Aug 08, 2011
Grocery Shoppers Want More Than Low Prices
For retailers, price and promotion have been the name of the game as the U.S. economic recovery continues at its sluggish and uneven pace. But when it comes to choosing a grocery store, shoppers say food quality and store atmosphere remain equally as important considerations as price.
That’s according to a consumer survey by AlixPartners, the global business-advisory firm, which reveals that, despite the fragile economy, 70 percent of consumers are making trips to the grocery store at least once per week and 50 percent plan to spend more on groceries in the coming year, with 39 percent expecting to spend the same amount.
“Grocery shoppers are just as choosy as ever – it’s not enough for grocers to win on price alone,” said Keith Jelinek, director in the global retail practice at AlixPartners. “Shoppers are looking for more from their grocery store; if it doesn’t offer quality and a pleasant experience and value, then they’re out the door. And, with expected increases in grocery spending this year, the big question is: what stores will earn those grocery dollars?”
The survey found that 86 percent of shoppers indicated they use a shopping list at least “sometimes,” and 79 percent use coupons when developing those lists. Despite careful preparation ahead of grocery-shopping trips, 93 percent of those surveyed said that product displays and in-store signage – which typically point to promotional and sale items – can influence them to purchase items not on their shopping list. Furthermore, 79 percent of those surveyed indicated that in-store product sampling can persuade them to purchase new items.
Competition between traditional and non-traditional grocery retailers is nothing new, but non-traditional players appear to be growing market share at a stronger-than-expected clip. According to the survey, shoppers are purchasing only 51 percent of their items in traditional grocery stores; mass merchandisers are capturing 30 percent of the total grocery spend, followed by club stores with 13 percent. And perhaps most disturbing for old-line players, a relatively new competitor – Internet retailers – are capturing 2 percent of shoppers’ grocery dollars.
“With growing threats from other channels, increasing price transparency made possible by mobile devices and the tepid economy, we see the potential for significant consolidation in the coming year,” he continued. “Grocers cannot continue ‘business as usual’ and expect to come out on top – and, though there is no ‘silver-bullet’ strategy, customer segmentation is key and it’s critical that grocers take a step back and look at their market and how they’re serving it. Fortunately, due to shopping frequency and existing customer-focused programs, grocery retailers have the means to know both their markets and customers better than any other type of retailer – it’s time for them to tap into those resources and make the strategic calls that will bolster their profitable customer base.”
A fully-developed loyalty program can also inform growth into new services such as in-store pharmacies. The AlixPartners survey showed that only 18 percent of consumers fill their prescriptions at grocery stores.
The AlixPartners Grocery Shopper Preferences Survey was conducted April 11-12 among 1,000 U.S. adults. AlixPartners LLP is a global business-advisory firm offering comprehensive services in four major areas: enterprise improvement, turnaround and restructuring, financial-advisory services and information-management services.
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