Certainly, in the UK shopping habits have evolved through recent economic tough times – we are savvier (demand and seek out low and transparent prices); do a “big shop” less frequently and buy fewer items when we do; increasingly buy groceries on-line; shop more often for “dinner tonight”; and, when we shop, we look for meal components rather than the meal ingredients. But don’t expect an “ATM Moment” with “Big Box” retail stores – remember when ATM’s were being introduced pundits advised us that they wouldn’t catch on because consumers would miss their interaction with bank tellers. What?! Most ATM machines have more personality than tellers! Within months, we all switched to cash points. But IGD forecasts that big store grocery market share will fall by 5 percentage points over the next 5 years (from 40% to 35%), as discount and on-line together add 8 points.
So, the imminent death of the “Big Box” format is greatly exaggerated – they won’t disappear in a puff of smoke like the bank counter staff did! However, retailers like Tesco and Asda must to come to terms with the fact that, through the remainder of this decade, on-line, discount, smaller supermarket, and convenience store sales will outpace hypermarket sales as we move comprehensively towards a more shopper-friendly and dynamic multichannel grocery environment.
Is managing decline the only outcome for “Big Boxes”? Or can they be reinvented? Here’s some observations on what the major retailers are doing now and some ideas for the future:
- go back to retail basics – nibble away at the price advantage of the discounters, reducing complexity of offer (fewer skus) but increasing relevancy, with simpler promotions that are personalized, backed up with friendly, attentive service and more retail theatre;
- capture the high ground on food and drink retail expertise – a “foodie” specialist in-store with hand-held technological back-up!. The Euphorium bakery initiative in Tesco is a good start. In-store cooking lessons and/or chef demonstrations work well for Whole Foods Market in the USA and is under trial by M&S in some of its big stores. More realistically, use shopper data to target specific consumers with very specific YouTube meal preparation tips – e.g. those buying Japanese food ingredients with “how to cook” yakitori or sukiyaki (the promise?: we’ll make you look like a smart cook!);
- food retail and food service are fast converging but, as Tesco is trying to do with Harris + Hoole and Giraffe, go for “Meals/Snacks for Now”. M&S and Waitrose score well here where you can try some tapas with a glass of wine in the store’s tasting area/café;
- bring in shops within shops – acknowledging that big grocers are not experts in everything (Tesco thought it could be back in the Leahy era) and rent space to the likes of Argos (Sainsbury’s), and Decathlon which has the sports goods reputation and Asda has the locations;
- integrate with the on-line offer – enable the collection of products purchased on-line (click & collect), and purchase products seen in-store (real or on-screen) for home delivery at a convenient time;
- expand the use of shopper-friendly technology in-store – communicating via smart phones with shoppers about personalized deals for them and them alone whilst in the store, magic mirrors for fashion shoppers who can see how they’ll look in the outfit when they get home and what accessories would go best, big screens in-store that show the full range available on-line (as is the case in Tesco’s Watford toy “infinite” aisle);
- auto-scanning to save time at the checkout, with an option that the customer can take some products home personally (e.g. food for tonight, fragile fresh products, etc.) and the rest can be delivered later;
- visit Asian supermarket stores and see how staff expertise and theatre can excite customers buying fresh meat and produce. Mind you, live turtle sales are probably not an option for us in the UK! In-store food preparation can draw a crowd, particularly if it involves expertise that is admired (e.g. sushi-makers), and gives the retailer fresh food credentials;
- attach services that make the investment in time to the “out-of-town” store more appealing – such as health, optical, etc.
What of “Big Box” grocery retail by 2025? Maybe they become mini-theme parks with the celebration of food and drink at their core. Somewhere for all the family to want to go to for a day out – a bit of everything to do with food such as a pop-up farm with animals, cooking classes for kids culminating with the family eating a “kids made” lunch, wine tasting, local food hero days, insights into exotic cuisines. Mind you, it might be useful to have a water slide, movie theatre and cool kids stuff, too. Of course, cool stuff isn’t just for kids – be sexist and add a spa and laser clay pigeon shooting. ! A JV with the guys from BOXPARK (Shoreditch, London) might attract much sought after millennial shoppers – fashion and food are a compelling combination!