Will Supermarkets Remain Relevant?
Supermarkets must reinvent themselves as online grocery shopping and home delivery intensifies, and overall consumer behavior evolves.
The internet is now the fastest-growing grocery retail channel, with a compound annual growth rate of 19.5%, according to the grocery retail research firm IGD.
Supermarkets’ online rivals such as AmazonFresh, Fresh Direct and Instacart, as well as myriad meal-kit companies, are stealing their dry-goods sales. Walmart Grocery is also poised to cut into the market share, having recently rolled out Delivery Unlimited, which costs $98 annually or $12.95 monthly for unlimited online grocery orders.
While e-commerce is on the rise in the grocery industry, online sales still only represent 2% to 5% of the $743 billion U.S. grocery retail market, according to CBRE Research.
Even the meal-kit delivery trend, which accrued an estimated $3.1 billion in sales in 2018, has been prone to fluctuations, with top providers falling in out of favor with consumers since their introduction in the past few years. Meal Kits: Trends and Opportunities in the U.S., 3rd Edition, a report by Packaged Facts, actually projects this market to decline to low single-digit growth by 2023.
Amazon knows grocery shoppers are still clinging to the in-store experience, which is why it acquired Whole Foods and opened 36 new locations since August 2017. The Wall Street Journal recently reported Amazon is also moving forward with opening grocery stores throughout the United States separate from its Whole Foods Market subsidiary.
In light of the recent turmoil in the grocery industry, traditional brick-and-mortar supermarkets are changing strategies to retain customers and attract new ones. Some have already introduced or beefed up loyalty programs. Others have introduced app-based technology shoppers can use to scan or wave smartphones over items they want to add to their tab.
Shrinking floor plan on aisle 5?
Bottom line, traditional supermarkets in the United States will decrease 24.6% by 2021, according to a report from Inmar Willard Bishop Analytics referenced by Store Brands. But super warehouse formats, limited assortment and fresh-focused stores will see double-digit growth.
But here’s the rub: Supermarkets are faced with more upfront costs to tear up their stores, changing the width of aisles to accommodate other categories (i.e. meat, fish, flowers) in a new spotlight. This trend calls for more electricians to spend countless hours retrofitting new lighting throughout each store, which is a time-consuming, costly endeavor.
Amid marketplace upheaval, lighting remains vital. It not only adds to overall aesthetics, but it influences purchasing behavior. Supermarkets can reconfigure their lighting to direct people to high-margin areas, such as aisle end caps and perimeter displays of essentials they can shop in a limited amount of time.
In the middle of nowhere
Store design will also evolve as the need for center-aisle shelving for dry goods decreases over time. Supermarkets will likely reduce their overall size or remodel their current space with fewer aisles. Either way, they will want to invest in fixtures that can easily be moved to rotate new and sale items to keep customers engaged.
While supermarkets won’t fall prey to online grocers anytime soon, they have to change with modern times and consumer behavior to continue to stay relevant. By embracing flexibility and staying keenly-focused on providing a convenient and enjoyable retail experience, the supermarket will remain central to the grocery industry, which IGD predicts will grow to $59.5 billion in the United States by 2023.
To learn more about the current evolution of supermarket lighting and Amerlux’s lighting solutions, read our next blog “5 Reasons Why Supermarket Lighting Evolves.”