Once the darling of healthy lifestyle stores, WholeFoods is responding to three consecutive quarters of sales declines with a revamped approach to grocery retail.
But it’s not what they sell that’s changing; it’s how they sell it. According to an article in Bloomberg Businessweek, competition and changing tastes have taken their toll on the grocery chain. “The parent store’s focus on organic and local has been copied elsewhere, cheaper. It’s getting killed by Trader Joe’s and Aldi, because they offer lower prices; smaller, easy-to-navigate stores; and an ever-rotating selection of inventive items covered in chocolate or Sriracha. WholeFoods is a victim of its own success: It got shoppers to buy fresh groceries instead of stuffing their freezers. But that meant they were going to the store more often, so they wanted to get out faster, without having to choose among 100 olive oils. And if you’re going to get them to drive somewhere, the destination has to feel like an ‘experience’ they can’t get online.”
Across every industry, we’ve seen massive transformation to meet modern demands, including banks evolving their in-branch journey and retailers embracing new approaches to customization. For many years, retailers, banks and even grocery stores focused on experiences that were directly tied to their process. Retailers offered clothes, banks managed money and grocery stores sold food. Each industry’s utilitarian purpose drove their outward-facing persona. But in today’s world, customers – especially the Millennial consumer – wants more than ‘basic.’ From our white paper, Why The “Y”: Millennials And The Generation Of Innovation, our research shows that “Millennials are smart; we will pay more, do more, become loyalists and advocates as long as you provide what we consider added value.” This added value often comes in the form of elevated experiences, so in banking, for example, we see more cafés with coffee and free Wifi and open design to better facilitate conversations.
Those same trends that value experience over exchange are now being delivered across the grocery industry, as shopping behaviors and health trends continue to evolve. Generational shifts in the market are pushing established grocery brands to develop sister chains while entirely new brands enter a crowded field of competitors. WholeFoods is growing their new concept 365, while Kroger introduces their own Millenialized-version grocery store Main & Vine. Virtual grocery stores like FreshDirect and InstaCart capitalize on convenience and customization via local grocery doorstop delivery, understanding what modern lifestyles demand. An even posher version of convenience, BlueApron’s subscription-based service delivers measured meal ingredients, complete with detailed cooking instructions. Innovation from Europe finds the German company Aldi taking the industry by storm with a unique marketing approach that has even retail giant Wal-mart worried. Aldi’s focus on natural, fresh food presented in a no-frills environment that is both economical and convenient for the consumer making grocery trips more often for fresh dairy, meat and produce. All of these innovative approaches represent the changing behavioral landscape in the grocery game.
Health, Convenience and Customization – We Want It All
The rise of on-demand information has been a significant driver of health trends across the globe. Today, savvy consumers have more information and knowledge at their fingertips about what’s in the food that we put in our bodies. According to Supermarket News, Millennials are “taking a more mature approach to foods and beverages, making careful choices while attempting to avoid unnecessary additives.” More than older generations, Millennials favor natural and organic ingredients, products that support their local farmers and are free of GMOs and allergens. This means for consumer-packaged goods (CPG) marketers, merely placing a nutritional stamp on the packaging is no longer enough. Further, as Forbes reports, “Millennials … care about social causes. They may not be writing the big checks yet, but they will spend a little extra with a brand who is aligned with what they care about.” For grocery, that means an even greater focus on transparency and authenticity with brands providing healthy ingredients, grown and delivered in a responsible manner and providing that information in a direct way, through labeling, signage and product narrative.
One trending concept that the Huffington Post recently highlighted is the zero waste brands that focus on environmental aspects of food production and consumption. These new approaches take on one of grocery’s dirty little secrets head-on: how much waste we generate in our typical grocery shopping trip. From fresh-prep foods to frozen items to convenience foods, packaging and the plastic bags we carry them in deliver one heavy payload to our landfills every year. According to the HuffPo piece, Sarah Metz who is the innovator behind the zero-waste grocery store The Fillery coming soon to Brooklyn, “It’s hard not to notice how much waste is generated here [New York City]. You walk past piles of trash that are higher than you are.” Concepts like The Fillery and Zero Waste Market in Vancouver hinge on decreasing waste from packaging, bags, and food waste itself from prepackaged foods that don’t allow for smaller, portion-controlled food items. These grocery brands ban bags and packed foods, and shoppers provide their own reusable containers that allow them to measure and buy only what they need. Both brands are focusing on the narrative behind our current lifestyles and solutions for the next generation.
So what trends are next for the grocery industry? Use #grocerytrends to discuss what experiences you’d like to see delivered to your doorstep or available on your next shopping trip.