Small-Format Grocery Stores and Your Brand

In a time of online shopping and trendy foods, grocery stores need to be able to adapt.  Now that shopping can be made convenient in so many different ways, what can grocery stores do to keep up with the times?  In the past few years, there has been an effective solution: small-format grocery stores.  So, this leaves two questions: what are they and how do you get your product on the shelf?

What makes a small-format store?

Small-format grocery stores typically stock more targeted items, depending on their location.  They are between 10,000 and 40,000 square feet and are located in more urban areas.  All of these go hand in hand.  Urban areas tend to have limited physical space for new stores and expensive real estate.  Because of this, grocers are forced to buy smaller stores.  In these urban locations, target markets change.  If the store is around a college campus, which many are, they are going to stock items that a college student would need: whether it is an ingredient they forgot to make their dinner that night or even a snack.  However, in a completely different area, which might be more residential, they will tailor to the needs of families and have completely different merchandise.

Who is doing it?

While some grocers, such as Trader Joe’s and Aldi, regularly have smaller stores, many of the large grocers are moving towards the smaller format.  Walmart was one of the first to implement smaller format stores with its Neighborhood Market stores in 1998.  These stores are about 38,000 feet with up to 95 employees.  Similar to the Walmart supercenters, the Neighborhood Markets offer produce, meat and dairy, bakery and deli, household supplies, health and beauty items, and a pharmacy.  Walmart had tested even smaller formatted stores in 2011 with Walmart Express but ended up closing them all by early 2016.

Image © Walmart US

Target also took the step into the small-format market, opening the first small-format store in 2012 and the first TargetExpress in 2014.  These stores are about 15% of the size of a typical Target store and target quick trip shopping.  Every TargetExpress carries completely different merchandise, depending on the area and target market.  As of 2018, Target had 65 small-format stores with plans to open 30 more per year.

Image © Target Corporation

Also jumping into the small-format grocery is Amazon.  While no stores have officially been opened, there are talks about Amazon entering the grocery industry.  According to The New York Times, Amazon bought Whole Foods for $13.4 billion.  This is their first step.  They plan on opening stores smaller than the average grocery that customers could buy fresh produce and prepared meals and a variety of non-perishable items, as well as online orders they could pick up and even delivery.

How does this affect you?

When it comes to these small-format stores, they are very picky about what products they choose to have in stock.  They will only use products that they find relevant to the area they are in.  To make it on these shelves, you must know your target audience and market directly towards them.  It is important to do research on your audience and adjust to fit in.  Maybe you will need to change your packaging slightly to draw attention to it or make it a little more compact so that they can fit in with the smaller format trend.  To learn more about getting your product on the shelf, here’s a blog that gives you all the important steps.   This will make the grocers want to put your product in these specialized areas.

To learn more about getting your product on the shelf of grocery stores everywhere or if you have any questions,  please reach out to the NewPoint team. If you are interested in more food marketing topics, please visit our Food for Thought page or check out NewPoint’s Patrick Nycz’s book: Moving Your Brand Up the Food Chain.