FOOD RETAIL

The consumer trends shaping the future of food

Consumers want to eat how they want, when and where they wantNever before in history have we had such a plethora of

eating options, from the different food items and variations

available, to the number of ways by which we can procure it.

Ironically, amidst all this abundance, many humans grumble

that they have less time than ever before to actually shop for,

prepare and consume food.

Changes are coming to food retail and fast, both to bridge

this divide, and to better serve consumer’s shifting behaviors

and demands. Hussmann believes that innovative technology

can help close the gap between our desire to gather over

a great meal and our time-pressed lives. Now part of

Panasonic, the global technology solution leader, we’re

developing innovative solutions that radically streamline and

personalize the shopping experience.

We study retail trends and do the research to learn what

matters most to every consumer segment, from the “value

shopper” and the “impulse buyer” to the “health & wellness

seeker.” By understanding consumer behavior as well as the

demographic and social trends that affect the communities

you serve, we can help you better meet the needs of your

shoppers.

Trends driving change:• Omnichannel grocery – More shopping options mean

stores need to do more to stand out and attract shoppers.

• Shifting demographics – The world population is living

longer, growing more urban, and Gen Z is coming of buying

age. All this will impact eating habits.

• Transparency in the food chain – Tech is enabling

consumers to know where their food has been, making it

easier to eat local and support sustainability.

• Consumer engagement – In our on-demand world, people

crave new and novel experiences and more personalized

solutions.

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Changing tastesand behaviors

Brick and mortar gets an overhaulRetailers aren’t just streamlining the shopping process – they

are streamlining the stores themselves. Shifts in shopper

habits are causing retailers to shift their store footprints and

even completely overhaul their format.

With more consumers buying dry goods and bulk items

online, supermarkets are downsizing, carrying less inventory,

and changing their layouts to focus more on fresh perimeter

foods, meal kits, eCommerce pickup and other money

makers. The median size of supermarkets fell 11% from 2005

to 2015, according to FMI.

Convenience, discount and drug stores are also changing to

meet these new demands, emerging as “fresh destinations”

with expanded offerings of fruits and vegetables, healthy

meals, meat, seafood and more. Retailers are experimenting

with hybrid concept stores that offer gas, grab-and-go and

convenience grocery items, alongside fast casual food service.

EFFECTS OF OMNICHANNEL: A growth of grocery options

Hyper-convenience at every touchpointSavvy grocers are catering to their omnichannel customers to

stay competitive and relevant. Consumers crave convenience

and research shows they will pay more to shop when and

how they want. In the wake of major online retailers merging

with well-known food stores, the line between the digital

and physical is being blurred, giving consumers a seamless

experience that flexes with their habits.

Offering multiple touchpoints means customers can

start shopping on their laptop, add more items later on a

smartphone app, and pick it all up when they want, right at

their neighborhood store. Adding an online component also

builds loyalty, allowing food retailers to gain valuable insights

into shopper habits and preferences to better meet them.

A recent study shows that 73% of shoppers use multiple

channels during their shopper journey. And, according to

WSL Strategic Retail, 34% of shoppers who use click-and-

collect buy more than intended, and 89% are satisfied with

the experience, largely because of the convenience.

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Gordon Food Service wanted to expand their presence

in the food retail market, and set out to design an

experience built on the way today’s consumer shops.

The concept? A high-end, fresh product offering in an easy “in-and-out” small format setting.

The food chain’s divergence from its traditional format

began with qualitative research. Company president

Tim Grabar conducted focus groups with his Millennial

employees to identify their likes and dislikes. He found

that Millennials were looking for fresh foods, a variety of

choices, more organics, and options to make for dinner

that night. Rather than stocking up on food for the week,

many Millennials prefer a smaller footprint store that

they can stop at on their way home from work.

Gordon Foods tapped ConvenienceWorks by Hussmann

to execute their format change. With an architect’s

sketch in hand, the food store discussed their vision

for the remodeled store, while the ConvenienceWorks

team used their equipment expertise and store design

experience to suggest optimal solutions to accomplish

the store’s objectives while working within their

existing footprint. Each department – bakery, deli,

meal prep, fresh meat, produce – was to have its own

unique appeal, with specialty merchandisers designed

to keep foods fresh and enticing. Hussmann’s account

team and design group worked relentlessly with store

stakeholders to bring concept to reality.

The first newly remodeled “G Store“ was unveiled

in Cascade Township, Michigan, and customers are

delighted with its offerings: an extensive olive bar next

to a full-service deli that serves rotisserie chickens,

a meat counter with hand trimmed cuts, gourmet

cheeses, prepped meals, a small bakery, a stand of

fresh cut flowers, and a fresh orange juice stand. There

is free coffee and popcorn available for shoppers to

eat while they walk through the store. The store is also

catching customers’ attention with fresh, colorful fruits

and a wide variety of vegetables.

The new store format is also pleasing store managers, with sales estimated to have increased by 30%.

The future of the c-store:Gas

Pump-side grocery delivery

Healthy grab-and-go

Freshly made takeout meals

Make-at-home meal centers

Fresh-baked pizza

Sushi counter

Gourmet beverages & beer on tap

Pet-friendly rest areas

Wifi and charging stations

Cashierless checkout

Food chain’s fresh, smaller footprint is a big hit, with sales up 30%

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Catering to the bargain-hungryThe distribution of wealth in the U.S. is becoming increasingly

uneven, with a growing number of Americans falling into

the lowest income bracket. Adults landing in the middle

household income range declined from 61% in 1971 to just

50% in 2015, according to the Pew Research Center. Retailers

are shifting their strategies to capitalize on this, targeting

consumers hungry for a bargain.

Dollar stores are also expanding their offerings with more

beverages, frozen and fresh foods in hopes of boosting profits

by appealing to their target’s desire for a faster shopping

experience than the box discount chains can provide.

Value shoppers are also driving the growth of private label

grocery brands, with more retailers expected to push and

expand their own product lines in the near future, according

to research firm CBInsights. And it’s not just supermarkets

scaling up their self-branded presence – major eCommerce

platforms are rolling out private labels to the tune of

hundreds of millions in online sales.

As more players enter the food retail market, companies

must find new ways to drive sales and win over shoppers.

Staying competitive means understanding the lifestyle and

behavior trends of the demographics you serve, so you can

cater to your customer segments.

Major changes are coming to our world population, and they

will impact the future of food – and its purveyors.

• The population of the world is projected to increase

by about 1 billion by 2030, driving increased need for

sustainable solutions and prevention of food loss,

according to the United Nations.

• The UN reports that aging will continue to progress in

developed countries. As people live longer, their dietary

needs will change, with a greater demand for wellness items.

• Urbanization has advanced rapidly worldwide, and in 2030,

around 60% of the total world population will live in urban

areas. This will result in downsized stores and streamlined

services and offerings, according to the UN.

• In 2030, digital natives will be 75% of the total labor force,

reports the Bureau of Labor Statistics. Millennials and

Gen Z want in-store experiences, digital ordering and clean

eating, and will have the disposable income to pay for it.

Although these findings describe changes around the globe,

similar shifts are playing out specifically in North America.

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CHANGING DEMOGRAPHICS: Societal shifts and their impact on shopping carts

Discount and dollar stores are on the rise, with two major competitors opening over 1,300 new stores between them in 2018.

Vegan, paleo and ketogenic diets have grown in popularity,

especially among this demographic, and the clean eating

trend is projected to stay strong as Millennial parents pass

these habits down to their offspring. The average annual

organic eating occasions per capita is highest among

children up to nine years old, according to research by the

NPD Group, revealing how much heart young parents have

for this lifestyle. Forbes predicts that retailers who provide

convenient, on-the-go clean and keto snacks will fill an

important void for consumers.

So too will retailers that answer the demand for transparent

and sustainably-sourced foods. Support for local farmers

has been on a meteoric rise in the last decade, according

to food industry research, with local food sales jumping to

$20 billion by the end of this year. Today’s consumers want

to know where their food came from, how it was made, and

by whom. Disruptive technology such as blockchain and

electronic shelf labels provide the transparency needed to

give it to them. Hussmann’s advanced refrigeration solutions

are enabling extended shelf life to keep foods fresher longer.

As our planet strives to feed a burgeoning population,

and as younger generations become more aware of their

personal impact, the future of food retail will be forced to

become more sustainable. Think energy-efficient lighting

and equipment, and 100% environmentally-safe refrigerants.

Last-mile pick-up, solar and autonomous delivery vehicles

will reduce visits to stores, helping to reduce the carbon

footprint. Food packaging will become biodegradable and

materials like plastic will be banned, with government

regulations keeping retailers in check.

Personalization for each customer segmentThe pursuit for consumer’s purse strings is being complicated

by the varying, sometimes contradictory preferences of

different demographics, both regionally, and globally across

different life stages. In our digitally-driven world, brands

and retailers are learning that the way to shopper’s hearts

is through their smartphones. Data science gleaned from

eCommerce now provides deep understanding of each

customer segment’s preferences, habits and satisfaction.

Savvy food stores are taking advantage of these insights to

personalize their marketing and services by segment, building

brand loyalty and boosting sales in the process.

U.S. retail has excess capacity as evinced by stores closing and

downsizing at a rapid rate. One European grocer is making gains

in the States by rethinking brick-and-mortar, with operations

built from the ground up to be efficient – enabling lower prices

and a more competitive business model. In the past few years,

micro-grocery stores have been another growing trend, helping

retailers penetrate cost-prohibitive urban neighborhoods and

provide low-income families with analternative to fast food and

traditional c-stores. Several large-scale grocers are currently

testing the concept as a path forward.

Clean eating and local, sustainable foodsThe foods we eat are transforming the industries that supply

them. A scan of the modern supermarket shows healthful

foods extending far beyond a store’s perimeter, impacting all

categories and aisles. Driven in no small part by the purchasing

power of eco-conscious, wellness-aware Millennials, food

retailers are increasingly catering to clean eaters by stocking

their shelves with more plant-based products, functional foods

and protein-packed SKU’s – putting these options front and

center in their stores.

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Fresh ideas in growing, and food as entertainmentThanks to disruptive technologies, indoor farming is gaining

traction, with 45% of retailers exploring this solution to

differentiate themselves by meeting the demand for locally

grown food, according to industry research. Grocers are

taking the indoor farming concept out of the warehouse

and into the produce aisle, growing ripe-for-picking herbs,

greens, berries and more right on their sales floor.

To support this concept, Hussmann has introduced a line of

smart, attractive living merchandiser cases that streamline

in-store growing by keeping produce properly watered

and incomparably fresh. This unique “veggie theater” lets

customers watch their dinner fixings grow right before their

very eyes, giving them the freshest produce possible – and

a unique, entertaining retail experience they can’t get at the

supermarket down the street.

Another theatrical, value-added concept being adopted by

retailers is the produce butcher. Cooking soup tonight? Step

up to this special counter with the ingredients you’ve picked

and have the produce butcher peel, slice, dice and do the

julienning for you – enabling fresher, healthier dinners while

chopping prep time in half.

In the digital era, supermarkets aren’t just competing with

local grocery stores but also national chain retailers and

online superstores. Innovative grocers are winning the battle

for shopping bucks with better consumer engagement,

offering new and novel experiences to make brands stand

out from the competition. Retail experts forecast that brick

and mortar stores will still exist several decades from now,

but with a markedly different look, and their offerings will be

more experiential.

Rather than running out for milk and bread, people will visit

their local shop for entertainment. Cooking demonstrations,

taste testings, product launches and special events are

driving foot traffic and will entice more feet in the future. Sure,

consumers will still be able to take home what they see, but it

will be just as easy to tap their smartphone and have it waiting

for them on their doorstep when they get there.

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CONSUMER ENGAGEMENT:

It’s all about the experience

› BUILDING AND CONSTRUCTION

Enticing shoppers with the new and novelSpecialty kiosks and rotating displays are another fresh idea.

Longer lasting than the pop-up shop, but flexible enough

for seasonal swap-outs, Hussmann’s line of self-contained

merchandisers are being leveraged by innovative stores

to put unique offerings front and center, drawing attention

and boosting sales while adding excitement to the shopping

experience. Easy to move and reconfigure, these standalone

cases attractively display anything from ethnic-themed

prepared foods and healthy grab-and-go snacks to new

offerings like meal kits for pets.

Trendy beverage displays can also differentiate a store.

Millennials account for over a third of the U.S. beer

consumption reports Neilsen, but they are drawn to products

that are handcrafted or otherwise innovative. Retailers

are attracting this demographic by creating beer cave

destinations in their beverage department, featuring national

and regional craft beers, with considerable success.

Creating urgency and excitementPop-up retail experiences are a recent trend that is fast

becoming a go-to marketing strategy. Global brands selling

everything from sneakers to toilet paper are using limited

time events and temporary spaces to engage consumers in a

unique way, whether giving them the chance to preview new

items first or by connecting with followers in an unexpected

setting. They’re also a smart tactic for grocers to create buzz

and a sense of urgency that will draw people into their store.

Branded pop-ups enable food retailers to showcase their

products, round out their marketing and provide one-of-a

kind experiences that create opportunities for future digital

engagement with customers. Yogurt bars, holiday-themed

events, food festivals, and farmer’s markets are just a few

of the fun ways grocers are executing the pop-up concept to

stop shoppers in their tracks and make lasting connections.

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No matter what the future holds,Hussmann deliversAt Hussmann, we’re developing forward-thinking solutions that help food

retailers streamline and personalize the shopping experience. Whether your

new strategies include everyday low pricing, simple meal solutions, quick

in-and-out convenience or specialty offerings, we can work with you to create

merchandising solutions tailored to capitalize on trends and win over your most

important consumer segments.

Count on Hussmann to be your trusted partner at every stage of the e-grocery

food chain, from in-store merchandising and storing to picking and staging.

Our next-gen innovations include mobile merchandisers to store fresh meal

kits, temperature-controlled lockers for curbside perishables pick-up and

electronic shelf labels to provide consumers what they want, when and where.

No matter what the future holds for food retail, we’ll be there delivering

integrated solutions to enable your success.

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Learn how Hussmann can help move your food retail needs forward.

hussmann.com