Trends in Grocery RetailAuthored by Steven ConwayDate: 2008
Then…
And Now
Evolution of Retail
Grocery retail very much different vs. ten years ago• Organics and “all natural” products permeate all shelf space• International food exposure drives demand for products at retail
Manufacturers and retailers develop new retail environment• Time crunch drives ready-made growth• Lux touches go mainstream with specialty sections (i.e. cheeses,
wine, olives).• Desire to be destination of choice in increased competitive food
retailing drives lifestyle store formats
Consumer behavior drives grocery retail
4. Environmentally Aware
5. Economic Pressure
Private LabelGo Green Initiatives
3. Health Conscious
Education
2. Variety Desired
Niche Aesthetics
1. Convenience Key
Quick Trip SolutionDisplay
Ready-Made Semi-Homemade Digital
Convenience Key
1. Convenience Key
Quick Trip SolutionDisplay
Ready-Made Semi-Homemade Digital
Consumers look for DIFM alternatives
Consumer behavior: Overscheduled, seek ready-made foods to alleviate pressure of cooking
Retail challenge: Fighting for share of meal dollars against takeout and restaurants
Retail solution: Ready-made meals & sides to accommodate
lifestyles– Example: Whole Foods, Tesco Fresh and
Easy Market, Safeway’s Citrine Bistro, and Lund’s Market.
Source: Progressive Grocer, August 2007 Iconoculture
Whole Foods Salad Bar
Consumers want short cuts - retail delivers solution
Consumer behavior: Lack of time for meal planning, tired of defaulting to same old standby meals
Consumer challenge: Finding new meal ideas, gathering ingredients
Retail solution: Solutions displays—multi-category promotions ideas from meals to spring cleaning
– Example: Fresh Express, ready-to-eat salads, works with retailers & thirty other brands to bundle together meal solutions
Source: IRI. Times and Trends. August 2007
Fresh Express bundle meal solutions
Consumers think of “homemade” in a new way
Consumer behavior: Desire to control what family eats, but lack of time and know-how to make multi-faceted meals
Consumer challenge: Shortcuts to make prepared + fresh = homemade
Retail solution: Dinner assembly sessions
– Example: Publix Apron’s Make-Ahead Meals, customers register for sessions, create meals using retailers ingredients and selection of recipes
Publix Apron’s Kitchen Line
Source: TheLedger.com, November 2007
Consumers want streamlined shopping experience
Consumer behavior: Limited time, want to get in and out of grocery stores
Retail challenge: Desire to interact with consumers and provide better shopping experience
Retail solution: Create programs that make shopping easier i.e. text messaging coupons, touch screens, smart carts
– Example: Kroger links consumer cell phone with bank accounts for quicker check-out.
– Example: Microsoft MediaCart navigates consumers around store and check them out
Source: IRI- August, 07, www.mediacart.com
ShopRite MediaCart
Consumers low on time refill on quick trips
Consumer behavior: Time crunched, gathering staple items on the fly via quick trips – mission shopping for essentials i.e. bread, milk, juice
Retail challenge: Convenience stores grocery section
Retail solution: Offer essential items typically found at the back of the store in the front
– Example: Retailers create secondary milk displays in front of store.
Source: IRI. Times and Trends. August 2007
Variety Desired
Aesthetics4. Environmentally
Aware
5. Economic Pressure
Private LabelGo Green Initiatives
3. Health Conscious
Education
2. Variety Desired
Niche Aesthetics
Consumers shopping needs vary, retail goes niche
Consumer behavior: More needs & higher expectations: variety, specialization, price—ALL factors—no one stop fits all
Retail challenge: Consumers shop by need state, average 3.6 stores
– Retailers roles: Wal-Mart= broad variety of goods, Costco= bulk food items, Trader Joe’s = unique items, Jewel= staple food items, plus bakeries and butchers on rise
Retail solution: Increase breadth of offering to satisfy consumer needs and drive floor traffic
– Example: Retailers transition from offering staple only items to greater breadth and higher-end products & services
Source: Speciality Food Magazine. “Supermarkets Go Specialty” May 2006 The Wall Street Journal. “Business Insight, Dec. 2007
Consumers multi-shop shopping, competition to be destination of choice
Consumer behavior: More needs and more retail options, no need to default to traditional grocers
Retail challenge: Be the destination of choice for consumers
Retail solution: “Lifestyle” stores, compete with higher end stores and
discount retailers– Example: Safeway Lifestyle stores: increased prepared
foods, locally sourced, natural and organic products, sushi stations, larger delis, cooking demonstrations, full service butcher, Starbuck’s & Jamba Juice Safeway’s Perishables Display
Source: Speciality Food Magazine. “Supermarkets Go Speciality” May 2006 Associated Press, December 2007
Consumer don’t want to be bombarded
Consumer Behavior: Consumers want a less intrusive retail environment while shopping
Retail Challenge: Balance satisfying merchandisers and consumers
Retail Solution: Create a cleaner retail environment which creates a better shopping experience
– Example: Restricting number, size, & configuration of in-store displays
Variety Desired
4. Environmentally Aware
5. Economic Pressure
Private LabelGo Green Initiatives
3. Health Conscious
Education
2. Variety Desired
AestheticsNiche
Consumer seek clarity on “healthy”
Consumer Behavior: Health conscious, overwhelmed with competing information
Retail Challenge: Taking back control, providing added value by educating consumers
Retail Solution: Act as an authoritative source, create systems that identifies better for you foods
– Example: Hannaford supermarkets rate the nutritional value of their items on a scale of zero to three stars.
– Example: Kraft’s line of sensible solutions educates consumers on choosing healthier ingredients
Source: New York Times ( 11/2006, 9/2007)
Environmentally Aware
4. Environmentally Aware
5. Economic Pressure
Private LabelGo Green Initiatives
3. Health Conscious
Education
2. Variety Desired
AestheticsNiche
Consumers become environmental advocates
Consumer Behavior: Increased concern & education about greener and sustainable products
Retail Challenge: Consumers seek out environmentally consciousretailers and products
Retail Solution: Retailers and brands adopt green practice
– Example: Wal-Mart opens high efficiency stores. Whole Foods offers “A Better Bag”
Source: Agri-Food Canada. Going Green: The Future of the Retail Food Industry, July 2007
Economic Pressure
4. Environmentally Aware
5. Economic Pressure
Private LabelGo Green Initiatives
3. Health Conscious
Education
2. Variety Desired
Aesthetics
Consumers increase preference for private label
Consumer Behavior: Consumers seek high quality but demand lowprices
Retailer Challenge: Private label has been perceived as low quality and poor imitations of national brands
Retailer solution: Drive innovation in overall quality, packaging, and ingredients
– Example: 70% of consumers think private label products are as good, if not better, than national brands
Source: Mintel. Organic Foods - October 2007
Consumers taste profiles expand
Consumer Behavior: Consumers demand unique flavor offerings andorganic products
Consumer Challenge: Finding these products on a wide scale across multiple product offerings
Retailer solution: Evolve private label to branded status, elevate consumers trust and increases awareness
– Example: Only 56% of consumers could identify Target’s “Archers Farms” as a private label brand.
– Example: Safeway’s O Organic line anticipates $300 million in sales for 2007
Source: Mintel. Organic Foods - October 2007
Thank You