“Retailers today have a lot on their plate. They may not have the time or the knowledge to run a pilot that uses specific standards and formalized testing. But if you really want to understand the performance of an innovation, you need a strategic pilot process from the outset,” says John Cloe, CEO at ProductivityONE, a consultancy firm specializing in retail optimization.

In the following, we’ll explore what that process should look like by:

1. Addressing crucial considerations for launching a preliminary pilot.
2. Explaining how to effectively broaden that pilot, with an emphasis on the store selection process.

(Note: For helpful insights on getting an innovation to the pilot stage, check out 4 Questions to Determine if Your Retail Innovation Is Pilot-Ready.)

Stage 1: Launch Your Pilot with a Questioning Mind 

For the initial pilot stage, you’re understandably not yet prepared to begin formalized testing or a full trial. Before you can reach that point, Cloe says your focus should be on achieving the following:

1. Reaching stakeholder consensus on the guidelines for implementing the innovation
2. Establishing a thorough how-to process for conducting the pilot itself 

Let’s consider the key steps to accomplishing these preliminary goals. 

1. Answering the Unknowns Through a Discovery Process

You initiate the pilot with the knowledge you currently have, which will be based largely on your research in the run up to the pilot’s approval.

Meanwhile, you need to be conducting a discovery process, says Cloe. “You’re going into this with identified unknowns that you want answered, and you’re staying alert to anything that you haven’t accounted for yet.”

Although questions will vary in relation to your specific innovation, here are some important examples:

• Have you identified all the SKUs and/or mechanical components needed?
• Can everything feasibly be delivered and installed in stores?
• What are your contingency plans should any step in the process be interrupted?
• Will there be new demands put on store associates and customers?
• Will the innovation displace existing store products, fixtures, and equipment?

You also want to continue this discovery process by gathering info in the following areas.

2. Defining the Win by Establishing Stakeholders’ Preferred Metrics

You need to establish the metrics that will prove if the innovation is indeed a win. Stakeholders have likely provided a degree of input on this already. Now, you want to verify that you’re including all the metrics they expect to see. You also then need to formulate the methodology for data collection.

When it comes to establishing the pilot’s metrics, Cloe emphasizes the importance of being thorough. “The last thing you want is to have a stakeholder later ask why you didn’t measure this or that factor. In a worst-case scenario, that can actually hold up a pilot’s progress.”

3. Formulating a Solid Framework for Measures and Practices 

The initial pilot involves installing and implementing the actual innovation in only a select number of stores. The full complement of pilot stores won’t be finalized until you expand your pilot in the next stage (discussed below).

For now, you’re focusing on formulating a framework for measures and practices, and establishing best practices in relation to needed time, resources, and equipment.

4. Demonstrating the Innovation in a Real Store Environment

Before you get too far into the pilot process, you’ll want to demonstrate the actual in-store innovation to key stakeholders. Flagship or showcase stores can work well for this. They’re typically located near corporate offices, which means they can be visited conveniently by upper management and others.

Note that Cloe cautions against using stores like these for formal testing because they usually have store events and other innovations continually running. “That creates a lot of competing customer traffic drivers,” he explains, “which prevent you from reliably quantifying data on your specific innovation.”

5. Removing the Guesswork with a Detailed Timeline 

Once critical information like the above has been gathered, it’s time to generate a timeline of scheduled events for the overall pilot.

An effective schedule takes away the guesswork, prevents unwanted surprises, and helps ensure everyone involved knows what their expected responsibilities are AND understands when they’re expected to execute them.

Additional timeline considerations from Cloe include the following:

Is it calendar-sensitive? If your innovation pilot is calendarized in relation to, for example, varied expectations through seasons and/or holidays, then this will likely stretch the duration for testing.

Does it directly involve a consumer packaged good (CPG)? If the innovation has a direct effect on a specific CPG, it could require a longer timeframe because of the timing of item promotions or, similarly, the peak of demand in relation to the time of year.

Is the innovation more equipment-oriented? If the pilot involves testing new equipment or fixtures, the timeline could be shorter, so long as you have a range of volume activity. That can be accomplished at various times of the year just by looking at days of the week.

Stage 2. Lay the Foundation for a Successful Broader Pilot

How will you know you’re ready to move from the pilot’s preliminary stage to a broader version for formalized testing?

Cloe says once you’re confident that you’ve incorporated insights from the discovery process (see above), you can then formalize the complete game plan for implementing the innovation and executing the pilot.

Important elements you want to confirm in order to broaden the pilot include the following:

• All the innovation’s necessary products and/or parts can be delivered.
• The in-store implementation of the innovation is feasible.
• Contingency plans have been put in place for potential problems.
• The visual reviews from executives and other stakeholders align with their expectations.
• Reaction from other key parties such as associates and shoppers is generally positive.
• All metrics and testing methods are in place.

In addition, you’ll need to finalize the stores to include. For your broader pilot to yield data that’s reliable and valuable, this critical component must be done effectively. Let’s take a closer look at the two major elements for this.

1. Calculating Just How Big Your Store Sample Size Should Be

Although numerous criteria need to go into answering this question, Cloe notes there are some rules of thumb he’s derived from decades of store pilot consulting. Here are some examples: 

• Innovations that are SKU-specific and/or are intended to influence a direct purchase generally require a higher number of test stores.
  
• The more intense the competitive landscape is for the retailer, the larger the sample size should be.
  
• On the other hand, if the pilot is testing the durability or labor impact of a specific fixture or other device, typically fewer stores are necessary.
  
• Similarly, if timed studies are the primary metric, such as for innovations in policy procedures or operational changes, fewer stores may be adequate.

“A sample size can be underdone, and I suppose in practice it can be overdone. But you can’t really overdo it because the larger the sample size the better,” says Cloe.

That said, he adds that a “carefully filtered” (see below) sample of 5 to 10 stores can still yield valuable results, regardless of an organization’s size. That’s especially true if the pilot is measuring an innovation’s impact on, for example, an entire department product category rather than on a specific product SKU.

2. Selecting Stores by Using Reasoned Criteria 

A careful, thorough store selection process is crucial for an effective pilot expansion. “You don’t want to select stores randomly, nor do you want to lean on piloting in stores that are, say, more conveniently located to the retailer or the innovation suppliers.”

So what should be used to drive your store selection process? Here are two major factors to consider:

Ruling out stores with red flags. You’ve already designated your metrics at this point. However, the data they provide will be less reliable if you’re running your pilots in stores that are not, in Cloe’s words, “clean and free of various data noise.”

The following is just a sampling of possible factors that could exclude a store from a pilot: 

• It’s new or recently remodeled, so year-over-year data is either unavailable or unreliable.
• Another recent innovation is still creating an uptick in customer traffic.
• It’s adjacent to new development that is likely increasing foot traffic.
• It’s near recent major road construction, which could have driven customers away.
• It’s in an area experiencing an economic downturn.
• A competitor’s recently built store is influencing your store’s current customer counts.

Getting an apples to apples comparison for test and control. A pilot may analyze how an innovation affects, for example, customer demographics, general customer traffic, and/or operational costs. In addition, depending on the retailer and the nature of the innovation, a pilot could differentiate performance in, say, rural, suburban, and urban stores.

But to acquire helpful information on these and myriad other potential data points, you also need control stores. These are stores which don’t have the innovation and therefore are used for statistical comparison. They also need to be selected with the utmost care.

Ideally, you want the test and control stores to offset one another, which prevents skewed data. “That’s why you’re trying to get an apples to apples comparison between your test stores and your control stores,” says Cloe.

For example, if a pilot store offers fuel and pharmacy, you want the control store to have those same offerings because those are significant customer traffic drivers. Cloe says, “There are literally dozens of considerations to make like that” as you select your test and control stores.

Leverage Outside Expertise for Success

You’ve just gotten some helpful insights on conducting an effective pilot. But we’ve only scratched the surface. In fact, depending on the scope and importance of your pilot, you may require expertise outside of your internal team. That’s why support from retail optimization experts like John Cloe can certainly help.

Of course, developing innovations to pilot in the first place isn’t easy. Don’t underestimate the importance of the right vendors. The most effective do more than just provide a product; they take the time to understand your current challenges and partner with you on your path to innovative solutions.

Marmon Retail Solutions and its family of retail-focused brands can help. We provide integrated retail products and services that enable your innovations to be more strategic, more cost-effective, and ultimately more successful.

Learn more about how these retail solutions can work for you.

The post The Right Way to Pilot Your Retail Innovation, Right from the Start appeared first on Marmon Retail Solutions.

“There’s both a science and an art to prioritizing your concepts,” says John Cloe, CEO at ProductivityONE, a consultancy firm specializing in retail optimization. The key is to put yourself in the shoes of key stakeholders. Does your innovation have what it takes to get a greenlight from them?

To answer that, we’ll explore four critical questions that can help you identify your most pilot-ready innovations.

1. Does your pilot have a strong why?

Before your concept is ready for piloting, you need to have a solid grasp of what’s driving the need for the innovation in the first place because that will affect how you go to market with it. 

According to Cloe, the reason for an innovation typically falls into one of these two categories: 

1. It will help you get caught up to your competition.

2. It will help you differentiate and distance yourself from the competition.

In turn, the innovation will likely have either a customer-oriented purpose or an efficiency-oriented purpose focused on reducing spending while improving store performance. 

Cloe says when you’re confident you can effectively express the overall why behind a given innovation in terms of factors like the above, then it becomes a more viable option to push to the pilot stage.

2. Are you jumping the gun?

An innovation you’re proposing to pilot should already have some degree of buy-in at the C-suite-level. That means you may need to balance your enthusiasm for a given concept with practical and political realities.

“The concepts that already have C-suite buy-in are the low-hanging fruit when it comes to pilots,” Cloe says. “You may be passionate about some other innovation, but if it’s not even on the radar of upper level management, then pushing for a pilot is jumping the gun.”

Keeping this in mind will help you prioritize concepts more strategically. That can ultimately help you choose smarter and enable an innovation’s positive impact to be felt sooner.

3. Can you show “the juice is worth the squeeze?”

An innovation moves to the pilot stage so you can more accurately project its effectiveness. That said, you still need to meet a certain level of pre-pilot legitimacy by running the innovation through a proof of concept process and possibly some type of beta testing.

Cloe says those preliminary steps are what will help make your initial financial projections more meaningful and believable. “Buyers and executives are really trying to understand if the juice is worth the squeeze. You want to be sure that you’re clearly telling them what they want to know: How much is it going to make us, and how quickly will that happen?”

You also want to clarify the nature of the payoff. Is it a hard return? Is it going to drop money on the table right away? Or, is it a soft return that’s really more about gaining operational efficiencies than, say, increasing customer counts?

Cloe adds that the size of the prize doesn’t have to be considered huge. “If you can show that the innovation’s risk is relatively low, that the reward seems likely, and it’s for an area where you’ve been struggling, then you have a convincing case that a pilot is the next logical step.”

4. Can the innovation overcome the hurdles?

If you think you have a winning concept that should be moved to the pilot stage, then you’re confident you can prove its value. But you also need to consider how key stakeholders perceive the innovation’s actual implementation.

Innovating stores is an irregular event that requires reallocating or displacing time, resources, and, possibly, physical space. “In some cases,” says Cloe, “those factors can be seen as such a huge hurdle that it prevents key stakeholders from visualizing the end result.”

In fact, he adds that he’s seen his share of innovation concepts wither on the vine because of this. “If the sentiment from above is, ‘We just don’t think we can make it happen,’ then it probably means they’re willing to live with the status quo for the foreseeable future rather than take on the innovation’s risks.”

In situations like these, Cloe says it’s best to reprioritize your options and keep moving ahead with other possibilities.

Don’t Forget This Quintessential Factor for Innovating

Higher retail prices, a tight labor market, and fierce competition are making it crucial for retailers to innovate their stores strategically. You’ve just seen some key insights from retail optimization expert John Cloe to help you evaluate whether an innovation is pilot-ready.

But another important factor that can help you innovate more effectively is the quality of the vendors you work with. Ask yourself: Do they go on site to better understand your unique store challenges? Do they bring helpful expertise and industry connections that go beyond the product itself? Are they interested in a partnership for your long-term success?

If you’d like to gain an edge as you consider store innovations, Marmon Retail Solutions and its family of retail-focused brands can help. We provide integrated retail products and services that enable your innovations to be more strategic, more cost-effective, and ultimately more successful.

Learn more about how these retail solutions can work for you.

The post 4 Questions to Determine if Your Retail Innovation Is Pilot-Ready appeared first on Marmon Retail Solutions.

In the following, we’ll explain what’s driving the center store’s evolution with the help of retail consultant Jack O’Leary, head of consulting, North America, for the commerce consulting firm Flywheel Digital. We’ll also discuss center store shopping trends and real-world innovations.

In this video, get a helpful overview of center store shopping trends from retail consultant Jack O’Leary, part of our What’s in Store series.

The Role of E-Commerce in the Store Layout’s Evolution 

Brick-and-mortar retailers are well aware of e-commerce’s rapid growth rate. But it’s also important to understand that this growth is actually affecting future store layouts.

For instance, based on research conducted by Flywheel, O’Leary says more and more large-format grocery stores in Western markets are shifting their space allocation. A major example of this can be seen with expanding space allocation trends in the store perimeter.

With its perishable food essentials, this store section is gaining new prominence—and more square footage—because it offers items and experiences “that can’t be easily replicated or sold online,” explains O’Leary.

On the other hand, as the following graphic illustrates, Flywheel expects center store space allocation to shrink. One major reason is the shift in shopper behavior. As O’Leary explains, “utilitarian shopper needs for this part of the store are going down” because many items traditionally found in the center store can be conveniently purchased online.

Here are more specific predictions from the Flywheel team on how the sales floor may change over the next five to ten years:

• 30% less space to center store merchandising
• 20% less space to the checkout area
• 25% more space to online fulfillment area
• 15% more space to perimeter products and experiences
• 5% more space to non-retail offerings

Reimagining the Center Store

O’Leary clarifies that there are still plenty of classic center store product categories with in-store purchasing volumes that far exceed online shopping. A few examples include pet food, baby food, and household cleaning products.

He adds that these and other still-robust center store categories should provide impetus for retailers to “defend” the center store. One way to do that is by reimagining this store section as a place to promote shopper engagement and meet the increasing need for what he calls “experiential shopping.”

This means having a center store that, for example, educates shoppers about products and/or presents items in ways that surprise and delight them.

Let’s take a look at some actual innovations that O’Leary says are impacting the center store shopping experience.

Next-Gen Center Store Innovations

Encouraging shopper engagement. More retailers are making an effort for center store aisles to become a place for customers to dive deeper and experience product categories in a more meaningful way.

Walmart’s new store concept “Time Well Spent” exemplifies this. The initiative includes design principles that encourage shopper dwell time and engagement via digital touch points like QR codes and screens. These enable customers to learn about product features and options, as well as place orders for home delivery.

Other features include curated product selections, activated corner areas that invite customers to become part of the space, and a next-level store-within-a-store (more on those below).

Helping shopper navigation. Retailers are also leveraging digital technology to help shoppers more easily locate products in the center store.

A perfect example is List & Go, an augmented reality navigation app offered by UK-based Marks & Spencer. The app lets customers enter their shopping list and follow an on-screen navigation path to locate items more efficiently.

Offering A More Formalized Store-Within-a-Store. Expect an increase in more formalized store-within-a-store sales floor spaces.

For instance, in Europe the beauty company Edeka is trialing a new “Beautybox” store-within-a-store concept with Budni, one of Germany’s largest drugstore chains. Highlights of the initiative include the use of separate flooring and lighting to create a completely different retail experience from the rest of the store.

What (and Who) to Watch on the Horizon

Given the potential for center store compression and store layout reorganization, O’Leary says to keep a close eye on the retailers that are maximizing the productivity of their square footage.

Regional grocers in particular are often more productive on a per-store and per-square-foot basis. For example, according to Flywheel data, the U.S. supermarket average for annual sales per store is around $9.2 million.

Now compare that with regional supermarket powerhouses like Price Chopper at $27 million, Hannaford at $45 million, WinCo Foods at $67 million, and HEB at $82 million.

“Some of the regional players have really figured out and cracked this, at least for grocery center store experience,” says O’Leary, “and are driving great productivity to these locations relative to the channel average. And so they’re a good one to watch.”

Summarizing the Center Store’s Future Potential

So what should be the key takeaways when we think about the center store’s evolution? O’Leary says the transformation of the center store will likely revolve around retailer efforts to engage, educate, and entertain shoppers.

In addition, he says to look for retailers to experiment more with center store initiatives that involve collaborating with brands in innovative ways.

Learn more about how these retail solutions can work for you.

The post Center Store Shopping Trends for 2024 and Beyond appeared first on Marmon Retail Solutions.

Bob Johnson, Sr. Commercial Vice President, Retail Space Solutions, says grocery retailers are urgently looking for innovations to alleviate staff shortage issues. “Ideally, your innovations should help associates be more efficient and, in the process, make their jobs more satisfying.”

And if those innovations also create a better customer experience, that makes them doubly valuable. “A happier shopper not only buys more but will likely keep coming to you rather than the store down the street,” says Johnson.

Let’s take a close look at three store innovations with the dual power to benefit associates and customers.

1. Pusher Tray Systems

The customer need for items on the grocery store perimeter has long been considered a crucial factor for getting people deeper into the store and increasing sales. And that need won’t disappear any time soon, even with the rise of online shopping.

Pusher trays help improve the performance of a store’s perimeter. They typically hang either on a grid or bar at the back of a cooler case and play a critical role in keeping perishable items — e.g., cheese, bagged salads, pre-packaged meat — front-faced and conditioned.

But by doing that, pusher trays also serve the kind of double duty that retailers should be looking for in an innovation.

How They Improve the Associate Experience

Minimize manual front-facing. Because pusher trays automatically front-face items as well as keep them in neat rows, they greatly reduce associate labor time.

Retail Space Solutions’ Bob Johnson says, “I’ve had grocery store employees tell me that their front-facing tasks went from 60 to 90 minutes a day down to just a few minutes because of pusher trays.”

Create restocking advantages. With all that time saved, associates can jump right to the critical task of restocking. And the bonus here is just how simple it is for associates to pull the trays out and reload them quickly—saving even more time.

Improve morale. Benefits like the above help your associates feel less rushed in completing their tasks. In turn, they can take more interest in keeping up the orderly, attractive appearance of their departments (which pusher trays help them do). Plus, they may find their jobs more fulfilling because they’re more available to interact with—and serve—customers.

How They Improve the Customer Experience

Find items quickly. Pusher trays help create an appealing, well-stocked, and highly visible product presentation, which also makes it easier for shoppers to spot what they’re looking for.

“People are busier today and often want to be in and out of a store as fast as possible. The way pusher trays function can help them do that,” says Johnson. (Be sure to read How Retail Pusher Trays Lower Operating Costs AND Increase Customer Basket Size for related info.)

Access items easily. Thanks to pusher trays’ automatic front-facing capabilities, the products themselves are convenient to access, preventing deep reaches or awkward grabbing.

Have more options. The design of pusher trays enables more efficient use of cooler space compared to OEM shelves, and that creates room for more product facings and more product options for customers (as well as a potential boost in sales).

2. Picking Carts

For your increasingly important click and collect services, picking carts are designed to counter the inefficiencies of store associates picking items using shopping carts. But according to Joe Rother, Director of Sales for Cannon Equipment, they do more than that.

“When picking carts help you do click and collect better than your competition, it creates a positive ripple effect that reaches well beyond reducing labor costs.” Let’s consider how that ripple effect touches your associates and your customers.

How They Improve the Associate Experience

Pick faster. Picking carts enable associates to pick multiple orders at once, helping them complete each order more efficiently. (For more details on click and effect, check out 4 Ways to Increase Click and Collect Efficiency AND Profitability.)

Pick more accurately. With the help of insertable totes, the carts help associates keep orders separate and thereby prevent unintentional order mixing.

Pick with more focus. These carts can hold everything an associate needs while picking. That means fewer pauses and more focused picking.

Maneuver more easily. The light weight and zero-turn radius of the carts help associates move easily through aisles, around shoppers, and in the back room.

Have a better work experience. This innovation helps associates perform better and can generate enthusiasm for continually improving their picking times and error rates.

How They Improve the Customer Experience

Pick up orders sooner. Faster picking can lead to orders available sooner for pickup, an important factor considering the rising demand for faster turnaround times.

Have fewer order problems. When you factor in the reduced error rate, you’re not only helping to retain satisfied customers—you’re making it more likely they’ll sing your praises to others.

Enjoy more available associates. The time and labor saved can allow you to have more associates on the floor restocking shelves and being available to serve in-store customers.

3. High-Quality Bulk Food Dispensers

More and more shoppers place a priority on being better stewards of the environment. Consider a recent customer survey on grocery store sustainability conducted by Kroger analytics subsidiary 84.51°, which revealed the highest response rates with the following:

• Consumers concerned with limiting food waste (45%)
• Consumers seeking reusable packaging (34%)
• Consumers concerned with overall sustainability when shopping (29%)
• Consumers focused on reducing plastic purchases (29%)

Bulk food sections with exceptionally performing bulk food dispensers can be an effective way to attract and retain green-minded customers AND employees.

How They Improve the Associate Experience

Feel confident and motivated. When your associates have clear, dishwashable bulk bins that are also haze-, scratch-, and stain-resistant, you’re giving them the best equipment to work with.

Enjoy a more meaningful job. Green-minded associates in particular can feel proud about maintaining an exceptional bulk foods section.

Play a key role in store success. Associates can take pride in maintaining a bountiful, alluring store section, which also leads to more sales.

How They Improve the Customer Experience

Reduce package waste. Customers can replenish items in reusable containers or, at the very least, buy food using considerably less packaging (such as recyclable paper bags).

Buy in self-selecting quantities. When customers can purchase just the amount they want, they can prevent food waste, experiment more freely, and save on food costs (more on that below).

Save money. Shoppers can generally spend 15% to 25% less on bulk food vs. packaged equivalents. 

Enjoy a fun, farmers market-like experience. A gorgeous bulk foods section is a visual feast of colors, ingredients, and staples—and has no online shopping equivalent. (For related info, be sure to check out Bulk Foods Department 2.0: Tips to Increase Sales and Attract a New Generation of Shoppers.)

Don’t Forget This Quintessential Factor for Innovating Successfully

With tough competition and serious labor challenges, you want your innovation investments to truly make a difference to both your associates and your customers. You’ve just seen a sampling of store innovations that can do that.

But another important factor in helping you innovate effectively is the quality of the vendors you work with.

Ask yourself: Do they go on site to better understand your unique store challenges? Do they bring helpful expertise and industry connections that go beyond the product itself? Are they interested in a partnership for your long-term success?

If you’d like to gain an edge as you consider new equipment and store innovations, Marmon Retail Solutions and its family of retail-focused brands can help. We provide integrated retail products and services that enable your innovations to be more strategic, more cost-effective, and ultimately more successful.

Learn more about how these retail solutions can work for you.

The post 3 Retail Innovations That Your Associates AND Customers Will Love appeared first on Marmon Retail Solutions.

With the help of retail consultant Jack O’Leary, Head of Advisory, North America, for Edge by Ascential, we’ll look at the encouraging state of brick-and-mortar retail and explore how the omnichannel shopper is driving the next generation of store formats.

The Key Strategies for Brick-and-Mortar’s Success

Because omnichannel shoppers move fluidly between online and offline shopping, it’s imperative that the physical store evolves to create compelling reasons for in-store shopping.

At the same time, the physical store must also reflect the realities of e-commerce—and ideally help facilitate online shopping when possible.

It’s a challenging dynamic, but, according to O’Leary, there is a way forward in which brick-and-mortar can flourish: store formats that not only bridge the divide between online and offline shopping but also make the in-store shopping experience indispensable for a significant number of consumers.

See retail consultant Jack O’Leary describe the next generation of retail store formats, part of our What’s in Store video series.

E-Commerce and Store-Based Growth Rates are Converging

Before we look at the next generation of in-store formats, let’s step back to consider the numbers on both online and in-store retail sales.

We’ve all grown accustomed to e-commerce’s rapid growth rates. For more than a decade, there’s been a double-digit differential between the year-over-year (YoY) sales growth of e-commerce and store-based retail.

In fact, in the pandemic year of 2020, e-commerce’s YoY growth rate reached its zenith, 42.7%, while the store-based growth rate sank to negative 0.2%.

But that gap has narrowed dramatically, and the store-based channel is now growing nearly as fast as e-commerce. “We’ve actually seen the channels converge as we’ve emerged from the pandemic period, where e-commerce saw explosive growth,” says O’Leary.

For example, in 2022, e-commerce retail sales grew at a 7.1% YoY rate. Meanwhile, store-based retail sales grew at a robust YoY rate of 5.3%. See the graph above for more details.

Keeping the Numbers in Perspective: Store-Based Sales Still Rule

As we note the intriguing developments in retail sales, it’s important to clarify that brick-and-mortar still reigns supreme.

In 2023, for example, the share of sales coming from store-based retailing in North America is at 76% compared to 24% for e-commerce sales.

Also, though store-based retail growth did take a hit during the pandemic, there are numerous examples today indicating that store network expansions will be a key growth strategy in the years to come.

O’Leary points to various retailers that are renewing efforts to expand their physical store networks—from Aldi and Dollar General to Sam’s Club and even Amazon.

More Spending, More Digital Integration: A Profile of the Omnichannel Shopper

As retailers expand with new stores, O’Leary says it’s an opportunity for them to implement new store formats that more effectively cater to the omnichannel shopper. And considering numbers like the following, it’s not hard to understand why that’s important:

• 87% of shoppers begin product searches on digital channels even if they purchase in store
• 71% of shoppers use mobile devices in store for product research
• 1 in 3 in-store purchases start online

Moreover, omnichannel shoppers often mean higher sales volumes. For instance, compared to its online-only shoppers, Target reports that its omnichannel shoppers spend four times as much.

Similarly, France-based Carrefour says that over a 24-month period, the spend per customer for omnichannel shoppers was 27% higher than offline-only shoppers.

Look for More Digitally Integrated Customer Journeys to Emerge

The conventional in-store experience has been “fairly analog with not many options for engagement or activity or data capture for retailers,” says O’Leary.

But given the fast-evolving digital behavior of today’s shopper, brick-and-mortar retailers need to respond accordingly. O’Leary explains that the next generation of store formats will “have a lot of opportunities to connect and interact with shoppers digitally” through methods such as these:

• Connected screens 
• Retail media 
• Mobile devices 
• Loyalty programs 
• Online purchase and home delivery
• Click and collect 
• Personalized follow-ups via digital channels 

High Stakes for Differentiating the In-Store Experience

With online shopping’s unparalleled convenience, the stakes are high to differentiate in-store shopping in ways that give the brick-and-mortar shopper a superior experience.

That online convenience factor is a powerful one, but O’Leary says it also underscores just how “very utilitarian” online shopping can be. “Most [online] shoppers have high intent. They know what they want. They go to one of the large e-commerce platforms, find their item, read reviews, and purchase it.”

But omnichannel shoppers are more open to the in-store experience, especially if they continue to have compelling reasons to go. For physical store formats to continue drawing customers, O’Leary says they will need to exhibit key features like the following:

Curated assortments. Curation in this sense means giving shoppers the chance to delight in discovering in-store items that aren’t necessarily available online.

Experiential environments. In-store shopping has the potential to create more meaningful   impressions and experiences. Experiential store environments leverage this factor by creating positive shopper experiences that can’t be replicated with online shopping. (See Designing a Retail Store: 2 Methods to Shake-Up (and Improve) the In-Store Shopping Experience for related information.)

Social engagement opportunities. This includes incorporating comfortable and inviting areas like cafes and food service sections, for example, which encourage more social engagement.

More Brick-and-Mortar Stores Will Become Logistics Assets

As store networks expand, there’s another important factor to consider beyond the evolving in-store experience: the physical store’s growing significance in fulfillment logistics.

Home delivery, click and collect with curbside pickup, online purchase with in-store pickup—the omnichannel shopper wants these options. But offering them comes with inherent logistical complexities.

That’s precisely why the brick-and-mortar store will play a growing role in “having inventory proximately located to consumers,” says O’Leary. This applies both to in-store picking from aisles and back-of-store micro-fullfillment centers.

Summarizing the Successful Store Formats of the Future 

O’Leary says that the most successful store formats will continue to improve the frictionless shopping experience, both in store and online. At the same time, they will push into new frontiers for what it means to shop in-store, thereby creating powerful incentives for the omnichannel shopper to maintain interest in the physical shopping experience.

On the operational side, retailers will continue to seek format improvements in fulfillment for the omnichannel shopper—while also maintaining a relentless focus on finding more efficiencies.

By implementing strategies like these, O’Leary says physical stores will “continue to be successful in comparison to pure-play online e-commerce,” adding that “these will be the store formats of the future that we all shop in.”

Learn more about how these retail solutions can work for you.

The post What’s Driving the Next Generation of Retail Store Formats? appeared first on Marmon Retail Solutions.

Find out below why—and how—grocery store perimeters around the world are evolving. Check out these helpful insights and real-world examples from retail consultant Jack O’Leary, Head of Advisory, North America, for Edge by Ascential.

The Effects of E-Commerce on In-Store Grocery Shopping

For perspective on global trends in the grocery store perimeter, it’s helpful to first consider the bigger picture.

Based on data from Edge by Ascential, O’Leary says global e-commerce sales for the edible grocery category will increase at a 9.7% compound annual growth rate (CAGR) for 2022 to 2027. Meanwhile, projections for store-based sales indicate a CAGR of 3.5%.

As the graphic illustrates, brick-and-mortar sales still make up the vast majority of this category. That said, O’Leary points out that e-commerce is definitely “disrupting grocery selling around the world.”

It’s also shaping the way grocery stores are being designed, including the perimeter. Let’s take a closer look.

A Shrinking Center and an Expanding Perimeter

Based on a variety of sources, including input from retail leaders and information derived from store opening floor plans, O’Leary says, “We believe that in most Western markets, big box grocery stores are going to shift their space allocation in certain ways.”

A major example is in the store perimeter, which is gaining new prominence—and more square footage—because it offers items and experiences “that can’t be easily replicated or sold online,” explains O’Leary. (See below for examples.)

Meanwhile, e-commerce shoppers are buying more and more of the shelf-stable products traditionally found in grocery store center aisles. O’Leary says, “What that means is the center store is being somewhat hollowed out by e-commerce order trends.”

Here are more specific predictions from the Edge by Ascential team on how the sales floor of grocery stores may change over the next five to ten years:

• 30% less space to center store merchandising
• 20% less space to the checkout area
• 25% more space to online fulfillment area
• 15% more space to perimeter products and experiences
• 5% more space to non-retail offerings

3 Perimeter Trends to Watch

With that shrinking center store comes a new wave of perimeter trends. O’Leary highlights three in particular:

1. New Technology is Enhancing the Perimeter Shopping Experience 

Weighing produce. Look for a new generation of tech to make produce shopping more convenient. For example, with the help of AI-powered weighing systems, the Australia-based grocery chain Cole’s is offering perimeter shoppers improved speed of service for unpackaged produce.

Cole’s is offering perimeter shoppers improved speed of service for unpackaged produce.

• Recognizes the type of produce
• Weighs the produce
• Automatically prints a label for the shopper

Next-level checkoutless shopping. The quest for shopper speed and convenience via technology can also be seen at the checkout—or rather in the absence of the checkout.

According to O’Leary, Germany’s second largest food retailer, Rewe, has opened a fully autonomous large-square-footage store.

“The shopper will be able to enter the store, select their items, and just walk out. No queuing at checkout,” he says.

A development like this is relevant to the store perimeter in an important way. Fresh produce in particular, as O’Leary explains, has “traditionally been the hardest to enable for checkoutless solutions” because it typically is unpackaged and has to be weighed.

But he says that the technology has now advanced enough to handle both packaged items and the unpackaged items commonly found in the perimeter.

2. Grab-and-Go Meal Solutions Growing In Importance

As time-crunched consumers look for faster eat-at-home solutions, grocers around the world are responding accordingly with more offerings on their store perimeters.

A good example is Spain’s largest grocer, Mercadona, which is expanding their grab-and-go meal section in a number of stores. O’Leary says Mercadona’s goal is to eventually bring these expanded offerings to the entire store network.

Similarly, in the Netherlands, Albert Hein is launching a new store concept focused on fresh meals. Following suit with trends in space allocation, O’Leary says Albert Hein will devote more area to the perimeter for fresh food merchandising like sliced vegetables and baked goods.

3. Health, Wellness, and Sustainability Features Being Added

Grocers are also incorporating what O’Leary describes as “experiential merchandising” in their store perimeter designs, reflecting growing consumer interest in areas like health, wellness, and environmentalism.

Ahold Delhaize, for instance, has a new Stop & Shop location located in Massachusetts with a section entirely focused on community health and wellbeing, including Guiding Stars nutritional information and health assessment kiosks.

And in the UK, Morrisons is building what could be considered the ultimate environmentally focused brick-and-mortar grocery store.

The perimeter includes an expanded selection of package-free foods, and the overall store implements numerous sustainability-focused features such as solar panels, rainwater harvesting, and a recycle center for customers’ waste.

Keep Your Eye on the Evolving Perimeter

The perimeter trends we’ve covered demonstrate the abiding need for retail solutions that change with shopper preferences.

Summed up in the graphic above, these trends can also be seen as an encouraging bellwether for the enduring, albeit ever-evolving, brick-and-mortar grocery store.

Learn more about how these retail solutions can work for you.

The post 3 Global Perimeter Grocery Shopping Trends: See How This Critical Store Section Is Evolving appeared first on Marmon Retail Solutions.

Innovating effectively demands a methodical approach that weighs short- and long-term costs and anticipates how a change will affect day-to-day store operations, from your associates to your customers to your square footage.

In the following, we’ll take a close at four crucial operational factors to consider when innovating your stores. But first, view our video on the subject:

ROI: Prove the Need and the Benefit with Real Data

“If this innovation is going to cost us X, what are we getting in return? For most retailers, that’s understandably the biggest question,” says retail innovation expert Joe Rother, Director of Sales for Cannon Equipment.

So how do you go about knowing the return? Rother says you need to go beyond the features that the vendor may emphasize. “You want evidence that it’s worth the investment.”

Tips to consider:

Quantify performances. If it’s a process that can in theory be improved with an innovation, look for a vendor who can help you accurately test and measure your current performance and also compare it to your performance using the innovation.

Start with a prototype. Work with a vendor who will prototype equipment for your specific needs—with multiple iterations if necessary—so you can put the innovation into actual practice and measure performance.

Opt for formal ROI analysis. If you’re convinced of an innovation’s value but need formal data for upper executives, use an independent company who specializes in conducting on-site ROI studies.

(Check out this related blog post for an in-depth look at calculating the total cost of ownership for picking carts.)

In gathering data and information to formulate the ROI, be sure to also consider how operational components will be affected, starting with the four listed below.

1. Associates: Train, Excite, Gamify

Most store innovations will affect your associates in some way, but this is especially true of equipment intended for associate use.

According to Rother, retailers commonly struggle with process scaling, which involves implementing an innovation effectively across numerous stores. More specifically, it requires getting associates fully on board with using a given innovation.

Tips to consider:

Make it simple but effective. Be sure the design of the new innovation is as easy as possible for associates to use.

Explain the why. Define the need behind the innovation while also emphasizing to associates how it will make their jobs easier and help them perform better.

Prepare them. It may not need to be extensive but be sure the training provided is adequate and then reinforce it with, for example, helpful signage or similar methods.

Confirm rather than assume. Provide oversight to measure associates’ acceptance and competence of new innovation.

Gamify the innovation. Generate enthusiasm by introducing a gaming component in which associates can compete with themselves and even each other. (For example, use timers on picking carts so they can see how fast they pick an order.)

2. Customer Experience: Don’t Discount the “Small Things”

Despite the rise of e-commerce, lots of customers still rely on the brick-and-mortar store. But Rother says their expectations for things like speed and convenience are rising.

“Grocery store competition is so intense. I think today more than ever, innovations need to take into account the seemingly small things. These can make the difference between a customer coming back or opting to go somewhere else,” he says. (See the tips below for examples.)

Tips to consider:  

Make it easy to use. For any innovation that requires customer engagement—like a bulk foods dispenser, for instance—be sure it’s simple to use.

Balance security and ease of access. For locked security cases and similar displays, if a customer can only access a product with assistance from an associate, try to make the process as fast and convenient as possible for the customer. 

Free up associates for customer service. Remember that an innovation which helps associates, say, stock shelves more efficiently, pick orders faster, or spend less time front-facing products also means those associates are now more available to help customers.

Consider how an innovation can strengthen loyalty. Reliably performing shopping carts, easy-to-find products, faster click and collect turnaround—when an innovation creates outcomes like these, you’re also making it more likely that customers will return to your store, not a competitor’s.

3. Floor Space: Remember Every Foot Counts

Retailers know that space is at a premium. The last thing you want to do is to make a change to your store that somehow compromises your floor space’s merchandising power.

“If anything, you want the opposite,” says Rother, “because the more products you can expose your customers to, the bigger their possible basket size.”

Tips to consider:

Think up first. Of course this isn’t possible with every innovation, but whenever possible, try to utilize your vertical space because that’s likely what you have the most of.

Maximize product display. Making changes to shelving? One of the outcomes should be to increase products facings the way pusher trays do, for instance.

Account for storage. If you’re investing in new picking carts, ladder carts, and similar equipment, be sure you have easily accessible backroom space allocated for storing them.

4. Maintenance: Anticipate Costs and Explore Your Options

Potential maintenance needs—and the accompanying costs—will obviously vary with the innovation.

“Generally, the lower the maintenance requirement, the better,” Rother says. “But I think what’s really important is to explore your maintenance options because there are probably more than you realize.”

Tips to consider:

Prevent surprises. There’s no reason you should be surprised by needed maintenance, provided you do your research and thoroughly address the topic with a trusted vendor.

Understand the skills needed. Know ahead of time what skill level the maintenance requires. If you’ll need to use a third party, that obviously should be considered in projected expenditures.

Opt for alternatives to maintenance. For example, rather than having intermittent maintenance performed on shopping carts, you could have the entire fleet remanufactured after a certain number of years. This is a more economical option that gives you completely refurbished carts.

The Power of the Right Vendor

You’ve just read about some key considerations to make when investing in new equipment or other store innovations. But another important factor in helping you innovate effectively is the quality of the vendors you work with.

Ask yourself: Do they go on site to better understand your unique store challenges? Do they bring helpful expertise and industry connections that go beyond the product itself? Are they interested in a partnership for your long-term success?

If you’d like to gain an edge as you consider new equipment and store innovations, Marmon Retail Solutions and its family of retail-focused brands can help. We provide integrated retail products and services that enable your innovations to be more strategic, more cost-effective, and ultimately more successful.

Learn more about how these retail solutions can work for you.

The post 4 Operational Factors to Consider with Any Store Innovation appeared first on Marmon Retail Solutions.

One key reason is “the broader macroeconomic environment that discounters are thriving and winning within,” says Jack O’Leary, Head of Advisory, North America, for Edge by Ascential.

More specifically, it’s an environment characterized by stubborn inflation as well as evolving consumer preferences, making the demand for discount stores and their lower price points extremely intense.

Check out the projected global numbers, learn more about the major players, and see the trends that are shaping the future of this rapidly expanding retail sector.

What are the Characteristics of a Discount Retailer?

Before we delve into the state of the discount store channel, let’s clarify its defining features. For O’Leary and the research team at Edge by Ascential, the stores within this channel exhibit the following characteristics:

• They operate small-format brick-and-mortar stores.
• They provide a limited assortment of items.
• They often focus on selling private label products.
• They offer items in smaller pack sizes at lower price points.

Although these retailers may vary in their strategies and store experiences, O’Leary says, they “all are very much oriented around that price point and that specific store size.”

The Biggest Markets for Discount Stores: U.S. and Germany Dominate

The U.S. and Germany are far and away the largest markets for this retail channel, says O’Leary, with the two countries accounting for more than 42% of global channel sales. 

But other countries are showing marked growth as well. The U.K., for example, is expected to grow at an impressive 8.5% compound annual growth rate (CAGR) from 2022 to 2027, showing it’s “an area of tremendous transformation in terms of discount retailing,” says O’Leary.

Based on research by Edge by Ascential, here are the top 10 markets for the discount channel.

1. United States
2. Germany
3. United Kingdom
4. Poland
5. Italy
6. France
7. Canada
8. Norway
9. Mexico
10. Russia

See the graphic for more details, including CAGR projections through 2027.

The Top Performers: Finding Success with Varying Market Strategies 

Major players in this channel vary in their market penetration strategies. Worldwide, the top performers are the Schwarz Group (which includes the Lidl banner) and Aldi. Combined, these two discounters operate in more than 40 markets.

Meanwhile, discount powerhouse Dollar General dominates in the U.S. market yet has only recently entered its second market, in Mexico.

Based on research by Edge by Ascential, here are the top 10 discount retailers in terms of projected performance outlook:

1. Schwarz Group (Lidl)
2. Aldi Süd
3. Aldi Nord
4. Dollar General
5. Jerónimo Martins 
6. Walmart
7. Edeka
8. Rewe Group
9. Dollar Tree
10. Reitangruppen

Check out the graphic for more details on the leading discount retailers worldwide, including CAGR projections through 2027.

Strategic Trends for the Discount Store Channel

Let’s move from the global landscape to the major in-store trends we’re seeing as discounters vie for more market share.

Trend: More Conscious Product Curation

Discounters are curating their product assortments more consciously, says O’Leary, in order to meet new areas of consumer demand. At the same time, they’re still focused on providing low-priced household staples.

Lidl, for instance, is carrying out initiatives like these:

Lidl UK has installed refill stations for their private label laundry detergent in an effort to offer more sustainable options.

Lidl UK has introduced end-caps that feature local items to appeal to a growing demand for localized options.

Lidl Belgium has expanded its range of plant-based meat substitutes with an additional 73 vegan and vegetarian options to meet a growing consumer preference for meat alternatives.

Trend: More Digital Activity

Traditionally, this sector has lagged behind other retail channels when it comes to digital initiatives. But O’Leary says that’s changing.

Dollar General exemplifies this with its enhanced retail media network, DGMN. According to O’Leary, the retailer claims more than 90 million customer profiles and touts their large store network as a distinct advantage for serving digital ads to consumers.

Trend: Proximity-based Retailing and Evolving Store Formats

New developments can also be seen where discount retailers are building their typically smaller-format stores. In addition, the formats themselves are being modified to better fit with a given store’s location.

Aldi is designing convenience-based stores in select high-density urban areas in, for example, Berlin. And in Australia, the discount retailer has launched its own Corner Stores in Sydney and in Melbourne’s Central Business District, or CBD.

Similarly, Biedronka Poland continues to roll out ultra-mini format stores to tap into locations unsuitable for full-sized stores.

In the U.S., a major proximity-based trend can be seen with discount retailers aggressively expanding into underserved rural areas.

That phenomenon plays a significant part in the U.S. growth projections for this sector, with more than 8,700 discount stores estimated to be added between 2017 and 2027.

“When we look at our U.S. database and we look at store network growth,” says O’Leary, “discounters are adding the most stores by a long shot.” See the graphic below for more details.

Summing It Up: Discounters Take Advantage of a Favorable Operating Environment

The discount store trends we’ve explored above indicate a retail channel that’s poised for continued—and impressive—growth.

These trends “sum up the themes to think about strategically when we’re looking at the discount outlook,” O’Leary says.

For more information on discount stores, be sure to also check out this blog post: Discount Store Industry Analysis: A Retail Sector That’s Adapting AND Thriving.

Learn more about how these retail solutions can work for you.

The post Global Discount Store Update: Growth Projections and Major Trends for This Expanding Retail Channel appeared first on Marmon Retail Solutions.

So where are we headed for 2023 and beyond? Find out about the global trends for the grocery channel with helpful insights and examples from retail consultant Jack O’Leary, Head of Advisory, North America, for Edge by Ascential.

Global Sales Projections: E-commerce Expanding (and Pushing Innovation)

Based on data from Edge by Ascential, O’Leary reports that e-commerce sales for the edible grocery category are projected to grow at a 9.7% compound annual growth rate (CAGR) for 2022 to 2027. Meanwhile, projections for store-based sales indicate a CAGR of 3.5%.

As the graphic illustrates, brick-and-mortar sales still make up the vast majority of this category. 

Yet even with the inherent challenges of selling perishable items online, O’Leary says when it comes to retail innovation, “E-commerce is really leading the way for grocery selling on a global basis.”

Top Players Positioned to Stay on Track for Continued Growth 

As for projected sales performance in the coming years, the most recognizable names in retail grocery will continue to experience growth (see graphic below).

O’Leary says these retailers will remain strong thanks to their diversity of banners and their ability to invest in new formats. Moreover, the influence they wield will “really shape the future of how this channel is shopped.”

Strong Performance of Regional Grocers Worth Noting

The grocery store giants aren’t the only players with promising performance numbers. O’Leary says regional players like WinCo Foods, Hannaford’s, and Hy-Vee “have some distinct advantages” that are helping them outperform typical channel averages.

When looking for examples of best in class grocery retailing, O’Leary says, “Don’t neglect or look away from some of these regional powerhouses.”

Major Consolidation Could Have Significant Effect on Grocery Sector

Retailer consolidation could play a huge role in shaping the grocery landscape, especially in North America, with a Kroger-Albertsons merger currently in the works.

Combined, these grocery behemoths operate more than 5,000 stores. Company executives hope to finalize the merger by 2024.

According to O’Leary, if the deal goes through, the merger will have major ramifications for the competitive grocery sector. Consider the potential numbers:

Key Initiatives: Grocers Tailor Offerings to Consumer Demands

Let’s move from the overall grocery landscape to major retailer initiatives. O’Leary highlights three areas of consumer demand that help characterize where this channel is headed.

Demand: More Plant-based Consumption

O’Leary says more and more retailers are tailoring their formats to meet the growing consumer interest in sustainability and health and wellness.

A good example of this is a new 200-square-meter store concept launched by the supermarket chain BILLA in Austria. Called BILLA PFLANZILLA, the store is dedicated solely to plant-based products and boasts more than 2,500 SKUs. (Billa is a subsidiary of the Germany-based REWE Group.)

Demand: Greater Cost Savings 

An extended high inflationary period has also prompted many retailers to expand private label selections and thereby offer more products at a lower price point.

“Retailers acknowledge that there are profitability advantages of extending more private label out and also consumer affinity advantages,” says O’Leary.

In fact, Kroger saw their own private label sales increase by more than 10% in multiple quarters for 2022, outperforming equivalent sales for non-private label products.

Demand: Expanded E-commerce

Any discussion of trends in the grocery channel today must address the growing number of ways e-commerce is being used to meet customer needs.

According to O’Leary, when it comes to online grocery shopping, “There are a lot of emergent, fast-growing platforms that can tackle various aspects of grocery buying, need states, [and] basket size.”

The following graphic helps illustrate his point:

Keep Your Eye on Those Key Initiatives

The new developments in the global grocery channel largely reflect consumers’ evolving preferences for selection, affordability, and convenience.

More specifically, O’Leary says to look for grocery retailers to do the following: 

• Offer more merchandise that meets the growing demand for sustainability, organics, and plant-based products.

• Help the more cost-conscious consumer by expanding lines of more affordable private label products.

• Serve consumers looking for convenience and/or immediacy by providing more e-commerce options.

“There are a lot of big themes, but those are the ones I would be watching … as we look to 2023 and beyond,” says O’Leary.

Learn more about how these retail solutions can work for you.

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