Consumers will demand higher quality shopping experiences & products from retailers in 2020

By Elizabeth Crawford contact

- Last updated on GMT

Source: Getty
Source: Getty

Related tags: Food marketing institute, Nielsen, Acosta, Online grocery shopping

As consumers continue to place a higher value on enjoyable shopping experiences, retailers will need to offer more than low prices to drive traffic in 2020, including enticing “sights, sounds and smells” in brick-and-mortar stores, seamless shopping across platforms and a wider-selection of premium and private brand products, predict experts with the full-service sales and marketing agency Acosta.

In recently released research​, Acosta notes that “low price is table stakes”​ for many consumers, prompting retailers to “press for non-negotiable low prices to remain competitive”​ in the New Year. But because there is only so low that prices can go, Acosta also predicts that retailers will look for ways to differentiate themselves based on shopping experience.

For example, it predicts that brick-and-mortar retailers in 2020 will double down on remodels to better showcase the products that consumers want and to make it more convenient to checkout.

Specifically, remodels will better showcase prepared foods, sales of which topped $12.5 billion last year and “will continue to be a heavy-hitter on the perimeter”​ in 2020, Acosta predicts. Similarly, it foresees major retailers incorporating more fresh foods space and engaging events, such as cooking demonstrations.

At the same time, Acosta predicts retailers will incorporate “online order solutions like in-store kiosks and easier checkout options, including cashierless technology.”

Online shopping will gain influence in 2020

Many of these changes are a nod to the larger trend of rising online grocery shopping, which the consumer and market research firm Nielsen says “is nearing a tipping point”​ with 45% average growth rates each of the past three years.

“In 2018, an additional $9.2 billion was spent online for food and beverage versus two years ago,”​ Nielsen noted in a recent blog post​, adding that “categories averaged $76 million in growth with some achieving 6x that amount.”

Based on the strong growth of online grocery shopping, Acosta urges retailers in 2020 to seamlessly integrate the in-store and digital experience or else risk losing consumers.

Many retailers already are taking action on this front, but most also have room for improvement, according to the Food Marketing Institute and the boutique digital and omnichannel consultancy FitForCommerce’s inaugural Grocery Omnichannel Index​ released in September.

The benchmark report, which is based on mystery-shopper data from 26 retailers’ online, in-store and mobile experiences across the country, found all of the 22 national and regional chains and four club and super centers covered in the report have mobile apps, but only 38% of the branded apps were transactional.

Similarly, most retailers “excel at content”​ online, with 96% offering editorial content, but the research found only half make the content shoppable. In addition, 70% offer digital shopping lists, but only 34% allow shoppers to move items from list to cart.

As a bridge between online and in-store shopping, Acosta predicts that more retailers will offer click-and-collect and same day grocery deliver options in 2020 and beyond.

Again, many retailers already offer these benefits, according to the Grocery Omnichannel Index, which found 77% of the retailers in the report offer both pickup and delivery options with 100% offering same-day delivery and pickup.

Consumers will trade up in 2020

Whether online in or in-store, retailers also will need to improve the quality of the products they offer to continue to drive traffic, predicts Acosta

It notes that “with the economy going strong, consumers will be eager to trade up to premium products to indulge or treat themselves.”

This holds true not just for national or legacy brands, but also private-label, which Acosta notes will continue to grow after capturing almost one in five consumer packaged goods dollars in 2018.

Consumer research by the Food Marketing Institute and IRI reinforces this prediction and the importance of high-quality private label products by revealing that today 46% of consumers say store brands influence their store choice. This is up from 33% three years ago.

This uptick, which reached $153 billion of private brand sales in the US in calendar year 2018, can be attributed to “retailers treating private brands as brands, rather than just following the lead of national and legacy brands,”​ according to Doug Baker, FMI vice president of industry relations.

Online retailers can further drive sales of private label by listing their brands first on search results unless and national or legacy brand pays for higher placement or can provide a business case, the consumer research firm Nielsen argues in research.

Categories primed for growth

Taking a step back from private-label versus national brand to look at specific product categories primed for growth in 2020, Acosta predicts consumers will continue to seek healthful products. It notes that nearly two-thirds of US adults said the “healthfulness”​ of a product influenced their food and beverage purchases.

In particular, Acosta predicts products “with added nutritional benefits, including electrolytes, minerals, adaptogens and prebiotics, are expected to reach $275 billion by 2025.”​ It also predicts CBD sales will grow from under $2 billion in 2018 to $20 billion by 2024 and that sales plant-based everything,”​ which grew double digits in the past five years, will continue to rise.

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