The rise of the internet marketplace has forced every industry to make some adjustments. Grocery retail has certainly not been an exception. Any sales and marketing agency worth its salt would tell the average brick-and-mortar retail business that the key is shifting their business strategy to an outgoing one, and to focus on making products available online. The retail grocery industry, however, isn’t positioned to live largely just online. Rows of fridges and freezers, deli, bakery, and butcher setups require real estate. The only recourse for grocery stores is to bring business to them.

As a result, the industry has seen an upswing in more niche and artisanal grocery stores, increased point of sale convenience, an emphasis on health and transparency, and, significantly, a reimagining of what grocery stores are and provide. There are two key components of that paradigm shift. One is a generally expanding push to control and market more of the food preparation process, like offering ready-to-cook meals and meal kits. The second is about making the grocery store food experience about more than just buying groceries. Specifically, it’s about offering a personal, sophisticated, and enjoyable in-store eatery.

Why It Makes Sense

As more of the grocery store/restaurant hybrids (aka “groceraunt”) prove successful, the explanation for their success becomes both clearer and more obvious in hindsight. Millennials, it turns out, are the ideal demographic for contributing to the success of groceraunts. While 43% of the general population eats out once a week,53% of millennials go out to eat once a week, choosing restaurants over home-cooked meals more frequently than Gen X or Baby Boomers.

It’s also no accident that so many of the groceraunts focus on coffee and alcohol. There are a lot of wine tastings, local and craft beers on tap, collections of specialty whiskeys, etc. This is due in part because alcohol turns a profit pretty handily, and, as any CPG marketing firm will point out, one of the most successful strategies for in-store conversion is keeping customers in the store. If the restaurant-preferring, locavore, niche-appreciating millennial crowd will buy a beer or glass of wine in-store, maybe with friends, and stick around to make more purchases, all the better.

Groceraunts as Food Labs

Another unique feature of the millennial food preference is the emergence of the meal kit as a multi-billion-dollar industry, one that seems primed to grow. Both in-store and delivery meal kits have been increasingly popular, and grocery outlets and chains are enthusiastic about becoming players in the trend. As direct moves to do so, the big chains, including Albertson’s and Kroger, have acquired meal kit delivery businesses as well as producing meal kits in-store.

Kroger has taken an additional step to better understand the tastes of consumers by establishing Kitchen 1883, a restaurant that also functions as a sort of food lab employing ingredients found in Kroger stores to determine what people like, what they don’t, and what’s feasible for mass-production. This trend offers an opportunity for grocery stores, the CPG brokers that supply them, and the food producers to better understand what customers would like to see and enjoy in grocery stores. Along with the traditional goods offered by grocery outlets, there’s a clear move toward more restaurant-relevant and meal kit products. And that offers an opportunity for forward-thinking grocery stores, grocery brokers, and those with independent food brands to promote the products consumers want. By working with a CPG broker with experience, brands and stores can leverage their broker’s knowledge of industry trends to help guide their own products and stores to success in the competitive grocery market.

About Impact Group

Since their founding 1994, Impact Group has relied on leveraging precisely-analyzed, fact-based, and empirical data on both the trends within the CPG industry and customer buying patterns. This proven CPG marketing strategy has consistently and effectively guided their clients up productive and profitable growth and profit paths. Analyzing the industry-relevant economic metrics and capitalizing on them with their advanced proprietary technology has led to Impact Group’s recognition and respect as an innovative thought leader in CPG brokering.

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