery for their consumers that are impossible to replicate digitally.
Retail didn’t die, and neither will groceries — as long as they adapt and innovate. A few ways to do so: take cues from the success stories in their own industry that have put an emphasis on experience over product, and learn from businesses in other industries that have positioned themselves as community anchors to get people in the door and keep them there.
Stew Leonard’s, dubbed the “Disneyland of Dairy Stores” by the New York Times, built a family friendly experience with costumed characters, animatronics and pet-a-lobster stations to make the dreaded experience of grocery shopping with kids more enjoyable. To add to the unique quality of its shopping experience, it’s also adopted Ikea-esque shopping routes that takes you through its stores via one path.
But what about grocers without the budget or desire to turn their business into a theme park with Swedish-inspired navigation? Ramsey Market in Iowa won awards and attention by bringing live music into their stores — sometimes provided by guest musicians, other times by employees singing to customers as they browse down the aisles.
Both of these examples tap the senses in ways that upend the typical, monotonous grocery store experience. Some other ways to do that include cooking demonstrations with local chefs, parking lot weekend barbecues, or featuring artwork and furniture by local artists and crafts people. These create multi-sensorial experiences for shoppers, generating more foot traffic and simultaneously building stronger ties within the community.
Another option: develop a dedicated space with a name like The Community Cupboard that could feature the necessary ingredients for recipes submitted by locals which would rotate every other week or so. Those areas could even be built by crafts people and decked out by artists from the neighborhood. At year’s end, grocers could celebrate these homegrown delicacies by designing an annual cookbook and hosting an in-store potluck celebrating the culinary chops of the community, as well as the brands and ingredients that make these meals possible.
A couple in Minnesota looked beyond storefront retail for inspiration when they opened Farmhouse Market, a 650-square-foot store that proves innovative tech solutions don’t just belong to larger markets. Inspired by a 24-hour fitness center, the store’s members can shop (and local suppliers can restock supply) any time they want — even when the store is unmanned overnight. Open to the public nine hours a week with a cashier, members can access the store after-hours using their membership cards. The store also has a community space upstairs where members can host meetings and classes. The market is monitored by remote cameras and tracks its inventory digitally. It has a one-strike policy that has proven effective in deterring theft — leave without paying and you won’t be coming back.
Breweries offer more great ideas. Many have found success by expanding their role in the community beyond simply selling beer. Breweries have functioned as civic advocates for causes in areas such as sustainability and gun control, acted as caretakers of history by restoring and maintaining meaningful community spaces, and functioned as community third places by hosting community events, trivia nights, live music, pet adoptions and more. These types of strategies don’t just bring people in the door — they keep them coming back over time by building relationships around retail experiences.
Nothing is more essential than food. But innovations in convenience have dealt grocers a difficult hand, forcing them to raise their game. The future of grocery stores depends on them being more than purveyors of basic commodities. Instead, they can represent something of greater meaning. The forthcoming leaders in this industry will be caterers of captivation, vendors of virtuosity, and suppliers of splendor.