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Does Online Grocery Shopping Hurt Legacy Chain Grocery Stores?

When an industry sector is capitulating customers, sales, and retail format customer relevance they seemingly want to blame someone else. One company told me, “it’s not our fault customers are migrating to other formats."

Well, yes it is!

You cannot blame technological change for a loss of customers. Consumers are dynamic, not static. Today, consumers want fresh food and they expect it fast. The retail foodservice landscape is evolving.

Fresh food fast can be found at many more locations than a legacy grocery store's labyrinth maze that is designed to trap a consumer into a longer stay; when all they want is fresh food fast.

In fact, driving to a legacy grocery store is difficult for millennials. NPD reports “Over half of millennials don't own a car.” So, millennials seek out new non-traditional retail locations with grocerant niche fresh-prepared Ready-2-Eat and Heat-N-Eat food. Specifically, local fast food restaurants and convenience stores, where they also buy ‘impulse’ items with high margins, are driving incremental day-part sales resulting in bottom line profits.

According to Nielsen, online food shoppers buy the ‘basics’ and hard to carry / awkward products online. Those items have become commodities. While the online shopper may initially come to your site because of your brand , they only stay if the price is right. The online shopping experience saves consumers time. It has fast become a commoditized space.  

Commoditization is not branded differentiation.

The NPD Group reports that “52 million U.S. consumers, or roughly one sixth the size of the population of the United States, already buy groceries online. Those who are lapsed or new to the process plan to do more of it during the next six months”  Note they don’t buy weekly. What they do buy are the ‘basics’ and hard to carry / awkward commoditized products. 

NPD goes on to say “Younger generations in particular, especially millennials and members of Generation Z, who grew up with technology, favor grocery shopping online, finding it "second nature ... to use the Internet for all types of purchases." However, without cars. fresh fast food are not found online nor are  consumers buying much of high margin ‘impulse’ items online as they shop.

Today there are 27 restaurants in the United States for every grocery store.  Without a car how many restaurants will a millennial be willing to walk by before buying a fresh fast meal at a legacy grocer?  It is time for legacy grocery stores to rethink their footprint and adjust location formats to customers' evolving lifestyles. Why is there a rush for legacy grocery stores to sell commoditized products online when technology is not their strong suit, yet fresh food is?

Legacy brick-and-mortar retailers need to do what they do best—sell fresh food fast. If not, fast food retailers will start selling CPG fresh food faster. There are 27 restaurants for every grocery store. It is time for legacy grocery stores to re-examine your business model.

Have you considered doing what you do best; selling fresh food fast with portability and differentiation?  Remember commoditization is not branded differentiation.

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About Steven Johnson

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Public Profile

Do you know who your competitors are today?  Do you know what they are selling? Do you know what your customers think of their food?  No? Well, maybe it's time to get a Grocerant Scorecard completed by the Grocerant Guru.

Steven Johnson is Grocerant Guru at Tacoma, WA based Foodservice Solutions® and a recognized food industry thought leader. Johnson excels at vertical brand and product positioning, marketing strategy and business development specifically identifying, quantifying and qualifying niche opportunity for global foodservice related activity.  He can help place new products in non-traditional channels of distribution.

 With an emphasis in grocerant niche, his focus has been on better for you food that is fresh or prepared ready-2-eat and heat-N-eat.  He developed and implemented of the 5 P’s for food marketing for all retail foodservice companies, including chain drugstores, grocery stores, QSR’s and particularly C-store clients.

 During the past 15 years he has developed over 7.5 billion Dollars in avenues of new business revenue for clients and companies. His experience has focused primarily on C-level sales and brand  building opportunity with industry leading international companies including: The Procter & Gamble Company, Papa John’s International, Minnesota Mining & Manufacturing, Chi Chi’s, TGI Fridays, Fuddruckers,  Food.com, Technomic, The Hartman Group.

 Prior to Foodservice Solutions, Johnson worked for the US Department of the Navy, where he led the development of Parcheesi’s Pizza Pasta Plus for global roll out and implementation including the development of the first dockside mobile pizza kitchen for use by the US Navy during the first Gulf War.

Johnson holds a Master’s of Science in Food Marketing degree with distinction from Saint Joseph’s University and a Bachelor of Art degree from the University of San Francisco. He is a member of Beta Gamma Sigma, the International Business School Honor Society.  Johnson has received numerous awards including 3 EMMEY; Awarded by 3M for “Outside the box” thinking and team leadership. Food Marketing Award; Awarded by Saint Joseph’s University, Outstanding Service Award issued by the Boy Scouts of America.

Don't get trapped doing what you have always done. Position your company with the evolving consumer. Interested in learning how Foodservice Solutions 5P's of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization? That's simple, call for Outside Eyes call the Grocerant Guru. Email Steve at: Steve@FoodserviceSolutions.us or visit: www.FoodserviceSolutions.us for more information. Visit us at Facebook.com/Grocerant, Linkedin.com/in/grocerant or tweet Steve at twitter.com/@grocerant.

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