instore - February 2018 - 27

cover story

Delivery
decisions
Instore deli, bakery adjust to the brave
new world of grocery delivery, pickup
by Andy Nelson

mazon's 2017 purchase of Whole Foods Market sent shockwaves through the retail grocery world that will be felt for a
long time. An almost immediate effect of the deal -and one
amplified by Walmart Stores Inc.'s big online push -has been retailers'
adoption of grocery delivery and/or pickup.

says. Ceramic totes, for instance, which are used to deliver frozen
goods, could also be an option at the other end of the temperature
spectrum, he says. New packaging will also play a big role. But many
question marks remain, Weitzel cautions. "They're still figuring it out -
they're not there yet."

It's probably safe to say that not a week went by in the second half
of 2017 without a retailer (or two or three) announcing it was now
delivering to customers' homes, or at least offering curbside pickup or
another alternative to pushing a cart up and down the aisles oneself.

While the problems related to delivering hot prepared foods will
take major efforts to address, at least they're tangible. By contrast,
the hurdles to online purchases faced by instore bakeries can't as
easily be fixed with a new pack or innovation, Weitzel says. "Bakery
is tricky because it relies on a lot of impulse purchases. The question
is: how will retailers do impulse online better than they do today?"

Delivery/pickup is growing exponentially, but is it growing equally
across all grocery categories? Specifically, how are instore bakery, deli
and prepared foods adapting to this new world?
Service deli and bakery have a long way to go to catch up to other retail
categories when it comes to frequency of pickup and delivery, says
Paul Weitzel, vice president of Chicago-based Inmar Willard Bishop
Analytics. After floral, instore bakery is the least likely category to be
ordered online, and service deli the third least likely. (Packaged deli
fares significantly better).
Many consumers still want to come into a brick-and-mortar store to
pick out their hot prepared and other service items, Weitzel says. But
change is coming even to those categories, and retailers need to adjust
accordingly. "The service part of it is still pretty far behind, but I think
(retail) foodservice is going to be a big portion of this going forward," he
says. "There's a learning curve there, and it will be tricky to do, but the
ones that figure out how to do it will be successful."
Perhaps the steepest part of that learning curve will be figuring out
new technologies for getting hot prepared foods to customers, Weitzel

Get on board...or else
The need among many consumers to shop instore deli and bakery
departments in person remains a strong one, says Neil Stern, a consultant with Chicago-based McMillan Doolittle. But retailers who don't
realize that at least some of that business will shift online could be in
for a rude awakening.
"Being able to see full choice, customize the product, get inspired by new
ideas or get influenced by impulse purchases remain powerful category
drivers," Stern says. "But they also will see the business move online for
repeat purchases or be influenced by less traffic through the doors."
Lake Success, New York-based consultancy Retail Feedback Group
polled consumers about what kinds of retail items they purchased
online. At the high end were grocery (62 percent purchased) and
health and beauty care (54 percent). Those categories in the lower tier
included bakery (28 percent), prepared foods/meals (26 percent) and
deli meats and cheeses (22 percent).

instore * FEBRUARY 2018 * 27

Table of Contents for the Digital Edition of instore - February 2018