Multi-Purpose Retail

Multi-Purpose Retail 1920 1280 Chute Gerdeman

Multi-purpose
Retail
Shopping during a pandemic has made us all reassess what is needed in our daily lives. Leaving the house for essentials is often anxiety riddled and we question every move we make. Do I have sanitizer? Is my mask on correctly? What do I need and where can I go to get it all with as few stops as possible? How busy and how clean will the store be?

The idea of the one-stop-shop is certainly not a new concept. For many, it’s their preferred way of shopping, but over the years we’ve seen consumer habits evolve and a willingness to go to multiple stores to get exactly what they’re looking for become not just acceptable but, expected. Personal preference as a driver for our shopping trips was on par with convenience, if not trumping it in certain instances. That has all changed and consumers are looking for ways to make their trips outside the home as clean, efficient, and successful as possible; while minimizing exposure and risk.

Yes, brands like Target, Walmart, and Kroger are poised to win based on the reemergence of the one-stop-shop game. However, because these big box retailers are also seen as a significant risk for exposure, it’s important for specialty retailers/restaurants to consider ideas that could maximize service and offerings to their shoppers. We believe retailers and restaurants can evolve to help relieve shopping fatigue and reduce stress even long after stores return to normal—altering their experience and offering to become essential in the long term.

With that in mind we looked at three specific opportunities for evolution as shoppers begin to return and the new reality of retail takes shape.

Re-think the Format

New format strategies were already underway before the pandemic took hold and we believe this will become even more important as we emerge from the crisis. Smaller formats and relevant stores dedicated to serve consumers in a localized manner will become more desirable.

Target, for example, announced in early March that they’ll be opening a location roughly the size of a convenience store, clocking in at a mere 6,000 square feet. This Micro-Target is currently slated to welcome the public in 2021 and appears it won’t be the only smaller store that will be added to their fleet. Although the crisis has scaled back their aggressive growth plans, they are still planning for 15-20 new small format stores in 2021 (down from 36 originally) ranging in size from 13,000 sq. ft. to 40,000 sq. ft— exploring locations as diverse as college campuses and the Las Vegas strip.

Target’s push to develop stores to offer a small and less intimidating environment, that are easy to shop, and have a locally relevant and tailored location-based assortment is incredibly smart. It’s a leading example of what we’ve seen in recent years—that smaller formats have become a preferred way of shopping and we believe even in the new reality; this will still remain.

Moving to a smaller format doesn’t always need to be in the form of a store that has a permanent brick-and-mortar address. During the lockdown, and in light of the heightened concerns around safety and social-distancing, we’ve seen the emergence of unmanned mobile stores that are focused on essentials with extra small assortments. These mobile stores are meeting the customers where they are and capitalizing on a desire for self-service until health concerns ease to some degree.

China has proven to be the source of leading illustrations of exactly this type of thinking. Alibaba, for example, teamed up with Zhongbai and in just 5 hours, built a grocery store outside of one of Wuhan’s key hospitals to address the needs of front-line healthcare workers. In its first day alone, it had over 200 customer visits.

Unity Drive Innovation, in eastern China, have autonomous, self-driving vans that deliver fresh food to checkpoint workers during the lockdown in an effort to reduce person-to-person contact. Imagine being able to pop down to the ground floor of your residential building and buy your groceries right there without having to ever leave the property. That’s exactly what Russian grocer Vkusvill has done with their supermarket vending machines in Moscow and St. Petersburg. They’re all great examples of the type of creative thinking regarding the format of your store that the new retail landscape will require.

Alter Operations

Restaurants remain one of the largest industries most impacted by government shutdowns but we’re seeing some of the most creative brands altering how they are supporting their customers and team members in the face of the crisis. We see these shifts changing not only how restaurants do business in the long-term but also becoming common place among the hospitality industry at a larger level. In fact, many restaurants are shifting to becoming convenience driven locations that allow them to stay in operation and qualify as an essential business. Illustrating the point are QSRs that are already making the change and reorganizing themselves as mini grocery stores to keep their team on staff and more effectively support the community they serve in these difficult times.

Examples are emerging like UK fast-food chain Leon, in partnership with Absolute Taset, are selling pre-packaged meals direct to the consumers through delivery or click-and-collect at one of their 65 locations. In a recent article for BBC, Founder John Vincent was quoted, “A lot of people in the industry are just giving up and shutting up shop. But we think this way we can keep 60% of our stores open and keep food production going.”

We believe brands have a huge role to address these consumer shifts, for both their team members and the community they serve. Offering healthy ready-to-eat and essential fresh offerings moving forward will allow for consumers have access to what they really need without having to go into a large retailer. Brands like Panera and Fusian Sushi are offering fresh grocery items along with their regular menu through the drive-thru, click-and-collect, or delivery. The halo these brands are seeing as a result of shifting to an essential business, aiding consumers  when they needed it most, will remain bright long after the crisis.

CONSUMER BEHAVIOR PRIOR TO THE COVID-19 CRISIS

73% of consumers shop multiple channels; 35% use 4 or more channels.

-Harvard Business Review

Be Nimble

It’s time to get creative and we believe it’s the perfect time to rethink your current operational practices, brand strategy, and service offers. If we thought retail innovation was fast before, be prepared to experience a whole new way of operating and to see brand evolution initiatives accelerating at pace we’ve not seen before. For proof look no further than past recessions and the brands who survived by leveraging the changing business climate to reimagine the possibilities for their products and services and, more importantly, to invest during a down market. Apple dominated Blackberry after the 2008 recession, after all. This approach allows brands to not simply survive, but to thrive as the economic situation recovers and consumers return looking for the products and services that best fit their new lives. Just recently Heinz launched a delivery service in the UK called Heinz to Home, allowing customers to create their own bundles of products shipped right to their door. The winners in the post COVID-19 world will see this moment as an opportunity. They’ll get creative about meeting the changing consumers’ needs and they’ll be nimble with solutions that will allow them to capitalize on the all-important first and early mover advantages.

Without a doubt, the crisis is having a severe impact across the retail and food service industries with crushing news coming in on a daily basis. We realize that not ever brand will be in a position to invest or have the luxury to rethink, but even for those retailers and restaurants where the situation looks challenging, we believe, that now is the time to be brave. To invest in any way you can to help evolve your business. It’s time to get as creative as possible to meet changing consumer needs and position your brand for maximum success as we emerge from this crisis and tackle a new day.

Be brave. Be bold. And by all means, be well.

More from the Preparing for Next series

Expand the Brand

For in-person, IRL experiences to return to their former glory, it’s going to take more than just opening the doors and flipping on the lights. New and unique experiences that encourage social engagement, will be crucial for increasing store visits.

HOW WE THINK SETS US APART

A collection of insights research and observations across retail, restaurant, c-store and grocery. Helping brands provide a better experience for their customers. Enjoy.

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CHUTE GERDEMAN
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