The grocery sector has seen shopper habits shift to more frequent, shorter trips, versus large weekly hauls. As a result, grocers are focusing on developing smaller-format stores, those under 10,000 square feet, with more local offerings to appeal to the surrounding community. Indeed, smaller-format stores are back in vogue and going ahead we expect to see even more grocery stores rolling out their smaller-format stores as they battle razor-thin margins in prime locations while still serving evolving consumer needs.
Also, the growth of smaller stores will accelerate businessmodel innovation in the grocery industry. Expect that successful new stores will be fundamentally different and built to be economically viable in serving specific trip missions.
Those that succeed won’t just be smaller, they will operate differently. Grocers haven’t totally abandoned the grand experience, however. Bigger hypermarket formats, too, will continue to thrive as giant temples of food, in select locations and will continue to offer expertly curated products in each department. So, the truly progressive grocer knows that it’s not all one way or the other. Just as a combination of brick and mortar and e-commerce is likely to be a winner, so is the retailer who knows just what type of store to put where.
Going ahead, retailers will have to actively keep reassessing store footprints, and reconfiguring square footage to accommodate e-commerce growth. In the end, it’s innovative ideas and trend-setting products that will keep driving store sales.