Walk into a supermarket today and you’re faced with 31,704 items to choose from.[1] That number sounds overwhelming, yet grocery chains and retail architects make it simpler than ever to cross items off your shopping list. Easy-to-navigate stores, e-commerce, retail media, integrated apps, self-checkout, checkout-less stores, express delivery and pick-up service are just a few of the salient features that contribute to enhanced customer experience and retail design for grocery stores in 2024.
Over the past 50 years and before, the shopping experience and retail architecture have evolved with economic, technological, and social trends. And that evolution has shaped the reimagination of the retail design experience. As retail architects, we’re interested in not only how we got here, but where we’re going.
Let’s start with how we got here.
Postwar Proliferation of Supermarket Architecture
After World War II, the construction of supermarkets exploded across America. Food production advancements, the popularization of home refrigerators and suburban development allowed families to more effectively store perishable food at home.[2] Supermarkets proliferated to meet the demand. In the postwar years, large supermarkets, while comprising only 5% of all food retail outlets, reported nearly half the sales volume. As a result, many smaller independent grocery stores shuttered.[3]
1960s and Grocery Store Architecture Design
With the 1960s came a renaissance in grocery store architecture. Standardized retail architecture designs previously used were repurposed and refined. Chains like A&P created colonial-themed stores, while others like Safeway incorporated recognizable glass arches into their retail architecture designs.[4] The nation flourished economically in the 60s, and Americans demanded a more diverse array of items in grocery stores. To compete with the burgeoning fast food industry, many supermarkets expanded retail grocery designs to include delicatessens and bakery departments. Many also widened the array of products and services offered and focused more on quality.[5]
Grocery Store Architecture and Technology in the 1970s
The 1970s witnessed the rise of technology in grocery retail experience. During this period, the Universal Product Code (UPC) was introduced — an innovation that directly impacted planning supermarket design in retail architecture by allowing grocers to precisely estimate how much stock of a particular product was required. Another significant retail breakthrough followed in 1974 with the checkout scanner.
Due to economic stagnation in the 70s, little attention was given to retail architecture, customer experience and grocery store design. An overall spartan aesthetic, including austere grocery store displays, minimalist food department layouts, metal shelving and cartoned goods contributed to the image that the grocery chain was saving the customer money. At the same time, supermarkets began promoting discounts and competing fiercely on price. This price slashing was another reason supermarkets focused less on retail design and customer experience, and more on offering consistently low pricing. In addition, the late 1970s witnessed the appearance of the wholesale club, a format that included bulk and retail offerings.[6]
1980s: Food, General Merchandise and Pharmacy Items Under One Roof
With the economic recovery in the 1980s, supermarket chains built massive retail architecture spaces to draw customers.[7] In 1988, Walmart, who previously focused primarily on general merchandise, opened its first supercenter store — marking the company’s entrance into the grocery arena. Soon, other general merchandisers like Kmart and Target followed suit.[8] The supercenter format allowed retailers to offer food, general goods and pharmacy items in one place.
1990s and Grocery Retail Architecture Formats
By the mid-1990s, supermarkets had taken on a wider variety of formats. The Food Institute identified 14 unique store types that materialized at this time, including conventional supermarkets, superstores, super warehouse stores, wholesale clubs, mini-clubs, convenience stores and supercenters.
Conventional supermarkets were categorized as stores with 9,000 items or more and included a deli and bakery. These stores comprised 26% of the industry’s total volume in the mid-90s, while, just a little over a decade prior, they accounted for more than 50% of the industry’s total volume. Superstores, which were slightly larger than a conventional supermarket, were classified as stores with at least 30,000 square feet in architectural space and offered more than 14,000 items. Larger, super warehouse stores spanned an average of 100,000 square feet.
Wholesale clubs were classified as 90,000 square foot stores who specialized in retail and wholesale, and mini clubs at about half the size carrying about 60% as many items as their larger counterparts. On the smaller side, convenience stores were characterized as shops, often attached to gas stations, offering a selection of everyday grocery items, general merchandise and hot food to go.
Then there was the supercenter, averaging 150,000 square feet with 40% of its space dedicated to grocery items — a format that would serve as a vehicle for growth in the retail grocery industry.
Grocery Retail Design And Architecture Trends 2000-2018
By the turn of the millennium, Walmart, with the supercenter retail design format and grocery selection, emerged as the nation’s largest retailer. In 2000, the retail giant had 11.1% of U.S. grocery industry sales across 800-plus supercenters.[9]
Simultaneously, grocery stores increasingly turned to sustainable architecture design. According to the Food Marketing Institute’s 2007 Facts About Store Development report, more grocery retailers had embraced sustainable designs and architecture. 21.6 percent of participants reported green building as a goal for their organizations, and 58.5 stated their organizations were considering green building options.[10]
Additionally, more emphasis was placed on streamlining the checkout process through self-checkouts. To shed some light on the increase in popularity, 6 percent of supermarkets in the U.S. provided self-checkout lanes in 1999; by 2007, 95 percent offered them.[11] In 2013, Walmart installed 10,000 self-service kiosks in stores across the country. [11]
Impacts of COVID on Grocery Retail Design
Trends in Grocery Retail Design stayed fairly consistent through the decade from 2010-2020. Most of the focus for that period was on building consumer confidence in e-commerce options for online shopping, in-store pickup, and at home grocery delivery. Trends in retail design were focused toward fulfillment options and developing new customer experiences in an effort to maintain market share as consumers were slowly spending more of their income on food service (restaurants, school, hospitals). Until March 2020, consumer spending on grocery and food service had reached near equality.[13]
In March 2020, COVID-19 changed the landscape for retail. In response to social distancing requirements, occupancy limitations, and cleaning guidelines, consumers shifted toward eating at home and stocked up on groceries and supplies, boosting sales significantly over the prior year.[14] COVID ushered in the disappearance of 24 hour stores,[15] as well as a resurgence in one-stop shopping. Respectively, these were in response to cleaning/sanitization recommendations from the CDC and efforts to minimize touchpoints with other people.
Over the two years of the pandemic, grocery retailers continued to see an increase in their market share versus food service, and the industry saw a shift in retail offerings to compete directly with food service vendors, which included prepackaged options, hot and cold bars, or even made to order stations. [16] This change in focus continued after COVID restrictions loosened, and has potentially significant impacts on refrigeration systems as well as other aspects of store design.
COVID also brought a stronger focus to contactless shopping, such as online ordering and store pickup,[17], which in turn increased the need for local product storage. This need has been met by many grocery retailers through micro-fulfillment centers (or MFCs). Micro-fulfillment centers are small, sometimes highly automated storage centers that can fulfill e-commerce orders as well as local store pickups.[18] Rather than building large remote distribution centers, retailers shifted to MFCs, often attached to existing retail locations either in the form of reallocation of already available space, or expansion of existing buildings to provide more storage.[18]
Post-COVID Direction
Many of the developments which were initiated or accelerated by the pandemic have continued into the mid 2020s. Fresh and/or prepackaged meal offerings continue to expand, MFCs and automation remain a strong focus for many grocery retailers, and e-commerce continues to be a growth vehicle for many operators.
A main focal point for many companies has been omnichannel; consolidating e-commerce and in-store shopping into a single unified approach rather than seeing them as separate avenues. Omnichannel allows retailers to connect with digitally focused consumers through all phases of their experience.[19] Associated with, but separate from, the omnichannel effort, 2022 saw the emergence of retail media as a method for grocers to connect to shoppers and maintain competitiveness in the industry.[19][20] This trend will increase the in-store digital experience with digital screens, interactive kiosks and expanded in-store app capabilities.[20]
Small format stores have also been taking shape. Shoppers have begun shifting toward more frequent, shorter duration trips, and grocers such as Whole Foods and Schnucks have responded with smaller stores, which enable a quicker and more personalized shopping experience, while also minimizing operating costs.[21]
Current and Future Trends
While the above directions are continuing to develop, some other trends are also beginning to have an impact. One such is accelerated implementation of artificial intelligence (AI). Largely used on the operations side for some time, AI and machine learning have been transforming inventory management, demand forecasting and pricing, supply chain optimization, analytics, and labor forecasting. Current efforts are becoming more customer-facing, with a variety of grocers implementing a variety of AI-powered augmented reality (AR).[22] Future uses of AI may also be paired with self-checkout technologies for image recognition, shrink reduction, more accurate product identification, streamlining checkout process, and reducing frequency of “miss-scans.”[23] Many retailers, such as Amazon Go and Sam’s Club are also exploring cashierless automated payment technologies, allowing customers to select their products and exit without going through a checkout.[24]
Over the next few years, we anticipate a continued emphasis on micro-fulfillment, and a strong focus on improving customer experience, with new technology being integral to those efforts. Retail media and AR opportunities will drive a lot of experiential changes, but retail architecture will also heavily influence the overall experience by providing interesting spaces that keep the consumer engaged and aid grocers in maintaining relevance through (or despite) current trends.
At SGA, keeping up with emerging customer shopping habits and technological advancements helps our clients grow. Essential components of retail design, such as clear signage, fixture layouts, quality lighting, and materials are extremely important. We bring value not only to these aspects of retail design and architectural planning, but also in planning considerations for micro-fulfillment, grocery pick-up, self-checkout, and facilitating co-partnerships with third party retail businesses to complete customer orders. Clients across the country rely on our understanding and experience in grocery retail design and architecture to bring value to their projects from start to finish.
Contact us to share more about your current project here
References:
[1] Supermarket Facts. (n.d.). Retrieved March 20, 2018, from https://www.fmi.org/our-research/supermarket-facts
[2] Mayo, J.M. 1993. “The American Grocery Store: The Business Evolution of an Architectural Space.” Westport, CT: Greenwood Publishing Group, Inc.: 77-233.
[3] Grocery and Supermarket. (2003, September 15). Retrieved March 20, 2018, from http://adage.com/article/adage-encyclopedia/grocery-supermarket/98499/
[4] Groceteria. (2018, February 18). A Quick History of the Supermarket. Retrieved March 20, 2018, from http://www.groceteria.com/about/a-quick-history-of-the-supermarket/
[5] Mayo, J.M. 1993. “The American Grocery Store: The Business Evolution of an Architectural Space.” Westport, CT: Greenwood Publishing Group, Inc.: 77-233.
[6] Structural Changes in Food Retailing: Six Country Case Studies. (2009, November). Retrieved March 20, 2018, from https://www.aae.wisc.edu/fsrg/publications/Monographs/!food_retailingchapter7.pdf
[7] Grocery and Supermarket. (2003, September 15). Retrieved March 20, 2018, from http://adage.com/article/adage-encyclopedia/grocery-supermarket/98499/
[8] Mayo, J.M. 1993. “The American Grocery Store: The Business Evolution of an Architectural Space.” Westport, CT: Greenwood Publishing Group, Inc.: 77-233.
[9] Grocery and Supermarket. (2003, September 15). Retrieved March 20, 2018, from http://adage.com/article/adage-encyclopedia/grocery-supermarket/98499/
[10] (n.d.). Retrieved March 20, 2018, from https://www.fmi.org/newsroom/news-archive/view/2008/04/01/fmi-facts-about-store-development-2007-retailers-design-build-and-remodel-with-sustainability-in-mind
[11] DePillis, L. (2013, October 09). Forget the haters. Grocery self-checkout is awesome. Retrieved March 20, 2018, from https://www.washingtonpost.com/news/wonk/wp/2013/10/09/forget-the-haters-grocery-self-checkout-is-awesome/?utm_term=.b80fe0a97794
[12] Thibodeau, P. (2013, January 16). Walmart, jobs and the rise of self-service checkout tech. Retrieved March 20, 2018, from https://www.computerworld.com/article/2494214/retail-it/walmart–jobs-and-the-rise-of-self-service-checkout-tech.html
[13]http://s2.q4cdn.com/056532643/files/doc_financials/2016/annual/2016-Annual-Report-PDF.pdf
[14] Weise, E. (2018, January 22). Amazon opens its grocery store without a checkout line to the public. Retrieved March 20, 2018, from https://www.usatoday.com/story/tech/news/2018/01/21/amazon-set-open-its-grocery-store-without-checkout-line-public/1048492001/
[15] Catherine Douglas Moran, “How Grocers Are Promoting Value Among Their Foodservice Offerings”, Grocery Dive, January 31, 2024, from https://www.grocerydive.com/news/how-grocers-promote-foodservice-value/705114/
[16] Jason Bodner, “The End of the 24-Hour Business”, Brownstone Research, from https://www.brownstoneresearch.com/unpublished/the-end-of-the-24-hour-business/
[17] Bill Aull, Becca Coggins, Sajal Kohli, and Eric Marohn, “The State of Grocery in North America”, McKinsey & Company, May 18, 2022, From http://www.mckinsey.com/industries/retail/our-insights/the-state-of-grocery-in-north-america-2022
[18] Brittain Ladd, “Is Micro-Fulfillment the ‘Next Big Thing’ in Retail?”, Forbes, July 22, 2022, from https://www.forbes.com/sites/forbescommunicationscouncil/2022/07/22/is-micro-fulfillment-the-next-big-thing-in-retail/
[19] Grocery Dive Staff, “8 Trends That Will Shape the Grocery Industry in 2024”, Grocery Dive, January 9, 2024, from https://www.grocerydive.com/news/8-trends-shaping-grocery-industry-2024-omnichannel-ecommerce-store-experience/703824/
[20] Peyton Bigora, “Retail Media to Elevate In-store Grocery Experiences in 2024, Experts Say”, January 29, 2024, from https://www.grocerydive.com/news/grocery-retail-media-instore-experiences-2024/705643/
[21] Neha Ghai, “The Small Format Revolution: Shaping the Future of Grocery Retail “, Grocery Doppio, November 15, 2023, from https://www.grocerydoppio.com/articles/the-small-format-revolution-shaping-the-future-of-grocery-retail
[22] Luke Martin, “Reimagining Retail: The Rise of Augmented Reality”, Retail Insight Network, April 23, 2024, from https://www.retail-insight-network.com/interviews/reimagining-retail-the-rise-of-augmented-reality/?cf-view
[23] Elie Y. Katz, “Skip The Line: The Rise Of Self-Checkout And What It Means For You “, Forbes, April 1, 2024, from https://www.forbes.com/sites/forbesbusinesscouncil/2024/04/01/skip-the-line-the-rise-of-self-checkout-and-what-it-means-for-you/
[24] Hazal Simsek, “Top 11 Checkout Free Stores and Solution Providers in ‘24”, AIMultiple Research, May 23, 2024, from https://research.aimultiple.com/checkout-free-stores/