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Satisfy your shoppers' demand for local

How grocers can use data to better meet the demand

With competition heating up across the Canadian supermarket segment, many grocers are focusing on how to use the “buy local” movement as a key differentiator.

Some grocers may still question the degree to which embracing this proposition will drive sales and how best to price the category.

For those still on the fence, the results are in: local merchandise is a valuable segment. Now grocers need to use data-driven insights to understand what is driving the category, and then align pricing and assortment visibility to meet consumer demand.

“Buying local” is a hot commodity for grocers. In fact, 61% of Canadians say purchasing local foods and beverages is important to them, and nearly half of this group are willing to pay between 15 and 30% premium for them, according to an online survey conducted by LoyaltyOne.

The survey, which tapped 1,646 Canadian shoppers in May 2015, also revealed 87% of these shoppers would increase their monthly grocer spend if local alternatives were more readily available. While consumers demand local products year-round, the survey found that summer, not surprisingly, has the largest amount of local product spend.

The fact that shoppers are willing to pay a premium for local goods is a strong incentive to more effectively manage the fresh and seasonal perimeter of the store. Carrying a relevant product assortment is an essential first step, but more can be done. As the results confirm, retailers should structure pricing to align with the value that consumers place on local products and make certain it's easy for shoppers to identify what is local when shopping.

To ensure success, the best place to start might not be by evaluating the benefits, but the challenges the category can cause. For example, 60% say the largest impediment is the fact that large chain retailers are not stocking a wide enough selection of local goods. Other top barriers to buying local include homegrown foods that are not properly promoted in-store (39%), and packaging that doesn’t clearly identify products as local (36%), making them difficult to find.

Essentially, it’s time to do some homework. Retailers are increasingly turning to marketing strategies to support “buy local” programs and define a competitive advantage. Among the areas to focus on include:

Showcasing local foods to be easily identifiable. Peripheral departments are often a key differentiator for many brands. However, as the fresh departments grow, especially among produce categories, it is easy to dilute a “buy local” message. By taking stock in fresh local merchandise, grocers can give in-store “buy local” marketing programs a boost. For example, highlight fresh produce by distinguishing these categories on end caps or in-aisle displays highlighted by signage. Fifty-five per cent of Canadians surveyed said they wanted to see local options alongside regular products. This provides a great opportunity to get creative with marketing displays. Besides, marketing displays, modular displays, half pallets and biodegradable boxes also bolster the integrity of “farm-to-table” exhibits.

Identifying high-value customers. Collecting the data is half the battle. Grocers that want to drive buy local programs now need to apply this information to understand how to position and price merchandise. By drilling down to find which shoppers spend the most across the total market, especially across local merchandise, they will be able to identify their high-value customers. And these shoppers are the ones that will drive a “buy local” program.

Targeting personalized offers to local lovers to capture this high-spend customer segment. Armed with a list of high-value customers, and the specific merchandise that drives their spend, retailers now have the input needed to engage them. By learning the specific categories across their local merchandise spending, retailers can tailor promotions and personalized offers via email, SMS text, and even through retailer web sites and loyalty programs that are designed to drive visits, basket size and sales. The more personalized the messages, the bigger the returns.

Competition across the supermarket segment has never been tighter, and grocers are looking for a key differentiator. With a focus on “buy local” programs, grocers are looking for a way to close the gap and grab more wallet share. By showcasing local merchandise in new ways, identifying high-value shoppers, and targeting personalized offers, grocers are delivering value to their “buy local” program and making a commitment to both shoppers and the local economy.

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