Independents should focus on local, unique products, says study

Independent grocers should stop trying to compete on price with major chains and should instead put the accent on local and unique products and a more personalized shopping experience.

Those are among the conclusions of “4 Ways to Win for Independent Retailers,” a report conducted by LoyaltyOne, which designs and implements loyalty programs, and the Retail Council of Canada.

It was based on two online surveys conducted in January 2014 involving 1,010 Canadian consumers and 613 independent retailers.

“Traditionally, we’ve seen independent retailers try to price match and focus in on prices,” said Jeff Berry, senior director of research and development at LoyaltyOne in Toronto. “But the focus on (prices) as your primary strategy seems to be actually counter to what consumers are actually saying.”

The report finds 81% of consumers do not expect independent retailers to match the prices of big chains and that 68% would rather shop at a local store that offers personalized products and services even if the price is slightly higher.

If independents focus on a price matching strategy, “they’re actually missing the broad reasons why consumers are more interested in shopping from them – personalization, tailored-product offering and limited selection,” Berry said.

Although it may sound counterintuitive, “we’re finding that consumers are overwhelmed by the volume of choice that they have. In a lot of ways, independent retailers are well-positioned in that they do often limit what they carry.”

The report notes only 19% of independents are following a strategy of stocking local products. As a result, they are missing an opportunity, as supporting the local economy and buying local products are the top two reasons consumers give for shopping at an independent store.

It also found shoppers seek out independent retailers for one-on-one service. “Customers want a meaningful shopping experience: one full of recognition, personalization and the karma-rich payoff of supporting a fellow community member,” the report said.

Berry said that while loyalty programs used to be prohibitive for independent retailers, “the costs have come down significantly in technology and in the ability to execute these programs.”

The challenge for an independent seeking to launch a loyalty program does not involve cost or technology but whether it can provide consumers with enough value to make it meaningful, he said.