Switzerland

Details

  • Type: Press release
  • Date: 4/16/2013

The grocery store of tomorrow is smaller, more social and more emotional 

The food retailing industry will undergo dramatic changes by 2025. An aging population, rising energy prices and changing needs when it comes to interconnectedness, health and flexibility are forcing retailers to switch to new logistics and sales models. In a joint effort, KPMG and the GDI Gottlieb Duttweiler Institute have drawn up some theories on future trends and scenarios in this sector.
Today, online orders for non-food items and standardized foods such as mineral water are already on the rise. As these figures increase, the range of items offered in stores threatens to shrink even further. Driving forces such as these are causing the core strengths of the food retailing industry – for instance, product selection or logistics – to be outsourced or completely restructured.  In light of these developments, KPMG and the GDI Gottlieb Duttweiler Institute have joined together to analyze the driving forces behind further developments on the retail food market and have drawn up ten hypotheses as well as four future scenarios on the basis of these driving forces.

Consequences of social and demographic developments on consumption

As we approach 2025, the proportion of the Swiss population over 65 years of age will continue to rise. At the same time, we are also seeing a breakdown in traditional daily structures: fewer and fewer people are integrated into regular and clearly-structured daily routines. Smartphones and applications (apps) make it increasingly unimportant for users to plan in advance. That creates a growing need for stores located within a short walking distance which can be reached on the spur of the moment. While the importance of convenience food and fast food is on the rise, consumers also wish to have a healthy diet that is more geared toward trusted and reliable foods that have been sustainably produced rather than those that purely function to satisfy a need.

Technology and mobility as driving forces

Based on cheap fuel in the past, consistently high oil prices have prompted both the food retailing industry and consumers to limit their mobility. Optimized home delivery, small stores and new pick-up formats are energy-efficient solutions. Offers such as these are getting an additional boost from technological developments. The widespread use of the Internet, also increasingly via mobile devices, enables consumers to place their orders spontaneously from wherever they happen to be. Whether products are delivered to a consumer’s home or picked up in a local or mobile store, the Internet has brought lasting changes to the availability and logistics of the food retailing industry while new payment methods (RFID and NFC chips) are revolutionizing the industry even further.

Smaller, more communicative and more flexible

This transformation means that the food retailing industry will look and function differently in 2025 than it does today:

 

Ten hypotheses on the future of the food retailing industry

 

  1. Online will not be standard for the market: The online share of the Swiss food market will remain moderate. The need for availability and spontaneity will prevail.

  2. Niche solutions could trigger upheavals: The desire for “safe”, authentic food is on the rise. Organic delivery services and in-store production are promising solutions.

  3. Around-the-corner shopping is becoming increasingly significant: The ability to buy food close to consumers' places of work and residence at (almost) any time of the day will increase in importance.

  4. Communications expertise holds opportunities: New store designs and additional services can create communication platforms.

  5. More interfaces to restaurants: The range of products and services offered in retail stores will be expanded to include direct consumption and, vice versa, restaurant operators will offer select food items for sale.

  6. ypermarkets are facing a slow decline: Online channels, increasingly expensive mobility and the trend toward urban living speak against large-scale shopping centers surrounded by green fields.

  7. Multifunctional store concepts offer added social value: Retail spaces that can be used for different purposes, depending on the time of day, will gradually gain in importance.

  8. The health of customers and employees are success factors: It will be important for the food retailing industry to conceptually expand the topic of health beyond the scope of its “healthy” product range.

  9. Emotionality is more important than optimizing efficiency: Emotions are the strongest competitive advantage in the race for efficiency. Experiences and contact meet customers’ needs.

  10. Individualization of enjoyment through flagship stores: While standardized products drift into the online world, in-store spaces are freed up for specialty shops with natural products.

Future scenarios

How the food retailing industry looks in 2025 will be largely determined by two developments: logistics costs and consumers’ values. The combination of these two parameters and their various manifestations reveals the four basic forms that the food retailing industry could take on in the future:

 

Future scenarios 

 

Four future scenarios for the food retailing industry (listed in order of likelihood)

 

  1. Small mart: Local stores (corner shops) with highly social and emotional components which are centrally located and easy to reach.

  2. Smart mart: Customers who are well connected from a technical perspective personally pick up their individualized products at stores or pick-up locations.

  3. All mart: Large stores with low logistics costs that offer a wide yet different range of products and services that are systematically geared toward an emotional experience.

  4. Call mart: Online-based store concepts with low logistics costs which enable them to flexibly supply customers with high demands on functionality.

Good opportunities for small stores and convenience shops

In today’s food retailing industry, large-scale supermarkets in particular are facing major challenges as the result of their decentralized location and functional focus. With their function so clearly defined, discounters, too, are likely to have difficulties identifying with one of the four promising scenarios. The prospects for small-scale stores and convenience shops look better since these can attract consumers through both emotional as well as functional factors and are not threatened by high logistics costs. Online retailing, which meets the needs of a large number of consumers through extremely flexible offerings, also has good prospects. The drawback here are high logistics costs and a low emotional factor due the lack of social contact involved in this kind of shopping.
 

Andreas Hammer

Andreas Hammer

Director, Head of Corporate Communications

+41 58 249 55 71

The Future of Shopping

Teaser Image
Outlook for the German and Swiss food retailing. A survey by GDI Gottlieb Duttweiler Institute and KPMG.
Twitter  Facebook  xing  YouTube  KPMG Blog