The Engaged Grocery Store of the Future: Reflecting Generational Differences and Technological Advancements
Grocery shopping is one of those tasks – one either loves or hates! Either way, it’s a necessary task. As we were reminded of during the pandemic, grocery stores are one of the few retail establishments to remain open during times of uncertainty as an essential need. With so many options available now for purchasing groceries, the physical store is still the preferred method of shopping. The in-store customer experience continues to evolve and adapt to the multiple generations, their different shopping behaviors, and consumers' changing needs.
Core States Group's Grocery Market Expert, Jeff Lampert, explores some factors impacting grocery store design and what the future grocery store will look like to provide the ultimate shopping experience.
Generational Differences
Currently, we are in an era with the most diverse types of consumers. In the United States, the two largest generations of shoppers are Millennials and Baby Boomers: each with totally different spending behaviors, shopping habits and technological adoption.
Baby Boomers are more tech-savvy than their older cohorts (the Silent Generation), but they still prefer shopping in physical stores. They are more likely to use loyalty programs and coupons, and they prioritize price and convenience.
On the other end, Millennials (Gen Y) are the most tech-savvy and value convenience over everything else. They are more likely to shop online and use mobile apps for grocery shopping. They are also more likely to prioritize healthy and sustainable options.
Types of Generations at a Glance
To add to the complexity, Gen X tend to have behaviors that fall in between the Boomer and Millennial generations. They tend to prioritize convenience and value when shopping for groceries. They are more likely to be loyal to specific brands and prefer stores with a traditional layout that is familiar to them. They are more likely to shop in-store rather than online, but they appreciate the convenience of features such as self-checkout machines and digital coupons.
Technology
In the 1980s, supermarkets typically carried around 14,000 SKUs, while today's larger grocery stores can offer upwards of 50,000 to 60,000 SKUs. The growth in the number of SKUs can be attributed to the availability of products from all over the world, the increased demand for specialty and organic products, and the rise of private-label brands.
Advancements in transportation and refrigeration have enabled supermarkets to stock a wider range of fruits and vegetables year-round. In the past, seasonal produce was only available during its growing season and was often locally sourced. Today, consumers can purchase fresh produce from all over the world regardless of the time of year.
Changes in eating habits over the years have also influenced the types of products available in grocery stores. There has been a growing demand for plant-based and vegan options, as well as gluten-free and organic products. Additionally, convenience has become a top priority for consumers, leading to an increase in pre-packaged and prepared foods.
Three Technological Advancements Over the Past Decade:
Self-checkout machines were introduced in the early 2000s and have since become increasingly popular in grocery stores worldwide. According to a report by Research and Markets, the global self-checkout market size was valued at $3.6 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 12.2% from 2021 to 2028.
Mobile apps have revolutionized the way consumers shop for groceries. According to a survey by Statista, 25% of respondents in the United States used a grocery app to order groceries online in 2021. Online grocery sales in the United States are expected to reach $59.5 billion in 2023, up from $23.9 billion in 2018.
Curbside pickup, where consumers can order groceries online and pick them up at the store without leaving their car, has become increasingly popular in recent years. According to a report by Rakuten Intelligence, the number of orders placed online for curbside pickup grew 208% from August 2019 to August 2020.
Future State
The design and size of the grocery store have evolved over the years to accommodate the increase in SKUs, families changing eating habits, changes from women working, and current trends that include prepared meals, curbside pickup, and delivery. Future grocery store design will likely continue to evolve to accommodate the changing consumer needs and preferences.
Five Trends Shaping the Grocery Store of the Future:
- Smaller store footprint: As e-commerce continues to grow, more consumers are opting for online grocery shopping and delivery. This could lead to smaller store footprints with fewer SKUs and more focus on fresh and prepared foods.
- Increased use of technology: The use of technology such as AI, virtual reality, and mobile apps could enhance the grocery shopping experience. For example, consumers could use augmented reality to see how a product would look in their kitchen, or virtual assistants could help shoppers find the products they need.
- Emphasis on sustainability: Consumers are becoming increasingly concerned about the environment, and grocery stores could reflect this trend. They may react by putting more emphasis on locally sourced products, reducing waste through packaging, and reducing energy consumption in-store.
- Flexible store layouts: Future grocery stores could feature flexible layouts that can be easily reconfigured to meet changing consumer needs. For example, some areas of the store could be transformed into pop-up shops for local vendors or seasonal products.
- Enhanced curbside pickup and delivery options: Curbside pickup and delivery have become increasingly popular, and grocery stores of the future could focus more on these services. This could include dedicated pickup and delivery areas, specialized staff, and faster fulfillment times.
Overall, the grocery store of the future will likely be smaller, more technology-focused, and designed to meet the needs of an increasingly diverse, environmentally conscious, and convenience-oriented consumer.
Are you looking to reimagine or scale your grocery store? Contact our Grocery Market Expert, Jeff Lampert, at jlampert@core-states.com. With 500+ employees and 20 offices throughout the United States and Canada, Core States Group designs, builds, and manages multi-site programs for some of the world’s most ambitious brands.
Sources:
- "Generations Defined" by the Pew Research Center: https://www.pewresearch.org/topics/generations-and-age/
- "Grocery Shopping Habits of Each Generation" by Acosta: https://www.acosta.com/news/the-grocery-shopping-habits-of-each-generation
- "Generations in the U.S." by the United States Census Bureau: https://www.census.gov/topics/population/generations/about.html
- Forbes: "The Five Generations Of Employees You Find In Every Workplace" (https://www.forbes.com/sites/ashleystahl/2021/02/03/the-five-generations-of-employees-you-find-in-every-workplace/?sh=10a1d6d67f60)
- The Atlantic: "The Alpha Generation: Life after Millennials": (https://www.theatlantic.com/family/archive/2018/06/the-alpha-generation/563849/)
- Research and Markets. (2021). Self-Checkout Systems Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026): https://www.researchandmarkets.com/reports/5236381/self-checkout-systems-market-growth-trends
- Statista. (2021). U.S. online grocery market size 2018-2023: https://www.statista.com/statistics/1121793/online-grocery-market-size-usa/
- Rakuten Intelligence. (2020). The Acceleration of Online Grocery in 2020: https://intelligence.rakuten.com/2020/09/23/the-acceleration-of-online-grocery-in-2020/
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