Onsite food retailing expands in the wake of the pandemic and with new technologies

Retail stores have been around for a long time in onsite environments, in guises like c-stores on college campuses, sundries shops in office buildings and mini-pharmacies in hospitals. The stock in these establishments generally consisted of quick-turning convenience items like snacks, beverages, toiletries and—once upon a time—tobacco products

Over time, a few pioneering hospitals and colleges opened full-scale grocery stores—even some rather upscale ones—sometimes replacing more traditional retailers. The rationale was usually a combination of a need to provide onsite populations with a convenient outlet to do shopping for necessities and the realization that given a sufficient sized customer base, these stores could serve as a source of added revenue.

Nevertheless, these remained the exceptions in the onsite convenience retail world.

However, two recent developments have now driven a trend toward more onsite retail spaces that operate as mini—or not so mini—grocery stores rather than bare-bones c-stores.

The Ginger Market at San Jose State University focuses on serving the specific needs of the SJSU community, where over a third of students are of Asian ethnicity, so the store has strategically curated a wide selection of more than 400 SKUs that include a large selection of Pan Asian food and beverage offerings like fresh sushi, ramen, poke bowls and tea.

One is the recent COVID pandemic that prompted a number of dining departments to extend onsite grocery shopping to their premises both as a convenience for time-pressed staff—something especially needed in hospitals of the period—and as a way to generate some more revenues. In offering this service, dining programs leveraged their existing purchase relationships with manufacturers and distributors, allowing them to be in position to procure some at-the-time difficult to find items like dairy and paper products.

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While most of these ad hoc retail operations have been discontinued with the waning of the pandemic, the experience did leave behind the idea that onsite food and grocery retailing was a potential market niche that could supplement traditional dining program revenues that continue to be impacted by diminished customer counts in the post-pandemic environment, especially in workplaces and healthcare facilities.

The checkout-free Lunchbox employee grocery outlet was opened by Ahold Delhaize USA’s Retail Business Services arm inside the Giant Direct e-commerce fulfillment center in Philadelphia to let staff buy fresh and shelf-stable sandwiches, salads, vitamin waters, milk, fruit cups, soup and snacks in seconds by scanning in to enter, shopping and walking out.

The other major development driving expanded onsite food and grocery retailing is the proliferation of advanced automated checkout technologies that reduce or even eliminate the need for increasingly expensive and increasingly scarce onsite staff while extending service hours to literally around the clock.

As a result, major contract firms have been cranking up their forays into automated retailing in onsite environments, especially colleges, where a substantial round-the-clock onsite customer base that is also already tech-savvy is a natural market for this kind of operation.

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Aramark won an FM Best Concept Award last year for its P.O.D. Warehouse store at Arizona State University (ASU), where the company replaced a closed campus Walmart with a grocery-style warehouse concept that adapted its existing convenience retail framework to craft a solution that provides the campus community and nearby residents with easy access to fresh groceries, on-the-go-meal solutions, everyday essentials and other popular retail categories, and with ASU students able to utilize their meal exchange options and dining dollars to make purchases.

Last year, Sodexo announced plans to bring eat>NOW brand autonomous grocery stores to campuses across the U.S. One recent example of this move is the expanded 1,000 sq.ft. Oscar P’s General Store at Tarleton State University in Texas, which operates as an urban grocery shop retailing fresh grocery and pantry items, school supplies, meal kits, household goods, and branded Oscar P novelty items.

Also last year, Chartwells announced plans to expand its partnership with autonomous retail company Standard AI to bring 100 autonomous retail stores to U.S. universities after the two firms had teamed up back in 2020 to retrofit an existing retail space at the University of Houston using Standard AI’s autonomous platform. They subsequently collaborated on more new and revamped markets such as the Ginger Market at San Jose State University, which aligns its stock with the preferences of the heavily Asian onsite population.

Artificial intelligence-powered touchless system from vendor Mashgin enables quick checkout at the Paws N Go Market and LBJ Marketplace at Texas State University, facilitating business.

Serving specialty populations is a sub-trend in the growing onsite retail world that has included category spread not only in traditional areas like packaged meals but also fresh meats, dairy and produce, as well as opportunities for engaging with more suppliers, including local, niche, organic and minority-owned businesses and serve specialty populations like vegans and ethnic minorities,

Colleges aren’t the only onsite market jumping on this trend. Businesses with substantial time-pressed employee populations are also seeing a benefit of leveraging technology to provide practical on-premise grocery shopping services. One recent example is the checkout-free employee grocery outlet opened by Ahold Delhaize USA’s Retail Business Services arm inside the Giant Direct e-commerce fulfillment center in Philadelphia where the company’s “Lunchbox” frictionless technology enables staff to buy fresh and shelf-stable sandwiches, salads, vitamin waters, milk, fruit cups, soup and snacks in seconds by scanning in to enter, shopping and walking out.

For healthcare facilities, onsite grocery stores generally have been ways to facilitate better community health by providing nutritious food at reasonable cost (or no cost in the form of food pantries). These have cropped up even before the COVID crisis, such as the 65,000-sq.ft. non-profit Market on the Green opened in the middle of the last decade by ProMedica in a “food desert” in Toledo, Ohio, that gave area residents access to categories like fresh produce, meat, frozen items, dairy, health and beauty products and even pet supplies.

At Eskenazi Health in Indianapolis, the Fresh For You Market was designed to be more than just an onsite grocery store where staff and visitors can pick up things like fresh produce, dried beans, healthful cooking oils and other items from which to compose a nutritious meal, but also partnered with the hospital’s outpatient nutrition team to create recipes and weekly meal plans to further encourage at-home cooking.

Aramark’s P.O.D. Warehouse at Arizona State replaced a closed campus Walmart with a grocery-style warehouse concept that provides the campus community and nearby residents with easy access to fresh groceries, on-the-go-meal solutions, everyday essentials and other popular retail categories.

More recently, the Rush University System for Health in Chicago is planning to open a grocery store in conjunction with a new 60,000-sq.ft. outpatient center in an impoverished neighborhood on the city’s west side.

Other hospitals are finding commercial grocery partners for such community service stores, such as an alliance between Novant Health in North Carolina and grocery chain Food Lion to launch a food pharmacy pilot program at Novant Health New Hanover Regional Medical Center in Wilmington that will provide access to nutritious food and healthy eating choices.

One commercial grocer that has entered the onsite world in a more traditional way—by opening stores on client campuses—is Plum Market, which enters the market in 2018 at Oakland University in Michigan, then adding outlets at Butler University in Indiana and Case Western Reserve University in Cleveland.