The NGA Show earlier this year uncovered changes of all types that will impact the grocery industry. The original article recapping takeaways at NGA can be viewed here.
Below is the summary recap with my two cents added.
1. Former Speaker of the House John Boehner predicts corporate tax rate will be lowered this year and expects them to be between 20% to 25%. Not quite the target of 15% we heard during the election but still a much needed relief.
2. Conventional food products are losing share to products that fit health and wellness claims (i.e., natural, fair trade). This is even the case in those categories that aren’t necessarily healthy, like ice cream, for example.
I would note that when it comes to healthy claims it is best for grocers to remain authentic and be cautious of marketing jargon with blatantly fictitious claims. For instance energy bars that are marketed as low fat but are loaded with more than a daily allowable amount of sugar. It’s disingenuous and even moderately savvy customers will find the information and your credibility is damaged.
A better approach is to take on real world consumer challenges such as obesity or diabetes. Partner with a local doctor or nutritionist and build a shopping basket filled with items for easy purchase that are good healthy choices. So an example, fight obesity or diabetes centered around a weekly menu plan that includes ingredients that are low in sugar and high in nutrients. Add recipe’s and preparation instruction to aid the customer. Pre-populate the basket to make purchase an easy consumer choice, eat healthy with just a click of the mouse. Take it one step further and create a value version of the same basket to appeal to all economic segments. Shelf Scouter is creating programs like this with our customers and their community.
3. Growing your center store sales online can be tricky, according the Michael Day, manager of digital commerce and innovation for Wakefern. “The center store has to be properly reflected online. You can’t have missing images and you can’t have poor information. And you have to have a time slot (for delivery) availability. Whatever you’re offering in store you have to offer online.” Day said baby, coffee, pet litter and water were growing online.
I agree with what he is saying to an extent, of course the imagery and product information are critical. But I also believe it is critical to focus on categories that are important to your customers, after all the goal is to capture their largest monthly baskets in your online store. However, I don’t believe it is advisable to offer every possible SKU at least not initially. A smart approach it so have a product strategy for each category. Analyze your in store sales data and build a product mix that will be a hit with customers without overwhelming them. You can always grow your product set overtime, but if you scare a customer away from your online store getting them back is a considerable amount of effort and time.
4. Keep an eye on meal kit delivery options…”Blue Apron…last year they were No. 13 in sales for online retailers and this year they are No.6.
Meal kits offer tremendous opportunity for grocers with almost unlimited marketing options. Use your in house deli chef or partner with a local restaurant to create meal kits. This can be a simple as a great meal on the go or event based kits such as March Madness Family Feast. You can also tie meal kits into cross promotions with your healthy programs, see point 2 above.
5. The NGA and FMS Grocers Financial Survey results were released at the show, and the top three things on the minds of independent grocers were: competition from other retailers (which was higher than previous year), the local and national economy, and healthcare costs and compliance.
Repeating a bit from point 4, but competition is expanding beyond the big chains. The online delivery services such as Green Bean, meal kit providers like Blue Apron, and restaurants seem to take a bigger bite every year. If you focus your efforts on solving your customers problems you can win. Why are people turning to meal kits, fresh home delivery, and take out? There are a number of reason, convenience, stress, desire to eat healthy, desire to indulge, and more. What other problems do they face, obesity and diabetes are two huge problems. Local retailer’s have the ability to meet all of the listed customer needs and many more. The good news is that early job forecasts are looking very bright, so people will be even busier but have more cash. What other kinds of consumer problems might a thriving economy cause? Focus efforts on becoming a problem solver and you can grow your audience, your online presence, and your sales.
Contact us today to talk about how we can help your store move forward in this ever-changing environment.