AlabamaGroceryJan2017Final

“They remain doubting Thomases, and as a result, they could eventually be replaced by others more eager to figure out how to move product by adopting new ideas,” he added. According to Stephens, too many retailers are still caught in the mindset that they are there to distribute products, “and any value-added experience is simply sprinkled in like garnish. “They don’t energize consumers to make the trip to the market enticing. But to survive, they’ve got to figure out ways to deal with the threat of online sellers who rely on convenience.” According to Stephens there have always been competitive pressures on the industry, but “Amazon doesn’t care if it makes money or not, and as it continues to grow, it will operate at a loss to put other players out of business.” Most operators still think more laterally, he said. “Even if a retail company increases its selection by 10 percent, that will still be only a small facet of what Amazon is able to offer,” Stephens said. “And even if a retailer can improve service by 20 percent, that still pales versus Amazon’s ability to deliver when the consumer wants when he wants it.” E-commerce is continuing to grow in all businesses, posting sales of $1.6 trillion in 2015, with expectations for long-term, high- volume growth, Stephens told conference attendees, “We’re probably just reaching the end of page 1 and turning to page 2.” Supermarkets stand to lose as much as 30 percent of their business to online sellers by 2025, particularly on high replenishment items like diapers, pet food, baby food, detergent and light bulbs, for example, Stephens said. “It will be a matter of ‘say it and get it.’ When someone wants an item, they will click on a technological device and have it delivered. The question for retailers, then, is how will your store, your chain and your brand be heard?”

The answer is enhancing the in-store experience, Stephens said. “As good as Amazon and the others are, they are still just digital catalogues. As connectivity becomes more important, the future of retail will be more experiential and immersive,” he said. “But the time for retailers to act is soon because there’s a diminishing window of time.” Figuring out ways to make the shopping experience more appealing to prevent shoppers from opting out is not the way most operators think about their businesses today, Stephens said in the interview. But in an industry with profit margins often at or below 1 percent, the challenge of how to generate revenue over and above selling groceries is daunting, he noted. The future may revolve around reassigning floor space, he said.

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“Developing a grocery store that will appeal to future consumers starts with the question, how much space does an operator need to create the kind of experience that’s so compelling and remarkable that people are motivated to return again and again to buy food there?

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