I recently read a headline calling today’s consumers “entitled.” To feel entitled a person must believe they are “inherently deserving of privileges or special treatment.” I’m not sure today’s consumers feel entitled as much as they feel empowered. There is a difference. Thanks to the Internet and smartphones, consumers have more information at their fingertips than at any time in history — and they know how to use it. Likewise, e-retailers are empowered by information. When consumers shop online, e-retailers can use generated data to provide them with instant recommendations — consumers become a “segment of one” shopping a near-endless aisle of goods.
Brick-and-mortar retailers, including grocers, have neither the luxury of knowing what a specific in-store consumer is searching for nor the ability to offer the consumer endless aisles of goods. That means traditional retailers need to have a pretty good idea of what local consumers want before they ever push through a store’s doors. Grocers do have one advantage over other retailers: desirability. A recent survey conducted by Vixxo found consumers still prefer shopping for their food in traditional stores. The survey “discovered that the key to keeping supermarket customers happy and coming back is having an exceptional in-store experience along with high-quality food. Vixxo surveyed over 1,200 consumers to see where their preferences were regarding online vs in-store food shopping. The results were eye-opening: 87% of consumers prefer shopping in-person. Results spanned all age groups, from baby boomers (96%) to Millennials (81%) who were all in favor of the tried-and-true method of in-store shopping.”[1]
Getting to know local preferences
Because grocery stores have limited shelf space, consumer packaged goods (CPG) manufacturers know how fierce the battle is to win a place on those shelves. Elliot Begoun (@intertwinegroup), principal of the Intertwine Group, understands winning the shelf-space battle is important, but winning the war (i.e., getting products off the shelf and into consumer shopping carts) is the real goal.[2] He asserts, “The underlying risk of being wooed by the opportunity to be on more shelves [is] not having a defined plan for what it’s going to take to get your product into more shoppers’ carts.” Begoun asks CPG suppliers, “What’s your plan to ensure that your ideal consumers see and select your product?” There are even more important questions that must precede that one: Who are your ideal customers? Where do they live? What are their food and taste preferences? Answering those questions helps suppliers and grocers understand which products are likely to sell well and which products are likely to sit untouched waiting for their shelf lives to expire. The empowered consumer can provide answers to all those questions via numerous databases now available in the food and beverage industry.
A couple of recent trends in the grocery sector highlight the importance of knowing local preferences. First, the neighborhood grocery store is making a comeback in an interesting way. Kim Slowey (@KimSlowey) reports, “People need to eat. Unless they live on a self-sustaining farm, growing and raising what they need to survive — or dine out for every meal — an occasional visit to a grocery store is a necessary part of life. … Along with the influx of grocery retail options has been a recent movement toward using the space to anchor residential projects — with cities, grocery stores and construction firms taking advantage of the trend. … The trend of grocery stores as mixed-use development anchors … is part of the shift to deliver things people need in addition to the hallmark upscale retail and dining that has typically come with these developments.”[3]
Obviously, not all neighborhoods or new developments are the same — which leads to the second trend: The rise of ethnic food preferences. Keith Loria (@Freelancekeith) reports, “Demand for ethnic products has been driven by the growing Hispanic and Asian populations in the U.S., which has created an environment in which ethnocentric food retailers has thrived.”[4] Greg Wank, leader of the food and beverage practice at accounting firm Anchin, Block & Anchin, told Loria, “The grocery store’s advantage is its physical location. They need to cater to the demands of the customer base in their immediate area. The ones that can be more nimble in their product buying and sourcing can best address the customer demands and maintain their relevance to the customer.” Data can help CPG suppliers and grocers understand their neighborhoods.
Using data to increase sales and profits
To demonstrate how data can be used to leverage the trends noted above in order to increase sales and profits, let me briefly discuss solutions offered by my company, Enterra Solutions®. For example, the Enterra Shopper Marketing and Consumer Insights Intelligence System™ can leverage all types of consumer data to provide high-dimensional consumer, retailer, and marketing insights. These insights can be complemented by Enterra’s SensoryMap™. The SensoryMap solution provides companies an easy-to-understand way to visualize consumption and demand patterns by geography. This way they can know what local consumers are eating and what they will prefer to eat in the future. Predictive modeling allows marketers to simulate consumer acceptance by region, proving deep insight and forecasting capabilities. Pre-mapping preferences to geography allows marketers to quickly determine if a product will sell well in a given area. Geographical solutions can be augmented with additional data and insights to improve forecasting, enhance target marketing and better align inventories to demand. These insights are drawn from data solutions found in products like the Enterra Category Management Intelligence System™ (CMIS). The System can help with trade promotion optimization, planogram insights and optimization, on-shelf availability and out-of-stock management, consumer migration analysis, net revenue management insights and optimization, pricing analytics and opportunities, omnichannel insights and optimization, and brand health insights.
The point I’m trying to make is brick-and-mortar retailers can leverage data analytics to achieve results like online retailers. Begoun notes, “If you strip it down to its core, grocery is a real estate business. There is a finite amount of linear shelf space available, and the goal of any good merchant is to maximize the gross profit generated from it.” Data analytics can help grocers achieve better results. Jeff Wells (@JeffWellsWH) believes personalization is as important in brick-and-mortar retail settings as it is online.[5] He explains, “With close to 40,000 products in the average supermarket, according to the Food Marketing Institute, it’s easy for shoppers to overlook items they might love. Personalized marketing works by mining loyalty data and other information to highlight these items in circulars, digital coupons and other materials sent to shoppers. Done right, it saves people time and increases loyalty. The concept of personalization extends to other parts of the store, including product assortment and store layout. Locations that serve young, affluent consumers typically invest more in prepared foods, while those that serve older consumers tend to have a more robust pharmacy presence. As stores get to know their shoppers better through advanced technology, they can zero in on their preferences and even anticipate demand.”
Footnotes
[1] Darryl Mundo, “New Grocery Shopping Survey Reveals Overwhelming Preference For In-Store Over Online,” NH1, 30 January 2019.
[2] Elliot Begoun, “The battle: Getting on the shelf. The war: Getting in the cart,” Food Dive, 24 January 2017.
[3] Kim Slowey, “The return of the neighborhood market: Why grocery-anchored developments are on the rise,” Food Dive, 17 February 2019.
[4] Keith Loria, “How catering to ethnic populations can spice up shopping and profits,” Food Dive, 2 February 2017.
[5] Jeff Wells, “Could personalized marketing be a key to growth for traditional grocers?” Food Dive, 30 March 2017.
