Five Emerging Trends for Supermarket Retailers to Leverage in 2016
As we begin 2016, supermarket retailers continue to adapt to changing consumer demands, industry issues and regulations affecting their businesses. Some grocers are expanding their footprints, others are narrowing to specialty formats, and some seem to be doing both. All are facing increased competition and high expectations around freshness, convenience and transparency.
We see five emerging trends critical for retail businesses in 2016 and beyond:
1. Authenticating the fresh foods story
Fresh is at the forefront throughout the supermarket business. We’re seeing an increase in the overall offering of fresh as retailers are displaying fresh foods to meet the expectations of today’s consumer.
What is needed now is for supermarkets to prove “fresh.” As the focus on freshness continues to evolve, grocery retailers need to tell -- and validate -- their fresh foods story. In the near future, retailers will likely begin to use available and new data to transparently authenticate that message.
With intelligent facility technology, retailers have more information available to help substantiate how foods remain fresh along the journey from “farm to table.” This data can be used to create a competitive advantage, building the authenticity of their brand. Future technologies, regulations and cold chain management will create an even more transparent route for fresh foods, and leading retailers will transform this data into marketing messaging to foster loyal customers.
As supermarkets today increase in-store demonstrations and engaging shopper interactions to differentiate their brand experience and showcase fresh foods, they are also integrating new store formats to remain competitive.
2. Convergence of concepts driven by convenience
Driven by the consumer’s demand for convenience, food retail concepts, formats and locations are converging. Today’s shoppers are pushing retail businesses to expand, invest in fresh foods and provide a consistent brand experience.
Consumers expect retailers to fit more -- and in some cases, everything -- into one location. Flexible infrastructures are needed to adapt to changing store concepts. It is no longer surprising to see supermarket chains with small format stores that offer the quick, convenient, or niche within their brand. Convenience stores are beginning to look more like restaurants. And, we’re seeing quick serve restaurants integrate refrigerated cases, similar to those found in grocery stores.
As stores become more complex, scalability is key. Retailers need comprehensive facility solutions that fit a variety of formats, new technology and equipment. This convergence also opens up the opportunity to explore flexible, wireless facility solutions.
3. Impact of changing regulations
Two regulatory issues will become top of mind in 2016: the Food Safety Modernization Act (FSMA) and refrigerant regulation changes.
FSMA will have an impact on food integrity and food safety, as well as in helping to reduce food waste. As grocers focus more on “farm to table” freshness, the result will be an increased importance on collecting and utilizing data related to the safety and integrity of the foods they offer. This will apply to more than just monitoring food temperature during shipping. Retailers will need to engage with their suppliers and partners more in order to ensure data integrity throughout the chain of custody for food -- and ultimately, to continue earning customer trust in their story.
As the EPA announces refrigerant regulation changes, retailers will need to address two primary issues: refrigerants and energy efficiency. With refrigeration equipment manufacturers, grocers will be challenged with adopting a new class of approved refrigerants. None of the emerging or new refrigerant alternatives are “drop-in” substitutes for retrofitting. Equipment must be specifically designed, evaluated and tested to comply. Retailers and their equipment and component manufacturers will need to work closely before any retrofit to fulfill all guidelines.
4. Turning workforce concerns into opportunities
There is an increasing difficulty in maintaining a skilled technical workforce. As the current workforce ages, technical experts are harder to find, and concerns arise around workforce costs.
It’s even more important for retailers to create the right environment for employee engagement and satisfaction. To better support associates -- who are already managing a myriad of tasks -- retailers need to make operations adjustments. By making facility tasks repeatable, simplifying the content and supporting them with intuitive technology, retailers can redeploy their associates to focus more on customer service, and less on operational tasks or equipment maintenance.
As retailers evaluate their priorities, a greater focus on friendly facility technology is a must. The latest in facility management systems utilize human centered design, providing grocery retailers with enhanced connectivity and monitoring capabilities while improving usability, user interface and intuitive operation. Adding third party monitoring services to remotely triage, diagnose and resolve equipment issues will also allow associates to focus on customer engagement.
5. Consolidation propels operational improvements
The food retail industry is simultaneously consolidating and differentiating. We’re seeing fewer companies and more store concepts. The mindset winning today is that you need to “get big or get niche” to capture more of the market. And the addition of new click-and-collect options, online retailers and delivery methods are also pressing traditional supermarkets to rethink their business approach.
As large format stores get even bigger and small format stores become more specialized, these retailers are reinvesting in new and/or consolidated infrastructures. Reducing infrastructure costs provide retailers with advantages to increase profitability, and pass along lower pricing to customers.
With this comes a greater need for improved equipment operation and maintenance. To eliminate unnecessary maintenance costs, such as refrigerant leaks and emergency service repairs, facility technology can control and monitor HVAC, refrigeration, lighting and foodservice equipment. As the systems capture data, leading supermarket chains will extract meaningful insights from that information that can help identify areas to reduce costs and improve efficiency.
Supermarkets that embrace the role of technology in each of the above developing trends will emerge as industry leaders this year. Retailers will begin to leverage vast amounts of data available in their facilities and look to trusted partners for insights to navigate their way through 2016 and beyond.
Mark Dunson, president of Emerson Climate Technologies Retail Solutions, has led the global retail business since 2009. Emerson Climate Technologies specializes in developing energy saving techniques and devices for chain supermarkets, convenience stores and restaurants (EmersonClimate.com/RetailSolutions).