The Future of Grocery: What’s in Store (and what’s not)

Industry Trends
May 8, 2020
Zipline Contributor

With much of the rest of brick and mortar retail grinding to a halt, grocery stores are booming. Products are flying off the shelves more quickly than stores can re-stock. Many analysts believe that with the emergence of COVID-19, we are entering into a new age of grocery, one where the customer experience shifts to the convenience of online ordering and delivery, while still maintaining a safe and shoppable environment within stores’ four walls. To understand other trends, we looked to the experts to understand what good store execution will look like in the “new normal.” 

Steve Hornyak of Total Retail believes that the future of grocery’s growth is rooted in e-commerce - and it’s growing fast. “Once consumers get a taste of how convenient online grocery can be,” he says, “many will want to continue to use these services, especially as grocers get better at quickly fulfilling orders.” 

The problem? Many grocery providers who banked on having just a bit more time to ramp up fulfillment operations are stuck with high demand and a lack of processes to cope. To put this squeeze into perspective: Deutsche Bank estimated that online grocery’s share of the total grocery market would break 10 percent by 2024. But that was before the pandemic. “We now expect online grocery sales to cross 10 percent as soon as this year,” says Hornyak.

To keep pace with the growing demand for online grocery services and options like curbside pick-up, these retailers will have to shift their mindset about what “good” execution looks like - at least in the short term. For some, this may mean blocking off entire aisles or areas of the store to accommodate staged orders for delivery. Others may begin to shift their hiring strategy to staff up to meet delivery demand. Then there’s the issue of third-party vendors: Using a service like Instacart might have made sense when online orders were the exception, not the norm, but now grocery stores are even more incentivized to take back control of their fulfillment. 

Think about it: A grocery store crammed with third-party shoppers attempting to check every item off on their phones and taking pictures for customers does not make for great customer experience. “Even before this crisis, one-third of consumers noticed a negative impact on the in-store experience due to manual pickers,” says Hornyak. By bringing fulfillment back in-house, grocery stores won’t just benefit from higher margins, they’ll see happier customers, too. 

In a post-COVID-19 world, the grocers who heed this advice quickly will be the ones that will come out on top. Case-in-point: Iowa-based regional grocery chain, and Zipline customer, Hy-Vee. They’ve been called “the most proactive, thoughtful chain out there,” notes Jessica Dumont in a recent Grocery Dive article, not just for quickly implementing strict health and safety standards, but also for their handling of the recent grocery “e-commerce boom.”

To meet the demand of its online ordering service, Hy-Vee made a bold move last month - shutting down four fulfillment centers and moving its fulfillment service for their e-commerce business, Aisles Online, back into retail stores. Thanks to quick and effective hiring efforts, Hy-Vee has been able to keep control over the majority of the fulfillment process - only leaning on third-party options like DoorDash in select areas. As a result, Hy-Vee’s CEO, Randy Edeker, has been able to focus on driving a consistent customer experience through cohesive messaging through the grocery store ranks. Daily calls with store directors and weekly videos to the entire company posted in Zipline have helped provide clarity during an otherwise tumultuous time. “The unity among Hy-Vee employees has been phenomenal throughout the pandemic,” notes Dumont. 

We may not know for certain what the future of grocery will look like (are those self-serve salad bars ever coming back?) but one thing is clear: the brands that will prevail will need to balance the needs of a more demanding and discerning online customer with the needs of traditional in-store shoppers. Striking the right balance requires consistent communication to ensure teams not only understand new policies, procedures, and technologies, but also feel connected to the brand they represent.

To learn more about how Retail Zipline can help prepare your fleet for a “new normal,” please visit our website and reach out.