instore - February 2018 - 28

cover story

from perishables, with improvements in packaging technologies. For
a perishable item, consumers still like to look and feel an item to select
what they think is the best available, not leaving it up to a warehouse
clerk who's trying to fill their order as fast as possible."

Keeping up with "the two big guys"

Whole Foods' instore ordering kiosks are among the many alternatives to
shoppers walking the grocery store aisles themselves.

There will always be shoppers who want the brick-and-mortar experience, says Brian Numainville, Retail Feedback Group principal.
But eventually those low numbers for instore departments should
start to narrow the gap with center-store when it comes to online
purchase and pickup/delivery. "As shoppers get more accustomed to
buying online for pickup or delivery, and as the service proves itself
by providing quality, it is highly likely confidence will be increased
around purchasing online for offerings throughout the store."
Instore bakery, deli and prepared foods are finding their footing in
the new online world just fine, says Bill Bishop, chief architect and
co-founder of Barrington, Illinois-based Brick Meets Click. "There's
no doubt that customers will continue to want to, and in fact enjoy,
coming to the store to shop these departments, but there are other
shopping occasions when it's going to just be easier for them to do
in online," Bishop says. For that reason, it's necessary for bakery, deli
and prepared foods to get on the pickup/delivery bandwagon. "If they
don't, they'll face an inevitable loss of business to competitors that do
offer the online option in these attractive and profitable categories."

Steve Gress, a retail expert with Atlanta-based consulting firm North
Highland, believes that while some perimeter items will adjust well to
the delivery/pickup era, consumers will still lean towards brick-andmortar when it comes to buying others.
"Brick and mortar will retain a large portion, though not all, of the
perishables," he says. "I also see an accelerated shift to prepared foods,
28 * FEBRUARY 2018 * instore

Delivery/pickup is still in "test mode," Weitzel says. Walmart, for
instance, is currently testing about seven different models to see which
ones fit the company's and its customers' needs best. But that's still a big
step forward from where it was just a year ago.
"A lot of retailers were sitting on the sidelines waiting for it to become
reality," Weitzel says. "With the investments Walmart is making now,
they're realizing this thing's going to be around and they better get into it.
The two big guys (Walmart and Amazon) are going to just keep pushing it."

"There's no doubt that customers will
continue to want to, and in fact enjoy,
coming to the store to shop these
departments, but there are other
shopping occasions when it's going to
just be easier for them to do it online."
- Bill Bishop, chief architect and co-founder of Brick Meets Click

"The two big guys" and other retail giants will make a successful transition out of test mode into go mode, Weitzel says. At the other end of the
spectrum, the best boutique retailers can count on their loyal customer
bases to keep up the foot traffic in their stores, which prioritize the
instore shopping experience. It's many of the retailers in the broad
middle of the category, he says, that will struggle to figure out how to

"Most successful online grocers will use the perimeter departments to
attract customers," says David Livingston of Waukesha, WI-based DJL
Research. "Restaurants already use third parties to deliver. I've seen
delivery services bring meals to one household but each household
member got a meal from a different restaurant. Same with grocers."

It's pretty clear, Bishop says, what produced the huge bandwagon effect
in retail grocery regarding adoption of delivery/pickup last year. "Most
of what happened in the second half of 2017 can be traced to Amazon's
purchase of Whole Foods," he says. "It was a wakeup call showing that
Amazon is moving rapidly to become a physical as well as an online
retailer and could be 'right down the street' sometime soon." Looking
ahead, it's not just Amazon/Whole Foods but the "tremendous amount
of work and effort that Walmart is putting into this area" that will accelerate the growth of online even more, Bishop says.

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