by Peter Larkin/ president and CEO, National Grocers Association
Special to The Shelby Report
There’s no question that the supermarket industry is undergoing rapid change—perhaps more dramatic than at any other time. But despite an avalanche of speculation about what’s in store for the future of grocery, traditional brick-and-mortar retailers are simply evolving, not disappearing.
While e-commerce continues to grow, 85 percent of U.S. consumers still prefer shopping in physical stores over online with spending expected to reach $5 trillion by 2020, according to TimeTrade research and eMarketer. Best of all, the independent supermarket industry almost always has the upper hand when it comes to implementing innovative strategies to keep up with consumer demand, whether in-store or online.
Research conducted by Nielsen on behalf of the National Grocers Association (NGA) and sponsored by The Shelby Report outlines these insights in a report called “The Independent Consumer,” which outlines shopper preference based on the consumer survey. The report compares attitudes of those who shop at different types of stores, such as independents and national chains, and was released at The NGA Show in Las Vegas earlier this year.
The results revealed what many independent grocers already know to be true: shoppers prefer buying groceries at their locally owned supermarket. In fact, 82 percent of respondents who primarily shop at an independent supermarket reported being very or extremely satisfied, compared to 65 percent of respondents who reported being very or extremely satisfied with a national chain.
The reason is simple. One of the biggest traits that sets independent grocers apart from national chains is their ability to experiment and tailor food options to the communities they serve. They’re able to respond—almost immediately—to what customers need and want, in addition to providing great service. In other words, independent supermarkets thrive in such a fiercely competitive environment because of their strong community roots and agility to respond quickly to consumer demand.
The report also outlined several key takeaways and areas where independent grocers have opportunities to grow that supermarket operators should use to help win the marketplace.
First, according to the survey results, independent shoppers place “very strong” importance on locally grown fresh foods and source traceability more than national and regional chain shoppers. When asked about their primary store, some 77 percent said it features fresh foods, with 72 percent highlighting that it sells high-quality fruits and vegetables. Shoppers of independent food stores in particular pointed to availability of high-quality meats as a key feature of their primary store. Independent store shoppers said factors that have the biggest impact on their satisfaction include availability of organic and local produce.
Health reasons are important and why most shoppers (79 percent) say they eat fresh foods, but gender played an important role as well. Women were much more likely than men (85 percent to 73 percent) to cite health factors. Another 79 percent pointed to the importance of taste in fresh foods, which was more important for rural (84 percent) and suburban (80 percent) shoppers than for urban (73 percent) consumers. Other reasons included value (35 percent) and convenience (28 percent).
Independent grocers shouldn’t ignore how they display fresh foods either. Shoppers ranked freshness and appearance most important in the presentation of fresh foods. Other attributes included packaging that provides a clear view of a product, cleanliness of display and packaging that preserves freshness. Most shoppers considered fresh foods to include produce (43 percent), followed by beef (15 percent), dairy (14 percent), poultry (8 percent), seafood (7 percent), deli (7 percent), bakery (3 percent) and cheeses (3 percent).
Luckily, the majority of independent supermarkets are performing well across this spectrum. Most even have an advantage over national chains in this space.
Room to grow
While many independent grocers are riding the health and wellness wave, there’s still some room to grow in several areas. Respondents ranked organic food of all kinds, including produce and packaged food, of “very strong” importance. While independents have an advantage over national chains in this area, they’re not quite on par just yet. The same goes for in-store dietitians, which respondents ranked of “strong” importance.
It’s becoming more important for consumers who shop at independent supermarkets, too. While just 4 percent of national chain shoppers want experts (such as dietitians) to be accessible in-store, it increases to 12 percent among independent shoppers. The same stands for organic food—just 50 percent of national chain shoppers value their store offering organic foods of all kids, whereas 61 percent of independent shoppers highlight its importance.
Health isn’t the only growing trend—consumers also are looking for digital touchpoints in their shopping experience. Nearly 20 percent of consumers shop for groceries online, up from 16 percent last year. Among online shoppers, 74 percent use a delivery service and 44 percent use click-and-collect.
But don’t discount the importance of human interaction and great customer service. Respondents placed “very strong” importance on courteous, friendly store associates—an area where independent grocers already are performing well with an advantage over national chains.
Overall, five key recommendations emerged as innovative action items for the independent supermarket industry to implement:
- Focus on the things you do best, such as fresh, locally grown food, low prices, offering a wide variety of private label selections and having friendly employees.
- Improve the variety of organic foods available, and don’t forget to respond to special requests from customers and providing an in-store dietitian.
- Satisfied customers will fight for you—keep them satisfied and they’ll support your business plan, recommend you to others and advocate for your store.
- Your customers are online and you should be, too. With the importance of social media, explore new ways to grow your online presence.
- Maintain your customer base, but continue looking to grow. Opportunities exist among Caucasian boomers and retirees in town and rural areas.
Finally, supermarket operators looking to stay up to date on industry trends and best practices should attend The NGA Show, held in Las Vegas, Feb. 11-14. The NGA Show brings together independent retailers, supermarket industry executives, food/CPG manufacturers and service providers for an unparalleled opportunity to learn, engage, share, network and innovate.
Over the course of three days, attendees will have the opportunity to take part in more than 40 education workshops, visit a sold-out Expo floor to strengthen business relationships with manufacturers and service suppliers, and network with peers and industry leaders. The next annual “The Independent Consumer” also will be presented, guaranteeing supermarket operators the opportunity to bring home innovative strategies to stay ahead of the consumer trend curve.
For more details on The NGA Show, visit thengashow.com.