Here’s a question many food retailers are wrestling with: How do you respond to different customer segments like Millennials when you’re a mass market retailer?
Even more specialized retailers like Whole Foods are wondering how to best serve the needs of younger shoppers who don’t have the disposable income of older generations. Whole Foods believes it need to create a new value-oriented banner to attract Millennials. In a recent conference call with analysts, CEO John Mackey said, “…we think a streamlined, hip, cool, technology-oriented store that has lower capital, perhaps a little less labor cost and lower prices is going to be very, very attractive to that Millennial generation, though it will still have the Whole Foods quality standards."
It’s true that younger shoppers in the U.S. have much less spending power than older shoppers, and this is one of the factors considered in Forrester’s recently published reports about the future of shopping and e-commerce growth. Lead author Sucharita Mulpuru contends that only six sectors will thrive moving forward: the web, restaurants, education, healthcare, manufacturers and luxury. Others will struggle, she writes, and will need to find ways to operate more efficiently while meeting shoppers’ needs.
Whether or not you agree with her choice of sectors, it’s clear that new solutions aren’t going to be found in the same old places. Last week, I took part in a discussion about the Forrester research in a LinkedIn group called Rethinking Retail, and some of the ideas I found there applied to the question at the top of this post. Here they are:
• Rather than choosing among customer segments, e.g. Millennials vs. Gen X vs. Baby Boomers, one participant said, why not look for overlapping interests in what otherwise would be competing segments. Then market to the sweet spots where the interests are the same in both groups. The desire to eat “better” foods is a good example, even though the way each group cooks and eats may be quite different.
• Thinking outside the box for ways to grow is even more important when so many traditional grocery categories are mature, said another writer. Putting greater emphasis on “food to go” isn’t a new idea, but it has a lot of headroom (and it gets close to one of Mulpuru’s growth categories — restaurants). Health is also a growing area, and retailers (especially those with pharmacies) may be able to leverage new developments like AppScript, which allows doctors to equip patients with apps to help manage their health (also close to one another of Mulpuru’s growth categories — healthcare).
If you like discussions like this, you may want to check out the group. Here’s a link to Rethinking Retail.
How else can supermarkets prepare for the future of shopping?