Supermarkets may not know it, but the window of opportunity is closing on pulling in the next generations of younger consumers. So says Dan O'Connor, president and chief executive officer of RetailNet Group, who predicts younger, more affluent customers could be the first ones to substitute online shopping for physical store visits in future years.
That phenomenon, along with an aging and very slowly growing population, will have a big impact on food retailers in coming years, he emphasized.
“Around 2015 we'll realize we have too many stores,” he recently told the Food Marketing Institute's Future Connect Conference. The best approach for retailers is to “create on-ramps that draw the next generation to your store,” he advised.
I was intrigued enough to contact Dan for more insights, and he began by further defining these future shoppers.
These are the people born after 1985 — who will be in their highest consumption years by 2020, he explained.
He said “on-ramps” for these shoppers would include online initiatives, such as e-commerce, digital marketing campaigns, and integrating social networking into the overall experience.
Other elements, however, involve the physical stores more directly, including “integrating the Web into the store,” such as Web-only merchandise on display in the stores.
Remerchandised in-store departments that improve customer engagement are also important. “The leader here is probably Tesco,” he said, noting the strategy is “anything but pile it high and sell it cheap,” he said.
Another opportunity involves interacting more closely with vendors to “keep them invested in the store model,” because many already have consumer direct strategies.
Greater engagement requires candid discussions between retailer and supplier, and O'Connor outlined how a retailer might frame a challenge to a beauty product supplier about the need to better understand an even younger group of consumers:
“Beauty is moving online, and it's clear that the 12-year-olds and 16-, 18- and 22-year-olds of today are engaging with beauty in a completely different way than store-based retailers serve it up. We need to understand why they are drawn to [newer] direct and store models.”
All of these strategies are worth thinking about because retailers need to connect with younger customers before it's too late. Recently I noticed some food retailers are launching initiatives that show they are at least thinking more about future generations.
Salt Lake City-based Harmons, for example, holds healthy cooking classes for children ages 4-14, while Albertsons LLC has unveiled a “Healthy Kidz Club.” While the main focuses of these programs are on health, they have the extra benefit of bringing young customers — and hopefully their families — into activities that can form life-changing habits, all with the supermarket at the center.
I believe supermarkets can create long-term customers of young people if they move quickly to make a difference in the lives of kids, teens, young adults and families.