The news that Sainsbury’s is set to shake up store formats with the closure of 200 cafés alongside refinements to bakery and hot food, doesn’t come as a surprise. The supermarket café has long been the destination of last resort, somewhere to take your nan for a cup of tea or grab food if the kids literally can’t wait to get home.
Retailers had been managing this decline with varied formats and brand partnership trials until the seismic shock that the pandemic dealt out accelerated the need for change.
Covid-19 proved a double-edged sword: the mass ‘forced trial’ of ecommerce for millions of people was a real-world social experiment and showed that actually, people thought it wasn’t too bad! Secondly, the explosion of Deliveroo and other food delivery apps revolutionised eating habits bringing restaurant-quality food from our favourite eateries delivered at home whilst we sit in our loungewear.
These outcomes colluded to make the grocery store a less appealing destination, adding pressure on retailer margins and changing grocery retail experience forever.
According to Gartner: “By 2025, organizations offering unified commerce experience by frictionlessly moving customers through journeys will see at least a 20% uplift in total revenue. Shoppers are increasingly using multiple sources — ecommerce, social media and brick-and-mortar stores to make a single purchase decision, and the time for the great retail fightback is now.
It’s time for grocers to serve up something different
Retail grocers are rethinking experiences and services that will truly differentiate their offerings and encourage traffic back into their stores and, in my view, brand partnerships are a powerful weapon in the omni-channel armoury.
So, it’s no surprise to see Sainsbury’s looking to Starbucks and Boparan Restaurant Group as a commerce growth driver – looking to sprinkle the magic of the Starbucks retail formula. As Howard Schultz, CEO, Starbucks astutely said: You walk into a retail store, whatever it is, and if there’s a sense of entertainment and excitement and electricity, you wanna be there. Well, supermarkets could sure do with some of this.
Power brand partnerships are well proven. Apple famously transcended the technology category into health & fitness lifestyle by partnering with Nike to launch Nike+iPod, paving the way for many innovations and service offerings. And look how that turned out!
The furiously competitive UK food retail is no different. Just last month, M&S partnered with Costa Coffee to launch food offering in its cafés. “Bringing together delicious, great quality M&S Food and the nation’s largest chain of coffee shops is great for customers as it extends our reach and supports our strategy of making M&S more relevant, more often for families,” M&S Food MD and CEO, Stuart Machin said.
If Sainsbury’s has seen the future of grocery as a food service destination, what are the key principles this iconic UK retailer and others might consider for success? Here’s my starter for ten:
1. Be picky about partners
Crystal clarity on whom your customers are and the types of offering they look for is essential when determining a partner strategy. With the energy crisis and food price rises set to continue, ever more pressure is placed on the consumer wallet, so ensuring food service falls nicely into the affordable bracket is essential.
Other retail destinations are getting this just right – new DIY destination stores are co-locating with small convenience food formats like subway or Greggs that not only serve the food-on-the-go need but appeal strongly to the DIY customer base.
2. Blur the lines
Well-known brand partners are essential but simply setting a Starbucks in the corner isn’t going to cut it. To truly make supermarkets a desirable destination for longer time dwelling, retailers should be looking to co-brand, co-host and co-curate a seamless space that feels visually and sensorially attractive. Look at Eataly – a destination store that cleverly integrates eating, shopping and learning flawlessly.
Ask how partners could take the integration further. For example, a restaurant created a bespoke menu that could be easily shopped in-store and replicated at home. Or, where chefs give cooking demonstrations and inspiration tours of the store to help shoppers get the most out of their shop and drive up basket value.
3. Be champions of change
Supermarkets have always been central to community and as they look to re-emerge as destinations again, they have a unique opportunity to be champions of sustainable practices. As the world races to find technology solutions to solve the environmental crisis, supermarkets could be creating partnerships with sustainable food and restaurants offerings. What if these destination areas became living labs where test and learns for environmental eating and consumption take place, actively educating customers on better ways to shop, to eat to live to for the benefit of the planet?
I for one hope we see more announcements, more partnerships, more in-store experience investment that can really help retail fightback gather pace and win in our omnichannel shopping world. Next time I take my nan for a cup of tea at the supermarket, I hope it blows her mind!
- Tom Moore is Head of Retail at VMLY&R COMMERCE UK
Originally published in Internet Retailing