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11.18.2009

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Ecology of Food Retailing

Maybe it's the heightened emphasis on all things trend worthy. Then again, maybe it's all the talk about the economic recession and how consumers are changing their shopping and eating behaviors. Or, it could just be that mainstream grocery retailers are struggling to maintain “relevancy” with a constantly changing, ever-evolving consumer. What does all this mean for food shopping in the future?

The short answer, which can already be found in many leading-edge marketplaces of today, is that food shopping in the future will center on a constantly evolving collection of more specialized retailers, something we prefer to refer to as an ecology of food retailing.

We define "ecology of food retailing" as the sum total of retail access points where food and beverages are acquired for the household. Whereas the ecology of food retailing in the 1960s consisted largely of traditional grocery stores (with perhaps a smattering of local eateries), today's ecology looks markedly more diverse. Here we find food retailers of all shapes, sizes and formats, a seemingly unending variety of restaurants and meals-to-go options, coffee shops, farmers' markets, community supported agriculture programs, local food cooperatives, airports, school cafeterias, and so forth. Oh, and do not forget that many leading grocery stores (e.g., Central Market and Wegmans) now operate full-size food courts at a quality level that would put those of most suburban malls to shame. Indeed, our ecosystem is a most robust and diverse one.

The allusion to population biology - with its notions of evolution and ecology - is not accidental. For we believe the existing evidence around us already points to a diversity of grocery retailing formats whose shape and character have been sculpted as much by consumer-led innovations (e.g., the explosive growth in farmers' markets) as they have the management decisions of large grocery retailers. And as consumer behavior evolves in lock-step with larger developments in food culture - which affects how, when, where and with whom we eat as well as what we eat - we suspect that consumers will come to play an even stronger role in shaping the evolutionary trajectory of food retailing in the future.

So what does an ecology of grocery retailing look like in the near future? Head to any leading-edge city, and you're already likely to find consumers patronizing many - if not all - of the following formats:

Small-format retailers offering high-quality packaged foods with a strong focus on private label (Trader Joe's)
Medium- to large-format retailers offering high-quality foods in prepared, fresh and perimeter categories (Central Market, Wegmans, Whole Foods Market)
Small- to medium-format specialty retailers (local and regional) offering the highest quality specialty foods with an equally strong emphasis on key perimeter categories, as well as a strong emphasis on neighborhoods and all things local (Southern Seasons, Fresh Market)
Local farmers' markets offering seasonal produce (of course), as well as an increasing selection of local dairy products, local meat products and artisanal products.
Large-format mass and club stores offering a wide selection of household goods, health and beauty aids, as well as more traditional pantry staples (Costco, Wal-Mart, Sam's).
An increasing diversity of small, specialty retailers focusing on a very specific category of the food or beverage worlds (tea shops, wine shops, cheese shops, spice shops, charcuterie counter, the revival of local butchers, etc.).
A variety of as of yet unknown retail formats that will arise to meet the evolving needs of ever-more demanding food consumers whose interests are cultivated and entertained within a broader food culture.

In as much as we are speaking about the present, we would, of course, be remiss if we didn't include traditional mainstream grocers on this list. But to the extent that clients are asking about what grocery retailing will look like in the future, we do not think it too much a stretch to suggest that such retailers will rapidly disappear from the ecosystem. In every sector of our world, consumers are redefining their notions of quality to meet ever-more exacting standards and needs, and food is already proving no exception to this trend.

On the bright side, such evolving needs for quality food experiences prove an opportunity for retailers willing to make bold moves and stake out clearly delineated positions in the marketplace of the future. On the other hand, those whose position has always been to court the mass-market by trying to be all things to all people had better come up with a different strategy, lest they find themselves going the way of the, well, dinosaur.

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