Strong Easter sales led to the fastest growth the UK grocery sector has seen this year. Overall supermarket sales grew by 1.1% during the 12 weeks ending 27 March. Separate data showed that the value of sales for the four weeks ending 26 March (including Good Friday) rose 2.5% year-on-year.
What this data doesn’t reveal is that winning retailers are focusing on food and drink to drive footfall. Take Sainsbury’s, once the foodie store for the masses – now more price-focused. However, there’s an interesting shift to regain this territory; Morrisons’ focus on fresh food, with its Market Street concept, has a key part to play in its six-point turnaround plan, say analysts.
Driven by technology, shopping habits are changing and convenience is a major differentiator – especially in food and drink. The lesson? Make it easy and relevant, because today’s shopper has less money and time. Retailers such as Waitrose, Marks & Spencer and Sainsbury’s have got it right; people can pop in for dinner for two, or a family of four, all located at an easy-to-find destination, where quality is reliable.
In the new landscape, people are also conscious of wastage and healthy living. Grocery retailers are challenged by the growth of innovators such as HelloFresh, which makes cooking more accessible and pertinent to our busy lifestyle, meeting demand for nutritious home-cooked meals realistically. Kantar notes that grocery sales are on the rise as people turn to healthy foods.
Interestingly, in the food battleground, own-label is as powerful as brand label and again a major differentiator. Award-winning Aldi has launched a premium wine, Chateauneuf-du-Pape, which is usually only found on the shelves of specialist wine merchants. Lidl is offering up lobster and champagne to appeal to middle-class shoppers, while Waitrose has launched Waitrose 1, a premium own-label range of food initially rolling out across more than 500 products.
This is all evidence that grocers are looking to inspire people to buy well and transform brand equity into action. With this in mind, here are my three suggestions to build commercial engagement:
1. Micro stores for the grab-and-go mission
Sainsbury’s is trialling micro store formats to meet mission shopping more specifically. These smaller store formats only stock around 1,000 stock keeping units (SKUs) and target the “grab-and-go” market (lunchtime, dinner, celebration etc), deliberately not stocking categories such as cigarettes, cleaning or lottery.
Tesco, meanwhile, is experimenting with new layouts in 50 stores, stocking meal ingredients together – for example, moving tinned tomatoes from tinned veg to sit with herbs and spices.
The good news is that data and analytics now mean that grocers can identify what convenience signifies, along with the opportunity to create mini-stores offering the family meal, the celebration meal and meals for people flying solo.
2. Understand experiential
Grocers should take note that UK brand investment in experiential is set to increase by 40% in 2016.
A “sell, sell, sell” strategy no longer cuts it in a world of personalised services and platforms. Smart retailers are inspiring purchase with a memorable experiences. Take Waitrose’s Cookery School, where you can learn to cook something new, or sample offers of the moment, freshly prepared by a team of chefs. Most classes are two hours, running at lunchtime and after work. In a similar vein, Tesco ran free cookery classes for children, helping them to get hands-on in the kitchen.
Waitrose has so far led the way in offering shoppers culinary treats by including juice and smoothie bars, wine bars, tapas zones and eat-in bakeries in its supermarkets.
It recently announced the launch of in-store sushi bars.
3. Add value beyond low prices
Personalisation and entertainment are two big triggers to change shopping behaviour.
In Sweden, McDonald’s, with a similar family shopper profile to grocery stores, is creating Happy Meals that turn into Happy Goggles for a virtual reality experience. Closer to home, Waitrose has leveraged the power of its loyalty card
to Pick Your Own offers.
For grocery retailers looking to win, there’s no question that the food battleground has a raft of opportunities that will deliver growth. Shopping expectations are higher than ever, and we all need to deliver delight.
Sarah Todd is CEO of Geometry Global UK
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