The pandemic generated a tsunami of changes in the grocery and foodservice industries, and it’s not over yet, according to global convenience store food experts speaking at the 2021 virtual NACS Convenience Summit Europe.
Panelists Daan Merckx, manager, retail and innovation at Areaal Advies in the Netherlands; Jesper Østeergaard, managing director of Reitan, which has been the 7-Eleven licensee in Denmark since 1993; and Mary Rose Hannum, senior director, fresh food and beverage experience for Pennsylvania-based Wawa in the United States, discussed how their companies managed pandemic challenges and what future changes retailers can anticipate because of COVID-19.
At Areaal Advies, Merckx and his associates work closely with developers, recommending retail and foodservice concepts that will attract consumers and make shopping areas “future proof.”
Although not new, the shop-in-shop concept is gaining momentum.
“We make shopping areas fun,” he said. Right now, “a trend we’re seeing in the Netherlands is that food retailers and grocers are looking for opportunities in foodservice.” Merckx provided several examples, including two involving SPAR, the private, multinational retail company based in Amsterdam. Last year, SPAR Supermarkets acquired 12 shops, which are named The Tosti Club in honor of a traditional Dutch sandwich.
In addition to sandwiches, the chain’s menu features smoothies, pancakes, cakes, granolas, yogurt and the Tosti Slice, a Dutch version of pizza, all made with quality ingredients. The company promotes its efforts at sustainability and lets customers know that all food waste—even bread crusts— is collected and donated to a petting
zoo at the end of the day. SPAR offers Tosti Club franchises and is integrating the Tosti model into the company’s existing grocery stores, a concept known as the shop-in-shop.
Feature image: Unattended micromarkets offering self-checkout like this one in the Netherlands from Albert Heijn are gaining traction as grab-and-go spots in office buildings, hospitals and schools. Top and bottom: A trend in the Netherlands is the pairing of food retailers and grocers in concepts like the Tosti Club shops, owned by SPAR Supermarkets. SPAR is integrating the Tosti model into existing grocery stores to create a shop-in-shop concept.
The shop-in-shop is not new, but it’s gaining momentum. The mini stores can breathe new life into a large retail environment and often become destinations that boost foot traffic in the bigger store.
Another novel foodservice concept is SPAR University, a chain of grab-and-go outlets located on university and college campuses. The unattended stores sell food and beverages, which change by daypart, plus SPARBUCKS coffee and other products students typically need. Shoppers select their merchandise and then self-checkout using their mobile devices. “Everything at SPAR University is super healthy,” Merckx said of the product selection.
A third example is the partnership between Selecta Catering and Albert Heijn, the largest Dutch supermarket chain. When market research revealed consumers’ growing need for tastier, fresher foods and drinks 24/7, the two companies teamed up to create FOODIE’S MicroMarkets. The current 20 stores, all unattended and located in office buildings, hospitals and schools, are furnished with innovative “smart fridges” stocked with Albert Heijn products. Plans call for opening 80 additional outlets over the next few years. According to the FOODIE’S website, a MicroMarket can be installed and operating within four weeks.
When the pandemic closed businesses around the globe and employees began working from home, consumers everywhere became online shoppers out of necessity. There are pros and cons to that, Merckx said.
“Look at Amazon or Hello Fresh or the startups like Flink or Gorilla. They make a lot of money disappear from the local economy,” said Merckx. “That’s dreadful for the local economy because that kind of company won’t support, for example, the local football club. But [that same situation] also opened doors for creative local initiatives.”
According to Østeergaard of Reitan, the pandemic forced Scandinavian grocers to quickly adopt online ordering and offer home delivery. “Grocers have been the only retailers open—other than us and pharmacies. They have actually introduced a big range of ready-to-go foodservice products, although we haven’t seen them establish separate brands,” he said. “But they’re growing their foodservice business in general.” Reitan Convenience Denmark was recognized with the 2019 NACS International Convenience Retailer of the Year Award.
Hannum of Wawa said that U.S. retailers haven’t seen the changes currently under way in the Netherlands, “but supermarkets had the opportunity to capitalize and promote the convenience of delivery, and we’re concentrating on the competition they bring to that morning daypart.”
Wawa stores have long been a part of many commuters’ morning routine, she explained. “But as we saw during the pandemic, especially in the morning, those routines have changed. Many people aren’t going out of their homes to work or, if so, it’s much later in the day. They’re purchasing products—coffee or whatever—and having them at home, which is an easy solution for grocery stores to provide.”
Understanding the need to be as convenient as possible despite the pandemic’s business disruptions, Wawa also offered shopping options, such as mobile ordering, curbside pickup and home delivery. “We’ve been in that world for over a year now,” Hannum said. “We saw fantastic growth during the pandemic, and it’s continuing.”
Wawa has relied on Grubhub, Uber Eats and other delivery platforms to get food into customers’ hands. But when a customer uses a third-party’s app to place an order, they also see what the competition is offering. In response, Wawa developed its own proprietary ordering app.
“It’s a constant battle,” she said of the competitive foodservice industry. “But it keeps you on your toes.”
Gen Z Shoppers
Top and bottom: In the U.S., Wawa offers mobile ordering, curbside pickup and home delivery services. This store in Vienna, Virginia, has EV chargers but no gas pumps. In Scandinavia, Reitan’s 7-Eleven stores are promoting better-for-you food and drinks.
“What about Gen Z, the swipe generation?” Merckx asked the panel. “If you look at them, they appreciate sustainability and health products, but they’re less loyal [to brands].”
“That’s happening in Scandinavia, as well. They shop all around,” Østeergaard said of the consumer group born between 1997 and 2015. “We’ve developed our own app, which creates some loyalty. We have a lot of active users, and obviously, we’ve been helped by the pandemic because not a lot of retail stores were open. It’s a challenge, and we’re not where we want to be yet. But I don’t think you ever reach that goal. You have to redevelop that all the time.”
Hannum agreed that it’s difficult to capture and keep the attention of Gen Z shoppers. “We have the app, and they’re interested in ‘what is the promotion or the deal?’ and ‘can I get that someplace else?’ So, you’re tackling that,” she said.
Fortunately, information from Wawa’s loyalty app—along with traditional research—helps the chain better understand what young people want to buy.
“We find what Gen Z is looking for, such as clean-label products, and make sure we communicate that we have them,” she said. “We have a broad range of products—from the highly indulgent and typical convenience store items to clean products or what we would say is a Wawa-branded item. We ensure that we’ve removed all unnecessary ingredients. They may not be low-calorie, but they are clean items.”
Gen Z appreciates sustainability and health products, but they’re less loyal [to brands].
Gen Z customers tend to go for Wawa sandwiches, which provide a wide range of topping options, and the chain’s full-serve beverage line. “Throughout the pandemic and even into his year, we’ve had phenomenal growth in that area, particularly in the drinks,” Hannum said. “We’re finding it’s the younger consumers who want those types of items, energy drinks and things like that. Seeing some of those new items dominate the stores’ performance month over month is fantastic, and we continue gathering information to better understand what Gen Z wants and how we can entice them back for that next visit.”
Today, consumers of all ages have different dietary needs, and “retailers must offer variety of choices,” Hannum added. “People eat in many ways. It’s our job to provide them with choices.”
For several years, Scandinavian 7-Eleven stores promoted better-for-you food options. 7-Eleven management told suppliers what products they wanted to offer customers instead of accepting whatever merchandise the suppliers made available. But consumer interest wasn’t as great as management hoped.
“We’ve increased our product range, and in the past two or three years, the consumer has begun demanding those items,” Østeergaard said. “Sales of traditional products remain relatively flat. Growth in food is coming from the demand for healthier choices, which increased during the pandemic. All the hard work we’ve done over the years is beginning to pay off, and it’s really exciting.”
NACS Convenience Summit Europe 2022
The NACS Convenience Summit Europe took place virtually June 1-3. Next year, the event takes place live in Berlin, Germany, from May 31 to June 2, 2022. Visit www.convenience.org/cse for more information.