Naomi Sleeper
Director, Business Development
Imperial Distributors
The Top Trends in Supermarkets for 2017
As we approach a new year, we reflect on how supermarkets can adapt to expected trends for 2017. These trends reflect changing consumer demands, a more diversified shopper population, and industry issues and regulations impacting the food industry. The industry will also continue to see increased competition and high shopper expectations around freshness, convenience and transparency.
The top ten trends that will change the supermarket landscape in 2017:
1. Market fragmentation: Blurring of retail channels and fragmentation of the market will continue. According to a study by Deloitte, consumers on average shop at four to five different types of stores to fulfill their grocery; health, beauty and wellness; and general merchandise needs. Drug stores, big box stores, dollar stores, supercenters, discount, specialty, convenience, club and e-commerce stores will continue to expand their grocery and non-foods offerings. The challenge to retailers will be to find and communicate their points of differentiation.
2. Multicultural influence: demographics will continue to change and broaden, expanding the population of “multicultural consumers.” A recent Nielsen study projects that the buying power from the Hispanic, Asian and African-American populations will be 17% of a $4.2 trillion market. Culturally relevant products, programs and marketing will be key for maximizing sales to this influential population of shoppers..
3. Health and wellness: Supermarkets will continue to be advocates for shoppers to make healthy and nutritious choices for themselves and their families. In a recent study by Acosta, nearly one-third of shoppers surveyed considered leaving a store if fresh and healthy options were not available. Another study showed that more than 80% of shoppers read labels for their nutrition value. General merchandise will also contribute to the promotion of healthier lifestyles, as new kitchen housewares better facilitate the preparation of fresh foods, measurement of ingredients, food storage, and hydration.
4. Natural & green living: Motivated by health and wellness of both people and the environment, the development and sale of natural, organic, non-GMO, and eco-friendly products will continue to accelerate. A study by the Natural Food Retailers showed that natural and organic sales (including dietary supplements) in all market channels grew to nearly $91 billion this year. Today, there are thousands of natural product offerings available in mainstream supermarkets across all HBW categories, including vitamins and supplements, baby care, oral care, deodorants, feminine hygiene and intimate, hair care, skincare and cosmetics. Natural GM products are also available in pet, baby, housewares and cleaning categories.
5. Consolidation + personalization: Consolidation in the supermarket industry will continue: big chains keep getting bigger. However, strong, independent, community-oriented grocers will continue to attract loyal customers with convenience, quality, value, and customer service. Personalization in retail is becoming more of a priority. While larger chains depend on technology to achieve individualized marketing, independent retailers are in a prime position to exemplify and personal touch.
6. Private label: Private label and store brands will continue to flourish. According to a Nielsen/PLMA study, sales of private label products generated a record $120 billion last year, and continued to outpace national brands. In private label HBW products, analgesics, allergy, vitamins, and cough and cold lead the way. In GM, private label stationery, pet, lighting and batteries are top sellers.
7. Digital technology: In 2017, supermarkets will need to continue to embrace digital technology and social media as a means to connect and communicate with their shoppers. A recent study showed that 37% of shoppers use their mobile devices in store for comparing prices, searching for product information, or checking product availability. While “digitizing a supermarket” is still in its infancy, there are some retailers who are equipping their stores with Bluetooth-enabled beacons to send ads, coupons and product information to their shoppers.
8. E-commerce: On-line and e-commerce shopping is a growing channel for grocery. Studies project sales to be around $24 billion in 2017. While urban dwellers are the largest on-line shopper segment, more “time-starved” consumers are shopping on-line with home delivery, or are taking advantage of the “click and collect” programs now available from many retailers. For 2017, brick and mortar supermarkets are challenged to find new ways to make the shopping experience easier, more enjoyable, and less time consuming. To this end, there are supermarkets who are expanding their on-line ordering and pick-up services. Some are even testing full-service restaurants, sponsoring special in-store events like wine tasting, food preparation seminars, and cooking demonstrations.
9. Small format stores: In 2017, we will see an increase in the number of smaller store formats. According to a Package Facts study, the average square footage of supermarkets has fallen since 2006 and is now approximately 46,000 sq. ft. Even smaller size formats of 25,000 sq. ft. or less, modeled by chains like Trader Joe’s, Aldi’s and Lidl, have proven to be successful. Other smaller formats are now being tested with Ahold’s bFresh stores and Whole Foods 365 markets. These stores are catering to smaller households in urban areas, and to shoppers who appreciate the accessibility and navigability of a smaller shopping space.
10. Quality, convenience and value and service: A trend that re-occurs each New Year: shoppers will continue to look for quality, convenience, value and service. Supermarkets that make their shoppers feel welcomed, engaged, and informed will attract and retain them. Shoppers also want to feel a connection to their supermarket, and have it reflective of their community.
Staying tuned-in to evolving consumer needs and retail landscapes will contribute to success in the coming year. Wishing everyone Happy Holidays and a very Prosperous and Healthy 2017.