Mercatus: 10 predictions for grocery retailers in 2021
Grocery retailers need to prepare for a business landscape including a heightened emphasis on safety and broader access to e-commerce.
Sylvain Perrier, president and CEO of grocery e-commerce platform Mercatus, recently shared with Chain Store Age his company’s predictions on major trends that will impact the grocery retail vertical in 2021. Following is a summary.
1. Extreme resurgence (and evolution) of meal kits – While meal kits have already seen an in 2020, Mercatus predicts they will become even more mainstream in 2021 as grocers augment the products that they have available with more grocery staples. Meal kit providers will also expand further into grocery retail, offering more grocery staples alongside their meal kit offerings to gain more market share. As CPGs continue expanding direct-to-consumer programs, meal kits will be another opportunity to get their brands in front of consumers.
2. Re-strategizing operations to meet safety standards and demand for convenient, contactless e-commerce – Traditional store formats will need to be reconsidered to account for the needs of order fulfillment (multi-order assembly and new demand for prepped foods and meal kits) and safety measures such as single direction lanes and social distancing. Mercatus advises that retailers which can adapt their planograms and/or expand into MFCs or warehouses (as needed), will be able to scale their businesses while growing their online shopper bases with a convenient, contactless online shopping experiences.
3. Improving e-commerce affordability – With more Americans out of work, reliance on programs like SNAP and WIC has grown considerably. Mercatus suggests that grocers looking to capture a wider base of shoppers need to consider how they can make it easier to spend program dollars at their stores. This includes making online SNAP payments available, as well as leveraging e-commerce to improve discoverability of eligible products for shoppers and help them build their baskets within budget.
4. Improving e-commerce accessibility – With grocery e-commerce becoming an essential service, those in high-risk groups are rapidly shifting their shopping online. According to Mercatus, grocers need to ensure this demographic is supported by following accessibility requirements for their websites, but also investing more in support services like call centers to help new shoppers navigate the site.
5. Renewed emphasis on omnichannel approaches to stand out in digital grocery – Grocery retailers will continue to use third-party marketplaces as traffic destinations and to reach a broader audience. To overcome fierce competition among retailers, and avoid becoming branded warehouses, Mercatus tells grocers to expect to see renewed focus on reclaiming retailer-owned and controlled channels.
6. Need for re-strategizing and re-platforming – Grocers have hit a new level of sales numbers, and they will want to have a greater degree of not just control, but also flexibility. Mercastus advises this will involve retailers re-strategizing how they can differentiate their businesses and scale to meet the growing demand for e-commerce. The grocers who are successful will be the ones with multi-tier architecture supported in the cloud and tightly integrated with an existing ecosystem of third-party solutions.
7. Focus on securing CPG advertising dollars online – As grocery e-commerce adoption increases, Mercatus says CPGs are shifting advertising budgets online to meet shoppers where they are. Competition is increasing among retail media networks offered by retail giants like Walmart, Amazon and Instacart against new networks by competing grocery retailers. The programs that offer the highest value through return on ad spend (ROAS) and access to key insights for target consumers will win CPG advertising budget share.
8. The evolution of the B2B grocery commerce platform – Post-pandemic, large bulk buyers will want self-service and expect that same easy-to-use, consumer-like experience they had at home shopping online. As the economy bounces back, Mercatus expects bulk-based retailers to offer 24/7 availability, intuitive navigation, rich product information, easy quotation and tax-exempt capabilities, and buying assistance when needed — both via web and mobile.
9. Wave of retail acquisitions and bankruptcies in grocery – Amazon will make a play to rapidly expand its grocery stores through acquisition, and competitors will also start to consolidate. As a result, Mercatus warns that grocers without trade dollars will not be able to make ends meet when sales decline once a vaccine is distributed broadly.
10. Rapid adoption of intelligent automation – As the pandemic continues, Mercatus predicts more grocers and CPGs will adopt intelligent automation to handle the growing demand for scarce products in certain categories. Grocers will also continue investing in automation that powers efficient, contactless services such as: automated checkout, fulfillment technologies such as micro-fulfillment centers; central-fulfillment centers (CFCs), and picker robots; and driverless delivery vehicles.