Four executives from leading grocery chains were asked to give their views on the greatest trends and changes facing the industry. While each had his own unique perspective, they all agreed on one simple fact: Fundamental changes lie ahead — and with them come both great challenges and great opportunity.

The biggest change in consumer behavior during the past two decades has been a push toward greater convenience. Today’s consumers demand the food they want, when they want it. In the years ahead, this trend will continue — along with new demands created by a more diverse, older and health-conscious audience.

“In the past, people planned out their shopping for a week,” says Big Y Foods’ John Pazahanick, Vice President of Real Estate and Development. “Now, they’re deciding what they want 10 or 15 minutes before mealtime.”

“The demand for convenience and speed will increase tenfold,” adds Brookshire Brothers’ Vice President, Bruce Bryant. “The next generation will not accept anything less.”

Convenience isn’t the only growing pressure that grocers will face from consumers. Diversity will also come heavily into play, as a more sophisticated, well-traveled, and international audience will create demands for ethnic or specialty foods that wouldn’t be found in most grocery cases a decade or two ago.

John Pazahanick

Bruce Bryant

The trend toward health-conscious shopping will also continue to grow, driven by aging demographics and consumers who are interested in everything from low-calorie options to gluten-free diets, to nutriceuticals and diet supplements.”

At the same time, a tight economy is creating new demands for value pricing in practically every product category. Dollar Stores and club stores such as Sam’s and Costco are capitalizing on this trend, but grocers are also finding ways to address this need. “People want health, and also value,” says Seth Brown, Vice President of Store Development for Sprouts. “That goes beyond selling premium priced organic or 100% natural. Our goal is to offer a healthier alternative at a price point that is attractive.”

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“Expect to see a huge emphasis on health,” says Pazahanick. “It goes beyond healthy eating and being calorie conscious. You’ll be seeing things like Wellness Clinics within stores.”

John Pazahanick

The established trend toward convenience- consumers wanting the foods they want, when they want it- has created an opportunity that is being seized by retailers outside the traditional grocery channel.

and buy clothes, all in one place,” continues Ibsen.

“Additional competition is coming from dollar stores, gas stations and pharmacies — even Toys“R”Us was selling kids’ cereals at one point, and office supply stores devote half an aisle to snacks, candy and food for the office. Unconventionalchannels becoming grocery outlets havehad — and will continue to have — a significant impact on the industry.” We now live in a world where restaurantsoperate out of vans, and drugstores now have a frozen-food case. As the demand for greater convenience grows, the traditional lines that once separated grocers, restaurants and nonfood retailers will continue to blur.

“One trend we can expect to see continue is serious entry into the grocery space of many retail channels that didn’t pose a threat 10-15 years ago,” says Christopher Ibsen, Director of Corporate Affairs for Piggly Wiggly Carolina Company.

Christopher Isben

“A high-profile example would be the explosion of supercenters and megamarts that allow you to get groceries, have your oil changed

While grocery stores are seeing their market share under attack by channels like gas stations, dollar stores and pharmacies, they in turn will move to protect, grow and expand their sales by intruding on territory once held by other industries. Today’s grocery stores offer services like branch banking, coffee shops, flu shots and even drive-thru pharmacies. In the road ahead, this type of innovation will continue.

The most noticeable entry that grocers have made into another industry’s territory comes in the area of prepared foods.As other retailers have sought to take business from grocers, grocers have begun to take business from restaurants, caterers and fast-food establishments.

“We’re becoming like a restaurant or caterer,” says Brookshire’s Bryant. “And we can be better at it, because we have the content and the opportunities.”

Bruce Bryant

But that’s only the beginning. Other examples of in-store innovation:

Brands such as Whole Foods are experimenting with in-store spas, while traditional mainstream grocers now commonly make gasoline sales a part of their offering.

Piggly Wiggly is pushing private labels to new lengths by producing a respected craft beer known as Pig Swig — which has earned such a following that they are considering opportunities to sell it in outlets outside their own stores.

Stores are also launching sub-brands designed to target specific audiences. Piggly Wiggly created Newton Farms, a freestanding store and private label with a premium feel. Brookshire’s has launched a chain of 29 convenience stores under the Polk’s and Pick It Up banners, to take advantage of underserved areas and smaller markets.

Innovation has always played a role in the grocery business. But in the years ahead, it will take forms that may reshape the fundamental reasons why customers visit their local grocers.

The most significant trends that are emerging may very well be those that are enabled and powered by technology. It’s driven by the prevalence of mobile devices, and by an explosion of affordable, available and meaningful household-level data. The use of the Smart Phone holds substantial promise for grocers who are looking for ways to more effectively communicate with customers, both off-site and in-store. And the depth of available demographic and psychographic data is also opening up new opportunities for grocers.

“In the northeast, we’re in a saturated market,” says Pazahanick. “The competition is intense. We’re using resources like Buxton to help us make more targeted site selections. Their solutions help us to have a better understanding of who our best customers are, and what we can do to reach those customers.”

“We think eBlasts are going to be a powerful tool for us,” says Brookshire’s Bryant. “In a relatively short time we’ve built a database of 55,000 customers, and that number is growing daily.”

Bruce Bryant

John Pazahanick

Grocers are using technology to spur sales and communicate more effectively with their customers in a variety of other ways:

Piggly Wiggly is using resources such as Buxton to identify the best prospects around existing stores to market to, and to place traditional print circulars more effectively.

Stores are also mining their own customer data with loyalty cards that identify purchase patterns and frequency, and allow them to personalize communications and develop tailor-made promotions with their customers.

Big Y is currently experimenting with “Big Y To Go,” an online effort that allows busy consumers to order their groceries online.

Brookshires is using site selection data that helps them target locations that not only offer strong local traffic, but that also capitalize on the presence of vacationers and weekend recreational crowds.

It’s been said that in business, the only thing constant is change. And for the grocery industry, it’s certainly a commodity of which there is no shortage on the road ahead.

Learn more about Buxton’s strategies for growth in the grocery industry.

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