Innovation becomes key as grocery competition intensifies

Supermarkets are undergoing some of their greatest changes since they came to the fore in the 1940s and 1950s, according to a new report from market researchers Packaged Facts. Indeed, while “The Future of Food Retailing: Shopper Insights and Market Opportunities,” report reiterates a great many of the same observations we make on a daily basis on both our website and print editions, it also provides additional color to enhance its findings.

“Economic, demographic, lifestyle and technological changes have created not only a fertile environment but the absolute necessity for new concepts to engage shoppers, capture share of stomach, and re-invent food and beverage retailing,” says David Sprinkle, research director for the Rockville, Md.-based market research firm. While the greatest competition to supermarkets and grocery stores comes from supersized, one-stop shopping venues like supercenters and warehouse clubs, the threat has spread out across myriad retail channels, including drugstores, dollar stores, limited assortment chains, and (the elephant in the room) online grocery shopping.

However, while supermarkets remain the majority force in food shopping, Sprinkle says, “They are no longer calling the shots” for the roles now shared with Whole Foods and Trader Joe’s on the natural/specialty side, Walmart, club stores and dollar stores on the value front, and farmers markets and food trucks in trend-setting.

At the same time, 2012 and 2013 have been big years for mergers and acquisitions in the retail food industry, as strategic buyers and private investors seek a way to expand their businesses to additional markets. Further, while the economy has shown positive signs of recovery in the past year, many consumers remain buffeted – if not traumatized – by higher gas prices, rising food prices, mounting healthcare costs and increased payroll taxes. Accordingly, most folks continue to feel economically squeezed and spending-shy, a fact that most grocery execs are acutely aware of – and how.

Other noteworthy insights from the report that caught my eye:

- Although many grocery shoppers are operating within a short time horizon, for most people grocery shopping is an activity that involves preparation. A substantial majority of grocery shoppers (85 percent) report that they do some kind of planning beforehand, according to Packaged Facts Food Shopper Insights survey data. Only 37 percent of grocery shoppers say they often stop by the grocery store on the spur of the moment.

- That’s in large part because saving money remains a key consideration. Two out of three grocery shoppers agree with the statement: “I buy a lot of groceries that are on sale or promotion.” Moreover, almost half (47 percent) used coupons or coupon codes during their most recent grocery shopping trip, 42 percent checked store circulars, 31 percent used store savings clubs/loyalty cards, and 11 percent used coupon matching services (such as double coupons).

- Even if the vast majority (83 percent) of shoppers say they are satisfied with the store(s) where they usually shop for groceries, only slightly more than half (56 percent) enjoy grocery shopping, and 18 percent actively dislike grocery shopping.

- The slippage suggests that retailers can do much more to make the task of grocery shopping easier, less burdensome, and maybe even pleasurable for a significant proportion of their customers.

For more information, visit www.MarketResearch.com.


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Article written for Progressive Grocer's by:
Meg Major

Chief Content Editor

mmajor@stagnitomedia.com

http://www.progressivegrocer.com/top-stories/headlines/trending-topics/id39675/a-remix-in-grocery-retailing/ 

Publix Challenges Wal-Mart on....Low Prices?

Publix The Walmart Slayer Wins Another Round With Low Prices

Publix is many things — favored among shoppers for quality store brands, customer service and well kept stores — but a low-price leader it typically isn’t. But the grocer Forbes recently dubbed “the Walmart slayer” is pushing ahead with its own campaign comparing Publix prices to the discounter and telling shoppers how much they can save shopping at Publix.

“Walmart doesn’t always have the lowest price,” declares Publix’s weekly ad. “Save $31.45 this week at Publix.”

It’s just another round fired in the volley between Walmart and regional grocery operators. In 2012, Walmart started running ads comparing its prices to competitors and in some cases naming regional chains. This Spring, Publix started fighting back with billboards and ads challenging Walmart’s low price claims.

“All the supermarkets have gotten smarter about how their competing against Walmart,” says Neil Stern, senior partner with McMillan Doolittle, a retail consultancy. “They’re being smarter and more strategic in the way they fight them.”

Many retailers like Publix have decided it’s better to come close to Walmart’s pricing on a list of roughly 500 essential items. It means less margin, or profit, but they try to make it up on items that matter a little less, says Stern.

This focus on price for Publix isn’t new, but the public display is. Many years ago, Stern and I conducted a series of pricing studies in the Atlanta market. We compared like items or price per unit across several stores including Walmart, Target TGT +0.1%, Kroger KR -0.1% and Publix. In nearly every instance, Publix had higher prices by a considerable margin.

The studies were published in a retail trade magazine and inevitably we heard from Publix CEO at the time, Charlie Jenkins. Not to argue the point, but to request the shopping list and more details. Jenkins was more interested in correcting pricing discrepancies and perception than debating the veracity of our claims.

Always the sign of a successful leader.

Price isn’t everything but when a popular retailer with the perceived edge on quality and service can also match the low-price leader, it’s an advantage that’s hard to beat.