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Retail and Foodservice 2025: Experiential Retail

Ed_McKiernan Ed McKiernan | President, Emerson Retail Solutions

Emerson Commercial & Residential Solutions

For this, our fourth installment of our series on the top five trends impacting grocery retail and chained foodservice markets, we take a closer look at the Experiential Retail trend.

In an effort to identify the megatrends strongly shaping retail and restaurant operations and facilities management over the next eight years, Emerson worked with global research firm Euromonitor International. Be sure to check out our previous posts where we focused on the first three trends: Digital Shoppers, Focus on Convenience, and New Retail Formats.

The growing options for how and where consumers can shop is forcing retailers to differentiate in an effort to increase or maintain foot traffic. This is driving an effort by brick-and-mortar stores to create an experience consumers can’t get online. We as an industry are seeing that experiences are important and will stand out with consumers. According to a 2014 study, 78 percent of U.S. millennials would rather spend money on a desirable experience than on goods.

So, regardless of whether you are managing a large format food retail operation, convenience store or restaurant the question you need to ask yourself is “How can I bring a relevant experience to my customers, regardless of my retail format?”

There are three prominent sub-trends we are seeing within Experiential Retail that can provide better clarity and understanding of the concept. The first is “retail-tainment,” which is the idea of utilizing technology and tools onsite to provide a level of entertainment. These technologies and tools are sometimes “gimmicky” and serve no other purpose than to provide an experience and facilitate interaction. One example is Target’s Wonderland, a holiday pop up store in Texas. The space featured 10 “spectacles,” including a jumbo Etch-a-Sketch, and it provided a retail-tainment experience aimed at families.

The second sub-trend is having experts on-site to leverage and offer a greater experience for consumers. For instance, having a nutritionist or dietician available to offer healthy eating tips or a wine expert to answer questions and suggest new wines. The third is the usage of virtual and augmented reality in brick-and-mortar locations. This can offer a cool and different experience to draw in consumers, as well as offer some immediate gains. For instance, augmented reality could be used to help consumers navigate the store and easily find the products they need.

One retailer that is already capitalizing on the Experiential Retail trend is an Italian foodservice chain that bills itself as “the largest Italian marketplace in the world”. It provides a unique experience by bringing Italy to the consumer. Consumers can shop, taste food and drinks and learn about Italian culture, through onsite wine bars, restaurants, and marketplaces.

So, what can retail and foodservice organizations do in terms of facility management and operations to help create a unique or memorable customer experience?

  • Facilities – Repurpose physical assets, such as branding tools and one specific store location, or to build equity against competitors.
  • Supply Chain – Repurpose possible non-experiential sites as fulfillment centers to provide faster delivery and better defend market share.
  • e-Commerce – Create personalized shopper marketing and ensure a positive digital experience to attract and retain more loyal customers.
  • Human Resources – Implement a consumer-centric mission that shifts employee mindset to enhance experiences that will improve equity against competitors and drive foot traffic.
  • Customer Experience – Create new experiential atmosphere and bring in low or “no cost” value adds that will engage shoppers and draw in-store traffic and create upsell opportunities.

Be sure to join us for our final post in this series, which will take a look at the fifth megatrend impacting retail and restaurant operations and facilities management: Omni-Channel Proficiency.

Retail and Foodservice 2025: New Retail Formats

Ed_McKiernan Ed McKiernan | President, Emerson Retail Solutions

Emerson Commercial & Residential Solutions

This is the third installment of our series on the top five trends shaping the grocery retail and chained foodservice markets through 2025.

Emerson worked with global research firm Euromonitor International to identify the megatrends that will have the strongest impact on retail and restaurant operations and facilities management over the next eight years. If you haven’t had a chance to do so, please check out our previous posts, where we focused on the first two trends: Digital Shoppers and Focus on Convenience.

With this post we take a closer look at the next trend: New Retail Formats. In case you haven’t noticed, the way people are shopping and purchasing items is becoming more complex than ever. Consumers, depending on what they need in different situations, are looking to leverage different channels and options that can meet those needs.

This fragmented and polarizing shopping behavior is creating a need for diverged formats that better meet changing demand. As a result, the look and format of traditional brick-and-mortar grocery models is changing. For instance, over the last 10 years, we have seen the square footage of stores consecutively shrink.

So the challenge for retailers and foodservice providers is how to better leverage that shrinking space and adapt new formats to address fragmented shopping behavior and align with the way consumers shop.

One way they are doing that is grocery stores are behaving more like convenience stores. There have been a few examples of this with major food retailers experimenting with smaller square footage stores, which have been expanding across the country and enjoying sales growth. Retail stores such as this have a condensed footprint and focus primarily on grocery items, operating similar to a convenience store in a modified format.

Another change in format we are seeing is the emergence of “Grocerants” that blur the line between retail and foodservice. These can include food service outlets selling packaged products that can be consumed later, as well as a high-end grocery store containing a café. Not only is this type of format providing stiff competition for traditional grocery outlets, they are also providing consumers an alternative to traditional restaurants. Research firm The NPD Group reports that Grocerants generated 2.4 billion visits and $10 billion in sales in 2016.

One factor we expect to further accelerate the new retail format trend is the impending entry of European retailers into the United States market in 2017. These competitors are more like a Trader Joe’s grocery store, offering a nice customer experience and affordable products, rather than a harder discounter that focuses less on the consumer experience. Competitive pressure like these challengers shows that business as usual is no longer an option.

So what should retail and foodservice organizations do in terms of facility management and operations to support the modernization and diversification of retail formats?

  • Facilities – Enhance store layouts and introduce new dining areas to attract specific trip types and drive traffic with dining opportunities.
  • Supply Chain – Offer curated, local assortment of items and value-based merchandizing to fulfill local tastes, provide unique selections and build equity against competitors.
  • e-Commerce – Consider focusing on digital and outsourcing your online infrastructure as a way to satisfy new customer expectations and offsetting declining in-store traffic.
  • Human Resources – Evolve staff skillsets and protocols to provide higher value interactions and experiences to customers.
  • Customer Experience – Focus on convenience-based needs and ensure price points and offered products fit demand to increase basket sizes and foot traffic.

Be sure to join us for our next post, which will take a look at the Fourth megatrend: Experiential Retail.

Retail and Foodservice 2025: Focus on Convenience

Ed_McKiernan Ed McKiernan | President, Emerson Retail Solutions

Emerson Commercial & Residential Solutions

Welcome back to the second installment of our series of blog posts that look at the top five trends that will shape the grocery retail and chained foodservice markets through 2025.

As mentioned in our previous post, Emerson commissioned global research firm Euromonitor International to identify these trends and determine what impact these developments will have on retail store and restaurant design and infrastructure.

The firm identified five megatrends that will have the strongest impact on retail and restaurant operations and facilities management over the next eight years. Our first post focused on the Digital Shoppers trend; this one takes a closer look at the second trend: “focus on convenience.”

While components of the digital shopper trend center around creating convenience for shoppers,  there is enough attention on the concept of convenience that it was worth exploring further in its own megatrend.

Everyone can relate to the general issue of being asked to do more with less time. As a result of hectic lifestyles, urbanization, smaller households and hyper-connectivity, time has become a crucial commodity that customers are willing to pay for now. Currently, 83 percent of the U.S. population lives in urban centers, while 65 percent of global consumers are looking to simplify their lives.

So the challenge for retailers and foodservice providers is to become more convenient and provide a level of simplicity for consumers living more fast-paced lives.

This first requires a redefinition of what convenience means. Traditionally it meant having a basic set of staple goods within a suitable location. Today, it has elevated to the next level, with applications such as click + collect, just-in-time delivery, and replenishment models.

Click + collect is ideal for retailers and foodservice providers that are not able to commit to a full online and delivery service. Many, especially grocery retailers, are finding it an easy way to provide convenience without out a significant supply chain expansion. Consumers digitally place their orders and drive to the store location to pick up their order.

The other two applications are being greatly influenced by multiple leading traditional and non-traditional retailers.   Just-in-time delivery is beginning to mean next-day delivery and even same-day delivery. While replenishment models are basically removing the whole idea of shopping from consumers and creating a “set it and forget it” mentality.

Convenience is being redefined with a new store strategy that promises a checkout-free shopping experience.  A recent Wired article noted that consumers using a machine-learning app could enter a store, pick up their products and walk out of the store, without having to interact with a single person. Through RFID tracking on the products, customers will be charged through the app.

So, what should retail and foodservice organizations consider doing in terms of facility management and operations to stay ahead of this trend and customer expectations?

  • Facilities – Reduce stockrooms and develop new front-end designs and pickup areas to ensure speedy service, freshness and maximize sales per square foot.
  • Supply Chain – Adopt a higher cadence delivery schedule with more exact inventory orders to guarantee fresher products and reduced out-of-stocks.
  • e-Commerce – Utilize physical locations for fulfillment and outsource last-mile delivery services to attract online shoppers and allow your business to enter the delivery space quickly.
  • Human Resources – Employ trained personal shoppers and implement new staffing and scheduling to increase customer satisfaction and order capacity.
  • Customer Experience – Focus on convenience-based needs and train customers for new protocols to minimize disruptions and realize potential new cost models.

Be sure to join us for our next post, which will take a look at the third megatrend: New Retail Formats.

Retail and Foodservice 2025: The Future for Customers, Operators and Facilities

Ed_McKiernan Ed McKiernan | President, Emerson Retail Solutions

Emerson Commercial & Residential Solutions

Food retail and food service environments are quickly evolving. As retail stores and restaurants adapt to changing infrastructure and facility requirements, it is important that operators understand where the market is heading and the impact these changes will have on their operations.

To help operators prepare for the future, Emerson commissioned global research firm Euromonitor International to identify trends that will shape the grocery retail and chained foodservice markets through 2025, and determine what impact these developments will have on retail store and restaurant design and infrastructure.

Euromonitor International is the world’s leading independent provider of strategic market research. With more than 40 years experience, the firm has offices around the world, analysts in over 100 countries and market research on every key trend and driver.

The research firm identified five megatrends that will have the strongest impact on retail and restaurant operations and facilities management over the next eight years:

  1. Digital Shoppers
  2. Focus on Convenience
  3. New Retail Formats
  4. Experiential Retail
  5. Omni-Channel Proficiency

These trends were shared at the Emerson E360 Annual Conference and on a global webcast. Over the next few posts, we will also take a closer look at each one of these trends, beginning with the first one.

Trend: Digital Shoppers

Consumers are becoming more connected, and expecting a connected experience when they interact with brands or purchase products. Currently, 3 in 4 U.S. households own a smartphone, and 47 percent of digital purchases in the United States are made through mobile devices. As the wireless infrastructure strengthens, the Internet becomes omnipresent and the prices of devices come down, these numbers will continue to grow.

We are already seeing a shift with many retailers moving toward mobile engagement with consumers within the store to create a better shopping experience and a stronger customer relationship. Also, more retailers in the U.S. are offering mobile order and pay capabilities to simplify transactions. Some retailers are even going beyond mobile and offering conversational commerce, where for instance, a virtual personal assistant such as Amazon’s Alexa can deliver your item within a short period of time.

So, what should retail and foodservice organizations do in terms of facility management and operations to stay ahead of this trend and customer expectations?

  • Facilities – Overhaul store layout (parking, checkout, dining area, etc.) to drive traffic and attract new trip types and consumers.
  • Supply Chain – Align online and physical inventory and offer real-time tracking of sources and orders to encourage repeat consideration and engage and inform customers.
  • e-Commerce – Implement digital order and payment platforms and offer a personalized, seamless experience to lower costs, reduce errors and increase customer satisfaction.
  • Human Resources – Make sure you have the training that focuses on the right skillsets and staff appropriately based on the different service models to improve customer experience and create stronger brand loyalty.
  • Customer Experience – Train customers for new protocols and offer a streamlined experience to minimize disruptions and serve more customers, faster.

Be sure to join us for our next post, which will take a look at the second megatrend: Focus on Convenience.

Highlights from the 2016 FMI Energy & Store Development Conference

A recent Grocery Headquarters article shares a preview of the 2016 FMI Energy and Store Development Conference. A brief recap of the article is below.

With increasing competition for food retailers, store maintenance and merchandising of products is becoming more important. The 2016 FMI Energy & Store Development Conference features the latest trends in merchandising, refrigeration, store design, energy conservation and other key areas. Emerson Climate Technologies is a sponsor of this year’s event, where we are highlighting new products and services, as well as hosting the store and facility tours for attendees.

At our Emerson Climate Technologies table, we will discuss the wireless sensor system, which allows retailers to quickly and easily monitor individual case and simulated product temperatures. Compatible with the E2 facility management system and Site Supervisor, the wireless sensor system can help retailers reduce operating costs, easily accommodate store layout changes and provide secure facility data transmission.wirelesssensorWith 2015 EPA compliance standards and DOE regulations continuing to impact the commercial refrigeration industry, we will also engage conference attendees in discussion about energy-efficient and environmentally friendly alternatives, including recently approved low-GWP blends and increasing natural refrigerant options. These alternatives are now available in the expanded Copeland Scroll discus and CO2 compressors.

Conference attendees can also learn more about our new three-month trial program of the cellular-connectivity ProAct™ Services, the leading enterprise management service for supermarkets, convenience stores, retail, commercial buildings and foodservice. With ProAct Services, retailers gain around-the-clock visibility and valuable insights into their facility systems without the need for connectivity to a company network, no significant IT support required and no risk of access to critical POS data through the monitoring system.

If you’re attending the FMI Energy and Store Development Conference, please stop by to see us!

You can read the full Grocery Headquarters article online here.

For more than 20 years, Emerson Retail Solutions has been helping businesses like yours safeguard food, reduce energy consumption, protect the environment and optimize business results. To learn more about our technology solutions and services for retailers, visit our website.

Ed McKiernan
President, Retail Solutions
Emerson Climate Technologies

 

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