New third-party marketing channels. Lingering concerns around health and safety. A world in which personalization isn’t just a nice-to-have, but a common expectation.

How are supermarkets responding to these and other trends right now — trends that may have crystallized with the onset of the global pandemic but seem likely to accelerate down the road?

The answer is a story of challenges and opportunities. These, taken together, are powerfully reshaping the grocery retail landscape of tomorrow. And how retail enterprises respond will make the difference between those that fall behind, and those that pull ahead.

In this blog series, we’ll put together a complete region-by-region analysis of supermarkets as we approach this critical inflection point, starting with the North American market. What’s on tap, based on where we’ve recently been? Let’s dive in to find out.

2020 and 2021 were watershed years, ushering in a torrent of changes that will remain with us long after the immediate public health crisis of the pandemic subsides. Among those is the essential role that brick-and-mortar supermarkets play in customers’ lives.

You can see evidence for this almost anywhere you look, but seldom is it so pronounced as in the recent growth in online grocery sales.

Between 2019 and 2020, for example, eMarketer reports that grocery e-commerce sales went from $62.2 billion to $95.5 billion, translating to a year-over-year increase north of 50%, all told. The 2021 sales forecast of $112.9 billion is no less impressive, indicating strong growth through year-end. Looking ahead, the 2020 sales figure is expected to nearly double by 2024.

For supermarkets looking to deliver optimized customer experiences, that’s something to bear in mind. Investing in new technology for both order and labor management, while also adapting in-store spaces for BOPIS (buy online, pick up in-store), curbside pickup and more, will be a key part of that.

Meanwhile, other changes have been afoot in the past year for supermarkets: the growing commercialization of social channels and the increased overall focus on health and well-being, to name a few. But none of these are quite as important as personalization for supermarkets right now.

Many supermarkets already recognize that for many of their customers, mobile is the communication channel of choice — and they’re rolling out impressive mobile-first campaigns in response. Take the Florida-based grocery chain Publix, which launched a personalized membership program in 2020 featuring advance notification for special offers, digital coupons, and even a pay-by-scan option.

Kroger went a step further, creating an AI-supported app that recommends recipes based on real photos of food tweeted by customers. Doing so is part of what enabled the company to capture double-digit identical-sales gains, alongside triple-digit e-commerce sales growth in the fourth quarter and full year of 2020, as reported in Supermarket News. Now that COVID-19 restrictions have been lifted, Kroger’s performance remains strong — the company’s Q2 2021 revenue of $41.3 billion significantly outpaced expectations, according to MarketBeat — suggesting that its digital strategies are translating to enduring consumer loyalty as well.

Ultimately, the holy grail for supermarkets across the board will be end-to-end insights around customer behavior spanning platforms and channels, in-store and online. That will enable a holistic view for greater optimization and more personalized customer experiences, no matter where those customers happen to be.

We’ve looked at how supermarkets are responding to novel challenges brought about by the novel coronavirus. But in what ways have shopper behaviors changed in turn?

• Perceived in-store safety is paramount. A study from Deloitte found that 85% of customers are concerned about their own personal safety, as well as the safety of others and of the packaging they handle, during in-store shopping. So, make no mistake: Safety could be as important a factor as price in determining where customers will (and will not) do their grocery shopping going forward.
• Food-related purchase priorities are changing. While considerations around safety today are more important than ever, the same cannot be said about a litany of other customer concerns. Issues around sustainability and food waste, for example, appear to be increasingly top of mind for many. Research from Ernst and Young, for example, found that nearly half of U.S. consumers (45%) believe businesses have an obligation to provide them with sustainable purchase options, and 31% plan to increase their purchases of sustainable products in 2021. Meanwhile, a survey from The Food Industry Association and the Hartman Group suggests that COVID-19 has significantly increased awareness around food waste: 36 percent of consumers said they had become better at avoiding food waste since the start of the pandemic, and 51 percent said they intended to waste less food in the future.
• Supply chain disruption is still the norm. The number of retail grocers reporting shortages of dried beans and grains jumped from just 5% prior to the pandemic to 19% as of June 2020 — and that level has more or less held steady ever since, according to research from NCSolutions (NCS), a data company that analyzes buyer behavior. The takeaway? The impact of COVID-19 on supermarket supply chains may persist even as the pandemic seems to wane in North America.

National Association for Shoplifting Prevention (NASP) estimates that more than $13 billion in merchandise is stolen from retailers annually, a figure which nets out to roughly $35 million in losses each day. With the onset of a global pandemic, how exactly did that change?

• The 2020 National Retail Security Survey from the National Retail Federation (NRF) reports, alarmingly, that shrinkage hit at an all-time high in 2020, representing 1.62% on average of a retailer’s bottom line.
• Of that theft, what’s more, organized retail crime (ORC) makes up an increasingly outsized share. In fact, three out of four respondents to NRF’s 2020 Organized Retail Crime Survey reported higher levels of ORC in 2020 compared to 2019.

What’s behind the rise in in-store theft? An economy damaged by the pandemic and consumers who suffered from the fallout is the obvious answer. But some observers have also noted that the now-ubiquitous self-checkout model can be a hotbed for theft — in the context of supermarkets, for example, it’s relatively easy for a customer to simply scan an item of lesser value. In fact, research from the Loss Prevention Research Council concluded that shoplifters generally believe self-checkout theft is easier to get away with than other modes of retail theft, based on either “prior experiences or established rationales.”

Whatever the root cause of the uptick in in-store theft, this is obviously a worrying development for supermarkets, as it comes with immediate negative consequences for the bottom line. What can they do to get out ahead of it?

Considering the jumble of changing customer behaviors discussed so far, how are North American supermarkets responding?

The answer, in large part, is with new tech solutions. That’s because these solutions hold the potential to create frictionless, personalized customer experiences that align with changing behaviors and preferences. What’s more, they can empower retailers with actionable insights spanning most of the key areas we’ve covered so far.

• Online grocery and personalization: New consumer mobility tools enable supermarkets to deliver enhanced customer experiences both in-store and online. Meanwhile, new traffic analytics can help supermarkets measure and benchmark in-store traffic, better identify opportunities, and more accurately predict performance.
• New shopper behaviors: By connecting sensor-based tools — refrigeration sensors, Bluetooth thermometers, and more — to mobile-ready cloud applications, supermarkets can now comprehensively monitor and manage all aspects of end-to-end food safety. The result? Less food waste. More sustainable operating practices. Improved compliance. Digitalized food safety records. And above all, unprecedented visibility into enterprise-wide data.
• Theft prevention: Enhanced public view monitors (EPVMs) — eye-level deterrents to help retailers make shoppers aware that they are being monitored — are just the beginning. New sensor-based solutions (think: bottle-cap tags, safers, and wraps for small items, and more) can add a whole new level of protection against theft, pinpoint root causes of shrink, and proactively prevent losses before they even happen.

Clearly, the pandemic has powerfully and decisively reshaped the grocery retail landscape, with ripple effects that continue today to influence not only consumer preferences but operational decision-making and priorities. For individual supermarkets, of course, the scope and nature of these challenges will vary by degrees, but there are broad commonalities at work as well. Perhaps most notably: Agile and effective management tomorrow requires more accurate and actionable measurement today. In fact, even as we shift the lens of our analysis to other markets, this will be a consistent through line for all supermarkets, regardless of geography.

For far more granular analysis on how COVID-19 has impacted supermarkets in North America — including detailed breakdowns of new consumer behaviors and operational responses across regions — be sure to download our comprehensive report.

Download your copy of the Sensormatic Solutions Supermarket Report for North America today.