Insight Presentation – December 2016 © IGD 2016 Executive summary Based on our global program of store visits, we’ve identified 15 of the best store formats that bring to life how grocery store formats are evolving against a backdrop of key industry trends. Retailers are focusing new format development on providing shoppers with new reasons to visit, emphasising their value credentials, integrating online and digital initiatives and building a stronger presence with food-to-go. For many retailers the focus is on reinventing or re-engineering existing store formats. Carrefour in particular had been making significant progress in this area, accounting for three of the featured stores. Despite a significant amount of technology–led innovation, this theme does not feature widely within our group of selected stores. In-store technology has not yet gone mainstream within the grocery sector. Retailers’ increasing level of investment in prepared foods/food-to-go is evident. This is a key trend shaping format development in several markets and we expect to see further development at the intersection of retail and foodservice. Source: IGD Research © IGD 2016 Introduction Although we continue to see an accelerating shift towards online and digital retailing, physical formats will remain an important element of the mix for most grocery retailers globally. Against this backdrop we continue to see a high level of innovation as retailers focus on the development of new offers and services to drive traffic to core formats, invest in new channels, and repurpose existing space to ensure the future relevancy of existing stores. With our team of analysts visiting over 20 countries this year, we’ve identified the Top 15 stores you should visit which bring these trends and others to life. This insight report was prepared by IGD’s regional research managers Featuring a mix of core stores, new concepts and unique operators which can drive inspiration across the sector, we’ve highlighted the stores to visit in 2017 and what you can learn by seeing these examples of retail development. Nick Miles Gavin Rothwell Milos Ryba Stewart Samuel Jon Wright Source: IGD Research Asia Pacific Latin America Central Europe North America ©EMEA IGD 2016 15 stores to visit in 2017 Stockholm: Toronto: London: Urban Deli Pusateri’s Food Sainsbury’s Shanghai: Hall Easy Carrefour Bucharest: Mega Image Paris: Ljubljana: Carrefour Saint Mercator Ho Chi Minh: Los Angeles: Emart 365 by Whole Marcel Foods Market Munich: Aldi Bangkok: Jeddah: Central Food Hall Nahdi Buenos Aires: Carrefour Monroe Cape Town: Woolworths Sydney: Woolworths Source: IGD Research © IGD 2016 North America: 365 by Whole Foods Market Overview: Silver Lake, Los Angeles, California, USA Whole Foods Market launched its new value-focused store concept in May. The smaller format store features a curated range of mainly private label products at value prices. Featuring a contemporary look and feel, the store is geared towards millennials and utilises technology to streamline the shopping experience. Future development With three stores up and running, the retailer is now taking a pause ahead of its next opening in spring 2017 in Austin, Texas. The retailer has 17 additional sites under development, and the Why we chose it expectation is that this new 1. Unique concept but is complementary to the core Whole Foods Market chain. chain could grow to be as large 2. Developed with a lower cost structure and operating model that is providing learnings as it core business which which are being applied across the business. currently numbers over 400 3. Re-thinks the Whole Foods Market model through external partnerships as part of its stores. ‘Friends of 365’ program. Source: IGD Research © IGD 2016 North America: Pusateri’s Food Hall Overview: Pusateri’s, Eaton Centre, Toronto, Canada As part of its entry into the Canadian retail sector, US department store chain Saks Fifth Avenue has partnered with Toronto based Pusateri’s, one of the leading gourmet-focused retailers in the city, to create a food hall offer within its stores. Including two Saks food halls, the retailer operates six stores in total across the city. Why we chose it 1. Incorporates a number of innovative elements including a ‘vegetable butcher, ‘dait bar’ and a vegan and gluten- free bakery. Future development 2. Inspirational concept for operators looking at creating a Saks is expected to open a further five department stores distinctive and elevated food experience through a range in Canada, although given their likely locations beyond of dine-in options, unique products and service counters. Toronto, it may chose to work with other locally relevant 3. Provides a contemporary take on the traditional food hall operators. However, Pusateri’s has scope to grow within format, comparable to operators such as Eataly, with the Greater Toronto Area, particularly given the minimal new ideas for product merchandising. level of competition in the premium segment. Source: IGD Research © IGD 2016 Latin America: Carrefour Monroe Overview: Carrefour, Buenos Aires, Argentina Carrefour has innovated in a big way in store formats across many different markets over the past year, and the Monroe compact hypermarket in Buenos Aires stands out as one of its most progressive in how it has integrated digital into the mainstream proposition to improve the shopping experience. Why we chose it Future development Digital extends to tie in neatly with 1. Digital from start to finish – the huge digital screen on entry features welcome messaging that the retailer’s online proposition, still can change at different times of the week or seasons, and to promote relevant offers in-store. at an early stage of development in 2. Targeting a key area of frustration – the queue. We were struck by the value that digital Argentina. While there are no plans integration added in saving shoppers time at the checkout – a common area of frustration in- to roll-out all the technology across store, in enabling shoppers to start queuing digitally during, rather than after, their shop. all of the estate, this store is an 3. Making the standout parts of the store stand out more. Signage at the counters helps the important step forward in helping us decision-making process for shoppers, by providing supporting product information and to understand what shopping trips of relevant offers. the future could entail. Source: IGD Research © IGD 2016 Western Europe: Sainsbury’s Nine Elms Overview: Sainsbury’s, Nine Elms, London, UK Nine Elms is Sainsbury’s new London flagship, showcasing the layout, look, environment, service and product offer of Sainsbury’s supermarkets of the future. A store of many firsts, it hosts both an Argos and a Habitat concession, following the £1.4bn acquisition of Home Retail Group by the UK’s second largest grocer. The store also debuts Sainsbury’s new ‘Foodhall’ concept and is the first to include a purpose built Lloyds Pharmacy outlet. Future development Sainsbury’s plans to have opened 30 digital Argos store and 200 digital collection points by the end of 2016 as it looks to leverage Argos’s sector leading logistics capabilities. Seven Habitat concessions will also open by next March, an upper- Why we chose it mid market brand that has a natural fit with Sainsbury’s. 1. Demonstrates how Argos and Habitat can provide compelling new ‘Foodhall’ has much potential to reasons to shop at Sainsbury’s, allowing Sainsbury’s to capture a much emphasise Sainsbury’s food greater share of shoppers’ spend. credentials in store with an 2. Re-imagined food-to-go offer enables this large (5,700 SQ M) store to expanded non-food offer. serve food-for-now shopper missions as effectively as main shopping trips. 3. Sushi Gourmet concession reinforces a re-styled bank of counters and makes the ‘Foodhall’ concept more experiential. Source: IGD Research © IGD 2016 Western Europe: Carrefour Overview: Carrefour, Saint Marcel, Paris, France The first interpretation of the ‘gourmet’ or ‘premium’ format that Carrefour has added in France, Saint Marcel opened in July 2016. The store was redesigned with the shopper firmly at the forefront of the planning. A food-to-go area at the entrance has longer operating hours than the rest of the store, enabling shoppers to buy breakfast and evening meal solutions quickly and easily. The rest of the store’s offer, meanwhile, has been adapted to meet local shoppers’ needs. Future development Carrefour’s premium or gourmet format has been added in Italy, Poland and Spain, underlining its global potential. In France, the company believes there is the opportunity for only about 30 upmarket stores, with most to be opened in Paris. Why we chose it 1. While the format may not be rolled out to hundreds of locations, it adds another option for Carrefour to flex its offer to meet the needs of different shoppers, especially in urban areas. 2. Operating within the centralised buying structures of Carrefour, the format provides store managers with the opportunity to adapt ranges, echoing the benefits of the franchise model. 3. From the food-to-go area, to locally-focused ranges and a range of checkout options, Carrefour Saint Marcel has been designed with shopper missions firmly in mind. Source: IGD Research © IGD 2016 Western Europe: Urban Deli Overview: Urban Deli, Sveavägen, Stockholm, Sweden Urban Deli is a combination between a restaurant, a food hall, a supermarket and a bakery. The business originally launched in 2009 and now operates three sites in Stockholm. Urban Deli also has its own bakery production and offers catering, rental, conference and banqueting facilities. Leading Swedish retailer Axfood acquired a 50% stake in the business in 2014. Future development Earlier this year, Axfood appointed Jesper Weidlitz as President of Urban Deli. Weidlitz originally founded the concept and will combine his new role with business development.