Forget buy-one-get-one sales and tired looking produce racks, the Wall Street Journal reports that the grocery industry is getting a makeover. - Upscale fresh markets and discount stores. Supermarkets are targeting high and low end buyers, in an effort to set themselves apart.
- Food is everywhere. More stores, even hardware stores, are selling food – which traditionally has low profit margins. To compete, groceries are adding more prepared options and general merchandise to pull in business.
- Extreme makeover. New layouts will take advantage of the fact that many consumers only browse the perimeter of the store.
- Everyday low prices. By eliminating the money spent on promotions, the stores can apply the savings to all their goods.
- No waiting. Hi-tech self-checkout systems are being introduced to reduce lines at checkout.
- More diversity. By not taking payment from manufacturers to guarantee shelf space, groceries will be able to increase the number of goods they carry according to customer demand.
- Private Labels. Store branded products, in both regular and upscale incarnations, save money that was going to the packaging of outside products, though they are often made by the same manufacturers.
- Cut labor costs. Companies are revising union contracts and trying to increase #5 (above), which could eliminate the need for about 50% of employees.
- Only $1. Consumers love a bargain, even if it’s not something they would ordinarily buy. If it is, even better.
- Go organic. As demand for organic goods increases, so does the self space dedicated to it. Organic offerings also attract younger consumers.
Now, I’m very interested to see how supermarkets follow along these trends and how they work out. From experience, I know that many people have difficulty operating the automatic checkout (#5) machines. This is mostly not because they’re too stupid to use them, but because they’re too lazy to follow the machine’s (simple) instructions. Or the machines are broken, possibly as a result of my previous statement. As far as private labels (#7) go, I would like the opportunity to discover where the products come from or what manufacturers they use. We have yet to see if more organic (#10) food causes a decline in the quality of organic good offered or will spark an increase in the quality of conventionally produced products.
Of course, all of these changes will be gradual, but I think it will be interesting to see how our shopping culture evolves from here.
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