While supermarkets have been a phenomenally successful format, accounting for a large proportion of the food retail market, their market share continues to be under pressure as new formats emerge and others raise their appeal.
Combined, e-commerce, c-stores, drugstores and club all pose a significant threat as they seek to grab a greater share of consumers’ grocery spending. And while the concept of channel migration is not new, the impact of new technologies and changing shopping behaviors is accelerating this trend.
Within the U.S. market, where grocery retailers are so heavily invested in the supermarket as their primary format, this is of concern. For many, the focus continues to be on driving traffic through targeting shoppers with promotions; the promotional blizzard that we have become accustomed to is slowly becoming a promotional vortex, making it incredibly difficult for shoppers to identify where the best offers are.
However, it is refreshing to see that many retailers, both in the U.S. and globally, are taking an alternative approach. Many are viewing this as an opportunity for innovation and re-invention, seeking to revitalize a format that has been so critical to their success in the past, but one which has received less focus in recent years compared to other channels.
For many, it’s about developing points of difference.
This may be through offering unique product ranges, including private brands, or introducing in-store features which enhance existing categories. Foodservice and food-to-go is an increasing area of focus. Specialist food counters and new concepts help to increase dwell time, while also adding an element of retail theater. The use of loyalty programs and data are also helping many retailers to develop shopper-focused layouts and build more personal relationships with their customers.
The supermarket of the future is likely to:
- Showcase retailers’ food credentials
- Be customer focused with curated ranges
- Offer great service, with strong value and local appeal
For many, this does not require a radical re-invention, but adjustments to existing strategies. However, others are viewing the shift in shopper behavior as an opportunity to develop new propositions.
This month Price Chopper unveiled an ambitious plan to spend $300 million over the next five years to convert its stores to a new “Market 32” concept offering expanded foodservice options, an enhanced product mix and a re-emphasis on customer service. It is unlikely to be the only supermarket operator in the U.S. heading down this path. Creating warmer, food focused and more appealing formats is likely to be a priority for many retailers as the role of supermarkets continues to evolve.
So think about which features, products or services are you investing in more to revitalize your supermarkets. How do your existing formats currently stack up against some of these new emerging concepts?