Supermarkets must understand the new shopper mentality to thrive

5/7/2012

The “new normal” presents a wide range of opportunities for supermarket operators, from new ways to merchandise store brands to new tools to reach the shopper, and the industry needs to act decisively to both retain the current customer base and attract back those who have left for deep discounters, online specialists and other formats. That was the central message at this year’s Food Marketing Institute’s (FMI) Annual Food Retail Show in Dallas.

How to address this new normal focuses almost entirely on the shopper.

“We’ve all acknowledged the recent rise in consumer empowerment, what we may not have properly acknowledged is that there is decided economizing value that informs, shapes and drives the empowered consumer,” said FMI president and CEO Leslie Sarasin.

Sarasin presented the FMI 2012 U.S. Grocery Shopper research, which featured four trends:

Value-Seeking as a Way of Life

Consumers responded to the 2007–2009 recession by choosing private brands and less expensive food options, making fewer trips and buying fewer items at the grocery store, shopping around for deals and generally seeking more value in their grocery shopping. Even consumers in segments not directly affected by the recession exhibited some of these behaviors. As the slow economic recovery continues, these cost-cutting behaviors are persisting and will continue to do so in the immediate future, which is resulting in a reshaping consumer shopper patterns.

Technology as a Fact of Shopping Life

More than half of all shoppers now use technology either before or during their shopping trips, most of it for value discovery–deals, coupons and price comparisons. As technology improves, more customers will be able to readily discover the lowest prices for the products they want. When the lowest price can be located with a few clicks, retailers need to utilize online means to build relationships with customers.

Online Shopping Eating Away at Centre Store

More than half of shoppers buy a grocery category online at least occasionally. Online grocery shopping is making a comeback, as specialist online retailers carve out target categories. Sales numbers of these new specialists now equal those of full-line e-commerce grocers. Online “old-timers” also continue to chip away at key categories with simple searching and subscription purchasing. As digital natives become household shoppers, this is likely to become much more common, pushing retailers to look for ways to better blend their bricks-and-mortar stores with their (or others’) online presence.



Format Innovation Pointing to New Differentiators

Since 2007, the grocery industry has added approximately 150 million square feet of net new capacity. That new space was not built by traditional supermarket retailers, but by supercenters, dollar stores, drugstores and other small formats like fresh specialists and hard discounters. New formats continue to expand, making it more likely that tomorrow’s shopper will have a landscape of options to meet any and all of his or her food retail needs. In this environment, retailers need to seek ways to differentiate themselves through merchandise selection, value, convenience, in-store services, customer relationships, and innumerable combinations of these attributes.

These trends were seen on the exhibition floor, where several vendors offered solutions to help retailers better understand the shopper through the use of data analytics and others showed how to better engage customers online or through mobile applications. They were also reiterated in the educational sessions, which featured titles like “New Metrics of Shopper Marketing” and “What Private Brands can learn from CPG Brand Management.”

The message delivered at FMI this year is that supermarket operators need to get into the minds of the shoppers in order to get into their wallets. Anything less could result in a loss of customers and sales, or worse.

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