Options and Change Define Grocery Space

By: Frank Kroger, Vice President Shopper Marketing, Valassis
Published Wednesday, Jan 18, 2017

Options and Change Define Grocery Space
It seems pretty simple. A product is produced by a company, sold to a retailer and purchased by a consumer. But in reality, the ever-changing grocery landscape is not simple at all.

The challenges start with the number of options consumers now have

For example, if you wanted to buy paper towels, in the past you likely purchased them at your local grocer. Now, you can buy them at many different stores including grocery, drug, dollar, mass merchants, clubs, closeouts, home improvement, or office supply, not to mention online retailers. While paper towels maintain a high household penetration level, they also hold a high retailer penetration level. Retailer options create opportunities for brand differentiation, assortment, pricing and promotion strategy, aisle location in store, pack size, serving size and more.

Now… how do you want to shop?

Do you want to go to a store and go inside? While the vast majority of shoppers prefer this, and most sales are still generated this way, like other shopping situations, grocery offers options. Order at home and pickup at store; order online and have it delivered to your home; or order at home and have delivered to a nearby location. Are you shopping for your weekly household needs, or just for dinner? Stopping right here - talking about locations, brands and delivery options only - there are already nearly 2,000 different buying options for consumers interested in just purchasing paper towels!

Next, what influences consumers?

Family size and income/employment still have an influence on where, how and what is bought. Pets, home ownership and health and wellness all continue to play a role as well. Different generations look, act, shop and buy much differently than one another. This includes differences in the types of products they want (nutritional, fresh, organic), how they shop, their brand preference, and the experience they want while shopping.

The desire to save is important too

Coupons still play a key role and maintain their position of influence when consumers purchase groceries. But coupons and coupon-type savings have additional options too. Coupon savings activities can happen pre-shop, en route, in store, at shelf, at checkout and post checkout. The savings can be deducted from your current shopping trip, a future shopping trip, or provided via gift card to the grocer or other retail/savings account.

Let’s not get too deep into product packaging… but

Consider the changes recently with soft drink companies adding names to cans, adult beverage companies trading their logo for NFL teams and candy companies offering customized candies at in-store kiosks. Personalization… fun… “retailtainment”… this is grocery shopping redefined.

Options create complexity but open the door for change. Change, in-turn, has opened the door for many of the new trends mentioned here, including where we shop (in store, online or somewhere in between), how we shop, and what we expect when shopping.

Best practices start with those (retailers and brands) who try new things. Winners are using existing and new data differently – and often sharing data and learning with each other, which results in better testing and ultimately, more complete solutions. Many have access to data, but often their view of that data doesn’t allow them to see a complete picture. It’s not just about identifying, but anticipating the ever changing demands and expectations of many different consumer groups. And, given the fast pace of change, wins or successes today come with no promise of how long you might benefit.

In the end, having so many options is a good thing, but it’s also the reason the grocery space is not that simple anymore!