The pandemic has delivered enormous sales to grocery retailers. But it has also flattened those store experiences they’ve invested so deeply in, forcing companies to reexamine how shoppers want to engage with them now and in the future.
Consider, as Grocery Dive and other business publications have, the salad bar. These stations have been a lunch and dinnertime draw for years. And though industrywide sales have slowed, a properly run salad bar can freshen up a store and offer a welcome break from all those aisles of packaged products.
During the pandemic, shuttered salad bars and hot bars have become, depending on where you shop, glorified shelving units or empty eyesores. The salad bar at a Safeway near my home is a vacant, depressing site. Another one located at a Metropolitan Market is loaded with bottled waters and bags of snacks, making a mockery of the sign overhead telling shoppers to "build a fresh meal." At a nearby PCC Community Markets store, the once bustling self-service bars mostly go ignored by shoppers despite having packaged prepared meals stacked on them.
It’s the same story at the in-store restaurants, bars, seating spaces, food sampling stations, classrooms and other spots retailers have built to make their stores more of a "third place" where shoppers want to spend time (and, of course, shop). Jungle Jim’s, an Ohio grocer with two massive stores, including one with a monorail leading to a bourbon bar and event space, has had to shut down all of its store attractions during the pandemic. The store’s director of operations, Phill Adams, recently told Grocery Dive that these days the company is positioning itself as more of a giant product warehouse than amusement park.
Grocers certainly haven’t struggled to draw shoppers since the pandemic began. But restaurants are reopening and honing their takeout game, and they’re starting to steal back meal dollars. Last month, grocery sales dropped 1.6% compared to May while restaurant sales rose 20%, according to data from the U.S. Census Bureau.
How should grocers approach their store experience during the pandemic and after? Some are biding their time, letting their self-service bars and other experiences sit vacant as they wait for the virus to subside. This is risky, however, because COVID-19 is surging and could hit the U.S. hard this fall and winter. That means losing revenue from precious store real estate over a prolonged period of time. Even after a vaccine is developed and the virus is no longer a threat, there’s no guarantee consumers will rush back into store restaurants and hot bars at levels that justify their space and service costs.
Others are moving decisively to repurpose store activities and create new shopper experiences. Last month, Wegmans closed down its beer-and-burgers restaurant called The Pub for good. Although The Pub had just 12 locations, it helped burnish Wegmans’ valuable reputation as a place to hang out, not just buy groceries. Permanently closing down those spots must have been difficult for Wegmans, which carefully crafts its in-store dining destinations. But the fact that it did indicates the chain, whose chairman in May lamented losing its “mojo” during the pandemic, is looking ahead instead of waiting around.
Likewise, Costco is trying to bring back its beloved sampling program in a contactless form, and chains like Publix are turning their salad bars into full-service stations where employees dish out custom meals.
Heinen’s, the chain that Food & Wine recently singled out as one of the top regional grocers in the U.S., has felt the impact of the pandemic on its many culinary experiences. Stores used to offer wine pours by the glass, host beer tastings and sell as many as 150 salads an hour out of its salad bars. But all of those services have been shut down since March — and they’re not looking like they’ll open again anytime soon, judging by the rising COVID-19 cases in Ohio.
It's tough for a company that has spent years embracing its customers to suddenly have to keep its distance from them. Yet Heinen’s is determined to explore new options. Earlier this month, as Grocery Dive reported, the Ohio grocer became one of the first food retailers to plug in a 6-foot-tall salad vending machine named Sally at one of its stores. The machine serves up 22 different fresh ingredients in a range of standard and customized options, delivers customer data around which options are most popular, and might just end up replacing the salad bar for good.
Chris Foltz, Heinen’s chief innovation officer, told me that Heinen’s executives have been talking a lot lately about what will constitute a great experience for its customers now and in the future. They’ve decided to focus more on innovation, safety and convenience and less on trying to create an immersive store environment.
“The level of engagement customers want from the retailer will be different,” Foltz said. “There’s going to be more concern about contactless purchasing, more concern about social distancing, and those kinds of things are going to stay around for a while.”
Heinen’s has a name for its plan: the return to the new normal. And it involves striking the right balance between the hands-on service many of its shoppers expect with the hands-off convenience that so many now demand.
This fall, Heinen’s will pilot new deli cases that, instead of 16 feet of full-service space, will feature 10 feet serviced and 6 feet dedicated to about a dozen top-selling packaged deli products. Heinen’s is also retooling its online shopping platform, which has ballooned from 3% of the company's total sales pre-COVID to a little more than 10% currently, to offer more prepared foods.
Heinen’s recently reintroduced sampling at its service counters. That means anyone can try a cut of ham or sample the macaroni salad before they buy. Next, Heinen’s wants to, like Costco, bring back floor sampling. Foltz said the company’s loss prevention and food safety experts are currently developing a way to do this safely.
"The level of engagement customers want from the retailer will be different. There's going to be more concern about contactless purchasing, more concern about social distancing, and those kinds of things are going to stay around for a while."
Chief innovation officer, Heinen's
A growing number of retailers are developing experiences customers can enjoy outside of their stores, like online cooking classes, digital activities for kids and, in Walmart’s case, a summer full of drive-in movies. But grocers also need to figure out how they’re going to engage their shoppers after the pandemic, when demands for safety, convenience and service will likely be different from what they are now. Shoppers may not want wine tastings, restaurants and self-service bars from their local grocer — and grocers have to be prepared for that.
There are silver linings in any challenging time. Just as Amazon’s acquisition spurred grocers to finally take online shopping seriously, the pandemic will no doubt force them to make updates that they may have otherwise dragged their feet on. At Heinen’s, salad bar sales were declining for years. The department saw a lot of sales velocity, but it had become difficult to overcome high ingredients and labor costs. Sally is a lot more efficient, and with the introduction of a new ordering app very soon, it'll be completely contactless.
Heinen's was also meaning to put more prepared foods online, and the pandemic has now forced its hand.
As for the deli — sales of packaged meats and prepared foods have been growing faster at Heinen’s than the serviced selections. Foltz said building out a new grab-and-go department was likely coming at some point in the future.
“The industry was kind of moving in that direction anyway, and then overnight it became a reality,” Foltz said.