Photo: Schnucks
Schnucks’ new concept store is a fresh take on the grocer’s business
Though the disruption and uncertainty of the novel coronavirus pandemic caused an uptick in the purchase of center store and frozen products that had become less of a customer focus in the years leading up to it, customers are still by and large interested in fresh options — assuming they can purchase them safely. With its new standalone concept, customers of regional grocer Schnucks will soon have a new outlet where the grocer’s fresh products will be given greater emphasis.
Schnucks Fresh will be focused on produce, meat, seafood and bakery, according to Inside Indiana Business. The first new concept store does not yet have an official open date. Schnucks Fresh is meant to carry the same fresh products customers find at other Schnucks locations.
Schnucks is not a stranger to experimenting with how it approaches its fresh and higher-end assortments. In 2017, the grocer partnered with specialty meat producer Volpi Foods to open a store-within-a-store selling the brand’s artisanal cured meats in the companies’ home state of Missouri.
While attracting shoppers to a focused product assortment in the new store could lead to cannibalization of fresh food sales in traditional Schnucks locations, other regional grocery chains have demonstrated some success with targeted rollouts of specialty concepts.
Meijer opened a small, experiential, fresh-focused concept store called Bridge Street Market in downtown Grand Rapids, MI, in 2018. The supercenter innovator announced the launch of another small concept store in Royal Oak, MI, in late 2019.
Publix has a separate organic/natural foods concept called GreenWise Market, which it launched under the name Publix GreenWise Market in 2007 (named after the grocer’s 2003-launched private label line). The banner’s footprint was restricted to three stores until 2017 when Publix announced an expansion of GreenWise Markets and, notably, the removal of the Publix name from the store’s branding to make it a more distinct entity.
Publix was operating seven total GreenWise Markets by the end of last year with plans for a continued expansion throughout 2021, according to Supermarket News.
Schnuck Markets Bringing New Grocery Concept to Jasper – Inside Indiana Business- Will miniature Meijers be a big hit – RetailWire
- Will a store-within-a-store work for deli – RetailWire
- GreenWise Market won’t name drop Publix anymore – RetailWire
- Publix to shut two GreenWise Markets in South Carolina – Supermarket News
Discussion Questions
DISCUSSION QUESTIONS: Do you see opportunities for grocers to use concepts similar to Schnucks Fresh to create unique points of differentiation in the marketplace that can lead to growth? What do efforts like this say about the relative roles of fresh products and center store categories in grocery stores?
Poll
BrainTrust
Di Di Chan
President of FutureProof Retail
Ken Lonyai
Consultant, Strategist, Tech Innovator, UX Evangelist
Center store sales were elevated in 2020 because of the pandemic which caused shoppers to stock up and shift spend from dining out to dining in. As the pandemic unwinds some of these trends will weaken. For most grocers this means that growth will come from edge of store concepts and fresh produce. Against this backdrop, opening fresh-focused concepts seems sensible – especially as the smaller footprint costs less and is more productive. There will still be a place for larger grocery stores, but retailers are right to experiment with different concepts as shopping habits shift.
Yes, shoppers gravitated to the center store in 2020. Many shoppers new to online discovered the ease and convenience. So where does that leave the physical supermarket? FRESH!
Grocery like all of retail will be heading more for experience of shopping over price competition on milk and bread. The home delivery services are here to stay and will be getting more efficient and less expensive as their models expand. Retail will soon become a more immersive environment with grocery stores offering cooking classes and unique products that are not typically going to be offered by delivery giants.
Fresh has been an effective way to differentiate and move away from the homogeneous center store. Lighting, colors, quality, and range of choices in the perishable perimeter of a traditional grocery store have always been a draw to discerning consumers. Creating a focused format around a whole range of healthy fresh choices creates a farmer’s market atmosphere for the store with all the associated upside benefits.
Absolutely! The future of grocery (and other retail) stores will offer a lot more unique lifestyle experiences for customers to enjoy. In China, Alibaba’s Hema grocery store is one of the fastest-growing stores and has gotten there by using their scan and go mobile checkout app and instant delivery services to create enough efficiencies in transforming the in-store experience. One of their main attractions is a fresh seafood bar. Goodwin’s Organic Grocery store in Riverside, California, has a health and wellness lounge area and one of the most delicious homemade smoothie bars, featuring their fresh produce, inside the grocery store. Many shoppers crave more than just transactional consumption when going shopping; there is a lot of desire and opportunity for retailers to offer a complete experience that highlights a beautiful lifestyle.
When allowed, every serious grocery executive should get on a plane and go see a Hema store. They will see the future and stop saying “it is too expensive,” “can’t be done,” “maybe in 10 years.”
There was a time when green grocers, butchers and bakers were next door to each other on the High Street selling their “specialty” products, so it seems odd that we are now calling these concept stores. They could be called history stores!
Following the pandemic, there is the trend for buying local and wanting to support the local community. Fresh produce, meat and bakery is perceived as local and a lot of consumers would welcome the opportunity to buy these products in a specialty store if the quality and freshness is very good. A lot of consumers are also worried about entering large stores now, so once again a smaller outlet would be welcome. With the massive increase of online grocery shopping, the one area where customers are still cautious is on fresh foods where they would still rather select their own, picking the best quality fruit and vegetables, seeing the meat before they buy. It makes sense that these stores would fill the gap that for products that customers do not want to have delivered. If the stores are managed well, the merchandise is fresh and they offer great quality, they could be a very attractive option for consumers wanting to supplement their online shop.
History stores! Great comment!
Good move. I strongly believe grocers need to find ways to bring people back to stores. The last 12 months may feel like supercharged growth. But the reality is overall sales stayed flat or experienced marginal increase or even declined as in the case of Kroger.
What really happened is that the volume mix has skewed significantly to e-commerce, which had a significant impact on profitability. It made it look as if every grocery store is swimming in growth. But this is far from the reality.
Grocers have to find ways to manage the mix to a profitable proportion. They need to find ways to increase e-commerce sales while NOT sacrificing overall growth.
This is definitely a worthwhile endeavor to try, even with the risk of cannibalization. As more people that have been hesitant to shop or shop in a relaxed way return to “normalized” shopping, it’s a great time to try a new concept and potentially generate consumer excitement that would have been challenging to create this past year.
We are on the verge of new store concepts, approaches, and the grocery store of the future concepts beyond the grab and go payment options. Before the pandemic, the center store was consolidating, as customers are increasingly buying commodity items via online subscriptions or other stores. Schnucks and other grocery store chains should continue to drive new and innovative offerings, especially as consumer preferences have changed,
Revitalizing profitable grocery industry growth during disruptive times requires innovative thinking. As I wrote about in a recent article, the center store assortments will continue to shrink, with approximately 40 percent moving online by 2025. Profitability and growth will also come from the differentiated, innovative perimeter and store formats driven by valuable insights from consumer baskets.
There are critical areas of opportunity to address the rapidly changing consumer behaviors and drive four-wall innovation initiatives:
The grocery business was one of the businesses that flourished during the pandemic. More people spent more time in the store. If there was ever a time to introduce a concept, this could be it. More people will see it, walk by it, experience it, etc. This concept wasn’t made up in the last few weeks. This has been looked at for years. Other food retailers have similar concepts, so the data is there to learn from.
I really like what they did with the Culinaria format from a few years back – very food-centric and a destination shop. I hope this format will become the same over time. A lot of customers have found a love for cooking at home during the pandemic and the objective now would be to keep shoppers interested in cooking at home or offering take home meals or meal solutions much like H-E-B or Wegmans.
The future of grocery stores is offering what can’t be bought effectively online. The answer is obvious, it is FRESH!
The question here, it seems, is not whether grocers should pursue “fresh” strategies, but whether they should do so as standalone stores (as opposed to departments within larger stores). I don’t think we’ll ever resolve that issue. The life cycle of theses ideas (and they’re not new) seems to be experimentation, widespread adoption, with the division often developing considerable autonomy…even a separate identity, loss of enthusiasm for segmentation as the cost of doing so is stressed, and closure or consolidation into the main brand.
I suspect we may see the same here: there’s usually a tension between (what are in effect) competing divisions in the same company, and a corresponding tendency to “develop” a concept until it’s no longer unique (“hey! produce is doing great but think how much better it would do if we added a few boxes of [whatever]..save people a trip!”).