Grocery retailers also play a critical role in influencing customer purchase decisions and what food producers and manufacturers introduce to the market. However, as the food market continues to evolve, the future of grocery retailers and food relies on global trends such as e-commerce, lifestyle, sustainability, strategic partnerships and experience economy.
Let’s look at critical trends affecting grocery retailers and consumer habits, both shaping the future of food.
E-commerce at the core
The COVID-19 pandemic introduced lockdown policies that forced several grocery retailers to shift to e-commerce and offer online shopping and delivery services. McKinsey reported that 20-30% of grocery store businesses turned to e-commerce at the height of the pandemic in 2020. Although physical stores have resumed operations, online shopping is still a big trend as millions of customers worldwide continue to shop online.
Consumers’ love for online shopping is no surprise, as they enjoy the convenience of digital technology and the additional perks of online shopping. The perks of online shopping include at-home deliveries with delivery notifications, coupons, shopping lists, product suggestions, and special offers. Apart from customers, grocery retailers will also benefit from e-grocery through diversification of business operations, increased market share and sales.
Lifestyle trends impact purchasing decisions
One of the most significant lifestyle shifts of the 21st century is the surge of health-conscious consumers who practice wellness-oriented lifestyles. These consumers prioritize physical exercise and proper nutrition to improve physical and mental health outcomes for long and fulfilling lives.
Besides health, most customers prioritize convenience and opt for brands that offer healthy meal plans, meal kits, grab-and-go, ready-to-cook, or steam options. Food companies like SteamUp are capitalizing on this lifestyle shift and have introduced ready-to-steam meals sold at grocery stores.
Past lockdowns and the current inflationary pressure have also had an impact.
“Our consumer insights, used by thousands of media sales executives, saw a major and sustained increase in requests for presentations sellers use when pitching grocery stores for advertising buys. American families are clearly feeling the pain of food shortages and inflation driving up prices at restaurants, and they’re looking to save money by cooking at home more and finding the best possible deals at grocery and bulk stores. Over the last year, we’ve also seen increases in requests for consumer insights and marketing materials related to related topics: home meal kits and food storage,” said Daniel Anstandig, founder and CEO of Futuri.
Another food trend that is making a significant comeback is veganism. Vegan consumers survive on an exclusively plant-based diet free from all animal and dairy products. In a recent article, Racheli Vizman, CEO and cofounder of SavorEat, an Israeli foodtech firm, noted that 12% of American consumers survive on a plant-based diet, making them essentially vegans.
Many food companies and grocers have noticed these trends and have introduced vegan options within their menus to capitalize on this growing niche. For instance, a Mumbai food company named SteamUp foods includes a range of vegan momos at grocery retailers to attract customers.
In 2020, the McKinsey survey found that Asian consumers viewed multipurpose functionality in consumer appliances as a sign of value and a top buying factor.
“Americans rushed to Peloton and Wayfair
Indeed, 3D printing food at home problem isn’t around the corner.
“I don’t believe we are at the stage where 3D printing at home is a viable alternative to large-scale food manufacturing. Many years ago, there was some hype about 3D printing kitchen appliances for simple food products, like pasta and chocolate. Even these simple systems were not very popular with consumers and did not replace products purchased from the grocery store,” said Bryan Quoc Le, a food scientist, food industry consultant, and author of 150 Food Science Questions Answered.
Consumers are also looking to purchase products from companies that boast sustainability and environmental consciousness. Some grocers are ushering the food market into the future by investing in ethically sourced, sustainable meat products. Migros, a Switzerland supermarket chain, partnered with SuperMeat, a food technology company that deals in meat bioprinting.
SuperMeat uses actual animal cells grown with bioreactors and feeds with nutrients to create a 3D printed chicken with a similar sensory and nutritional profile as natural chicken. The bioprinted meat is natural, healthier, non-GMO, and has a similar texture, taste, quality, and feel as ordinary meat. Growing meat is environmentally friendly, as it helps to reduce 95% of water and land wasted during cultivation.
Bioprinted meat also lowers the methane gas level generated from cultivation. It is an ethical practice that facilitates proper treatment of animals by removing the need for inhumane slaughter. Unlike traditional meat, 3D meat eliminates the need for injecting animals with antibiotics and growth hormones that affect human health.
However, many remain skeptical about the utility of 3D and bioprinting.
Grocery retailers and food producers are developing strategic partnerships that help both brands improve brand image, add value and diversify their demographics. For instance, Zomato, a restaurant and food delivery company, acquired Blinkit grocery delivery to expand its market outreach. Although it is under Zomato’s umbrella, Blinkit is an independent mobile application for online grocery shopping and delivery.
Foodtech outfits are also using strategic partnerships with well-established grocery retailers to help them expand their customer outreach. For instance, FreshRealm is an American-based food start-up partnered with grocery stores to sell ready-to-cook and ready-to-heat meals. It also introduced its off-the-shelf Kitchen Table meals brand and white label products to grocery stores.
FreshRealm also has private-label partnerships where grocery retailers sell their products under the grocers’ names. Through these partnerships, Fresh Realm provides its customers with the added value of convenient access to a diverse range of food products. Strategic partnership with grocers has also helped Zomato increase sales and profits.
Personalization of the food experience
The experience economy is the future of grocery retailers. Modern-day customers want to differentiate grocery retailers based on their experience or customer service convenience. Aleksandr Galkin, the CEO of Competera, suggests that personalized pricing is one of the best ways to improve customer experience.
There are different strategies that grocers can use to implement personalized pricing without promoting price discrimination. Grocery retailers can use customer data to personalize prices through subscription-based services, reward clubs, loyalty programs, coupons and special offers. Personalized pricing increases sales, customer loyalty and customer relationship management.
Another strategy for personalizing the food experience is using innovative personalized food technology. Innit’s Smart Meal Plans is a grocery e-commerce tool that has revolutionized grocery shopping across North America, Europe and Asia. Smart Meal Plans is an online platform that uses artificial intelligence to personalize grocery shopping according to shopper needs.
Apart from price comparisons, it helps shoppers select ingredients and meal plans based on their nutritional needs and budget. After selection, users can automatically add selections to their digital carts and connect to the retailers’ websites or apps for online purchases and delivery. Groceries benefit from the Smart Meal Plan as it helps them to connect to customers and provides information on customer needs and competitor prices.
Besides online shopping, grocery retailers use personalized food technology to personalize their food selection through customized menus.
“Today’s fast-changing restaurant menus and foodservice businesses live at the intersection of several trends – reducing waste, adapting to supply chain challenges, improving efficiencies, and alleviating labor challenges, all while enhancing margins and customer experience. Digital manufacturing and production of ready-to-cook, customized meals, is a game-changing proposition when it comes to elevating menu variety and standing out in the crowded and competitive foodservice landscape,” said Vizman from SavorEat.
The company’s solution for foodservice is an end-to-end technology platform.
“The platform is powered by a Smart Robot Chef, which helps solve many of the above challenges. For example, with the robot’s machine learning, guest orders and ordering patterns are learned, empowering the food service operator to more efficiently manage the supply chain, and procurement of ingredients. If the dashboard shows the operator that turkey burgers for example are outselling breakfast sausages, there could be real savings in streamlining the procurement of needed ingredients. It’s a chain effect, all driven by end-consumer demand, and the digitizing of supply chains allows food businesses to anticipate disruptions more effectively and resiliently.
According to Vizman, integration of innovative solutions and smart robots into the kitchen of today – and tomorrow – streamlines many of the challenges that food businesses face, operationally and beyond.
Groceries are capitalizing on the vegan and gluten-free trends and are introducing customizable gluten-free and vegan menus based on customers’ selection and past visits. These customizable menus promote customer loyalty and relationship management by improving customer experience and catering to their unique needs and preferences.
The modern food and beverage environment is highly competitive, requiring grocery retailers to implement appropriate corporate-level strategies to differentiate from competitors. Customer preferences have also shifted, and global trends such as the aforementioned personalized experiences, health and environmental consciousness, sustainability, and online grocery shopping are influencing the future of grocery retailers.