The Grocery Industry - 99 Years of Prosperity (with many more to come)

The grocery industry is celebrating its 99th anniversary. I recently came across the article “The grocery store turns 99 with its survival in doubt” (Fortune Magazine) in which author Chris Morris discusses the future of the grocery industry. What struck me is the commentary in the article from industry analyst Phil Lempert, who believes that the grocery business as we know it will be obsolete within the next 10 years because of developing technology and changing consumer demands. I disagree with his claim that the survival of grocery stores is doubtful. It reminds me of the buzz when on-line shopping started becoming popular and many felt this might be the end of the brick and mortar shopping experience. Malls have evolved and lifestyle centers are thriving. However, grocers must continue to change to better meet the needs of their customers – and know what not to change, too.

Tactile Experience
Lempert states that technology will be a primary driver in the death of the traditional grocery store.  As the article’s author explains, before the advent of the “self-service” grocery store, consumers purchased their items from a clerk behind a counter. This model evolved into the one we know today mostly because buyers like to touch, smell and see the products up close to ensure they’re bringing home a quality product. This need for a full sensory shopping experience has not, and will not, change.

Staying Relevant
Merchandising is being updated with millennials’ desire to eat fresh, handcrafted, local foods. Grocery stores are adding more prepared foods as consumers starved for time can save money by eating prepared foods at home vs at restaurants. More and more, grocery stores are transcending their traditional role as a retail store and are expanding the experience for their customers as a social center. We are also seeing an increasing number of grocery stores opening restaurants that have become family dining destinations. Their chefs now offer cooking classes and stores are scheduling other events to get more people in the door.

But, as they say, “the more things change, the more they stay the same.” The article suggests that trends such as “buy local,” fears about genetically modified foods, and a desire for convenience will make shoppers turn away from the traditional large format chain grocers.  Technology will make the industry more cost effective and efficient and it will offer increased convenience.  Stores may, indeed change their merchandising and physical layout to accommodate changing preferences in product type.  Specialized grocers may become more prevalent and online or delivery shopping may become more common.  But, at the end of the day, just as they did 99 years ago, shoppers will always want to see, touch and smell the items they purchase.  Traditional, self-serve grocery stores will change – but they will also continue to thrive.