Retail

Grocery Tracker: Grocerants To The Rescue?

Major changes are coming to a grocery store near you. In this week’s grocery tracker: Target’s grocery department struggles, Whole Foods loses a CEO and grocerants are on the rise.

Target leads this edition of the Grocery Tracker with news that its grocery business executive, Anne Dament, stepped down after a year-and-a-half. Her last day will be November 18.

Target’s grocery department has recently struggled with losses higher than the industry average. Target hopes to counter subpar food sales by increasing marketing efforts and assembling teams of in-store food specialists. The retail chain has investigated urban farming and conducted food research with MIT. They also plan to increase its number of smaller, urban stores.

Whole Foods announced that co-CEO Walter Robb’s position will be eliminated as of the end of 2016. Robb will remain a board member and receive a reassignment package in the form of a $10 million lump-sum payment. This leaves cofounder John Mackey as sole CEO.

Whole Foods has faced stiff competition in recent years as competitors have caught up in the organics department — but without the price hike. Whole Foods’ growth has slowed considerably since the beginning of 2015.

Not everything in the world of groceries has been hit with slowdowns. Quick: What’s the fastest growing sector in food? If you said the grocerant, you’d be right — at least according to Supermarket Guru.

What exactly is a grocerant? It’s a portmanteau of grocer and restaurant, or the term for the sit-down restaurants that shoppers see popping up in their local Whole Foods, Kroger’s and Hy-Vee’s, among other places. And it could very well be the solution to the grocery sector’s slump.

In 2015, the National Retail Federation lauded supermarkets as the fastest growing retailer sector. But 2016 has seen a considerable slowdown in the market as sales continue to move online.

Grocerants provide customers the incentive to get out of their computer chairs and into aisles once more — at least that’s the hope. Because let’s face it: Millennials aren’t buying groceries. Well, they’re not spending as much cash on food as previous generations. Experts attribute this spending trend to economic concerns, delays in marriage and child rearing.

While millennials still eat, they’re certainly not setting foot in physical stores. As with much else, they’ve moved their food purchases online. It’s not like baby boomers are stopping by Hannaford’s like they used to, either. Increasing reliance on coupons and discounts don’t help much with continued grocer growth.

The thought is that bringing the dining experience into the store — with locally sourced ingredients and healthy options, as Supermarket Guru points out — will bring back the crowds with it.

But not every company is experiencing the slowdown. As Amazon introduces its Amazon Fresh delivery service in city after city, the retail giant recently announced plans to introduce 2,000 brick-and-mortar grocery stores in the U.S. in the next 10 years. Stores in Seattle could even open by the end of 2016. How real-life stores will work out for one of the companies largely responsible for the loss of foot traffic in retail is yet to be seen.

Amazon does have some tricks up its sleeve. Locations could feature touchscreens where customers can place orders without having to walk around the store. A drive-up option to pick up online orders in person should get some people out of the house as well. The option for a traditional grocery store experience will still be available.

Given these trends, it’s safe to expect that technological integration, the incorporation of delivery and pickup options, and grocerants will be make-or-break developments for grocery stores nationwide in the coming years.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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