Co-op and Amazon plan for grocery growthAndrew Smith
With our own aspirations for personal development in mind after the festive period, two growth stories of grocery chains grabbed our attention in Week 1 of 2019. Both Amazon’s Whole Foods and UK based-grocery chain Co-op announced plans for growth this week, with the former planning to increase its store count in US suburban locations, and its British counterpart set to open 100 new stores in key locations in London and the South East.
Indeed, while in 2018 sales in wider retail were continually impacted by shifts from in-store to online, the grocery sector seemed to buck the trend. In the US, online grocery sales account for only 2% of all sales, and remain statistically insignificant in the $800 billion grocery industry according to Forbes.
In the UK, while the big three supermarkets – generally preferred by consumers for the weekly ‘big shop’ – have invested heavily in their online offering, the fact is that online shopping is dominated by those weekly trips. Smaller ‘top-up’ shops account for just 18% of online trips, compared to 57% for in-store. (Neilson via Retail Times) There is clearly just cause for investing in bricks-and-mortar grocery – but that is not to say the sector is exempt from overarching imperatives to rethink store formats in the new age of retail.
Perhaps the most interesting aspect of Whole Food’s planned growth is that the new stores will be some of the first to be built by Amazon – could this mean that they will be designed differently? Amazon has, itself stated that, with its new Whole Foods stores, it aims to expand its quick grocery delivery offering through Prime Now. The new stores could also facilitate fulfillment and returns – so expect them to be designed with plenty of Amazon lockers and online return points. Its growth strategy for Whole Foods is likely to be well and truly omni-channel – creating key added value to drive footfall to its new stores, and away from Walmart which currently operates a leading 5,352 stores in the US. (Forbes)
Co-op, on the other hand, as one of the UK’s smaller grocery players, and operator of aforementioned ‘top up’ stores, has been slow to move into online – but with Amazon eyeing locations for its first Amazon Go store in the UK, Co-op’s growth strategy is considered, and complemented by plans to renovate 200 existing stores. The retailer has stated that its new stores will open in key city centres transport hubs, university campuses and new communities in high rise residential developments. What’s more, Co-op is testing its new food-to-go concept in multiple UK locations, where shoppers under time pressure can grab self-serve products and pay at a bank of self-scan points.
Although bricks-and-mortar grocery has not yet felt the same impact from online as the rest of the sector, consumer preferences will continue to shift towards more convenient modes of shopping. With this in mind, as exemplified by Co-op and will likely be evident in Whole Food’s new stores, creating added value – whether through an omni-channel approach or innovative new concepts – will be key to the future of grocery shopping.