Good question, isn’t it? Have you ever found yourself in a mall store and due to being in virtually the same environment as every other store, and being surrounded by virtually the same merchandise, have you had to step back outside the store and glance up at the sign to ascertain which store you’d ambled into? I’m willing to bet most of us have at some time or other.
What about supermarkets? That’s why a recent BusinessWeek article dubbed, “Supermarket Strategies: What’s New at the Grocer” didn’t grab my attention at first. The subhead under the title did: “From ready-to-eat meals to eco-friendly offerings, food retailers are finding more ways to distinguish themselves and win customers”. Now that line did pique my curiosity.
The gist: consumers are cutting out luxuries, and focusing on purchasing necessities instead. No news flash here. However, since housing, health and food costs constitute consumers’ largest cash outlays, customers are getting ever more frugal. Even with necessities. Upshot: “margins in the $547.1 billion dollar food market averaged just 1.84% nationally in 2008 according to the Food Marketing Institute.”
Since most supermarkets stock pretty much the same merchandise, have cut prices to the bone without much room for further cuts, with few “wow factor” new product offerings on the horizon, what next? The article states: “. . .food retailers are seeking out new trends and technology that might differentiate them from competitors.”
So, what are they?
* Smart shopping assistance. Consumers can breeze through stores with smart shopping carts that tabulate the products as they are added, and download available coupons for the products in the carts on their cell phones. They can then allow payment for the groceries without the consumers ever having to queue up in a cashier line. A number of large supermarket chains have implemented some or all of this; others are in the process of doing so.
* Convenience. Many large supermarket chains are opening up smaller stores in specific locations, stocking them with basic needs and ready-to-eat meals. Message: no need to travel out of the way to pick up a few items. Extra services like in-store baby-sitting make it quick and easy for consumers to shop. Wal-Mart’s Marketside, Safeway’s Market and Supervalu’s Urban Fresh are among those doing this. The thinking: a lower average sale is the likely scenario, but consumers will shop with more frequency.
* Catering to minority purchasing power. In areas where ethnic minorities live, smaller locations are catering their product mix and meal offerings to meet their needs. Examples: Wal-Mart’s Supermercado and Publix’s Sabor.
* Targeted in-store advertising. Example: Wal-Mart’s Smart Network features a technologically advanced in-store television that provides detailed product information and advertising on individual screens.
* New RFID technology. Wal-Mart and Walgreen’s are testing new RFID embedded microchips to signal to employees when store shelves need to be restocked and to help them restock product where it belongs. It is also being tested to make certain stocks are replenished to coincide with promotional ad campaigns.
* Development of niche private label products, such as new organic brands.
* In-store amenities like healthier restaurants; Whole Foods and Wegman’s have terrific ones.
* More eco-friendly store environments like Kroger and Price Chopper are building.
Implementing these ideas can lead to highly differentiated stores for consumers. Of course, when one supermarket chain implements any of these ideas successfully, can it be long before their competitors jump on the bandwagon? Then what?
* What do you as a consumer, and as a marketer, think of these ideas as differentiators among food retailers? Do you think these will eventually be adopted by every major chain, thus losing their ability to be differentiators?
* What kinds of services/amenities would you like to see in your supermarket from the list above? What about services that don’t appear on the article’s list?
* Lastly, do you think these kinds of differentiators matter most? Or, would you prefer to see helpful, well-trained, service-oriented personnel in your supermarket instead? What matters most to you?
I’d love to hear from you.