For many of us, the grocery channel represents most of our revenues. That makes it imperative to be keenly aware of the top issues and challenges facing our customers so that we can do what we can to help them, and us, be successful. Now that we are out of the pandemic, the list of concerns is a bit different than in years past.
#1 Challenge: the impact of inflation on shopper behavior and product assortment. While food prices have moderated somewhat, in many product categories consumers are still forced to make choices. Many are shifting down to private label products or increasing their purchases of larger sizes and bulk offerings to help make their grocery budget go further. The other consumer response is to more deliberately prepare for their weekly shopping trip so that they can take advantage of promotional pricing and deals. Some shoppers will even split their purchases across multiple grocery chains to save a few bucks, which adds up over the course of a year. The implications here are to be competitive with your promotion deals to offer good value and to do your best to complement private label brands, as opposed to going head-to-head.
#2 Challenge: finding and retaining workers. Here, the larger chains have an advantage as they can legitimately offer a career path, training, and better benefit programs. A more experienced and better trained team typically can provide a better shopping experience for consumers. Kroger recently announced it was moving to 100% consumer self-checkout to save labor costs. There’s not much that brands can do here, but labor is a pain point for everyone. That said, if you can provide labor-saving pre-packed displays, especially during peak promotion periods, that can be a true differentiator.
#3 Challenge: most grocery retailers are tackling how to deploy technology that improves the shopper experience and reduces costs. Enrolling shoppers into their loyalty program, making shopping lists painless, offering recipes, and highlighting weekly promotions and specials to loyal shoppers are becoming table stakes. The larger chains are leveraging AI (artificial intelligence) technology to improve restocking and demand forecasting, while others are going after electronic shelf tags to automate price changes. Others are using surveillance cameras to try to reduce theft. Brands should be prepared to participate in grocery shopper loyalty programs and online-only promotions.
#4 Challenge: grocers are going after more grab-and-go, fresh-prepared meal options, as many workers have now been called back into the office, putting a premium on convenience without sacrificing freshness or quality. The deli, bakery, produce, and meat departments get particular attention as they deliver against this need and feature the brand name of the grocery store. Plus, they tend to provide somewhat better margins than center of the store items. The more that you can do to provide complementary programs or quick meal concepts that sell your products, in addition to the grocer’s fresh food departments, the better.
#5 Challenge: continuing emphasis on organic and sustainable product offerings. Grocers are increasing their selections of organic private label products to deliver value and healthy choices. Make sure that your labeling and product claims tell a story about how your brand is doing on these two priorities, particularly since consumers continue to be willing to pay a premium for brands with a solid sustainability benefit.
#6 Challenge: supply chain issues remain, especially for those products and categories negatively impacted by excessive heat or drought or drenching downpours—like produce and meat. These disruptions are out of the control of grocers but do cause distribution, logistics and pricing nightmares. Obviously, do not contribute to any supply chain interruptions or less than 100% complete orders for your brands if you can avoid it.
#7 Challenge: larger chains are embracing online shopping with curb-side pickup available in many stores. Some have even gone so far as to establish “dark stores” that only serve as pickup locations for online orders, saving labor and energy costs. For high turnover, frequently purchased items, be prepared to work out special delivery schedules to these “fulfillment” centers.
#8 Challenge: demand for higher service and higher quality, smaller stores that provide a superior and more personalized grocery shopping experience. The assortments and store footprints are smaller, while the fresh-prepared and take-home departments are featured to better meet the needs of higher income, more discriminating shoppers. These stores most often are located in major metro areas. For higher end brands, these smaller chains can be a great way to showcase premium products.
It is no secret that grocery retailing is a low margin business with high operating costs. Being sensitive to the challenges and being creative in how you can help your customers deal with those challenges can position your brand as a thought leader and a preferred vendor.
No doubt your leadership team has plenty on their plates already. Here is where a top marketing strategy agency like Damen Jackson can help you. Challenge you for your best thinking on innovative ways to bring even more value to your grocery customers.
At Damen Jackson, we have been there and done that. We thrive on helping clients get the biggest bang for their buck while staying keenly focused on being smart and nimble. We are here to be your partner, your conscience, your devil’s advocate—an extension of your team. And we will always bring the conversation back to strategy. How do we maximize the market opportunity for your brand, your business?
We were recently named #14 among the top 100 marketing and design agencies by Agency Spotter Top Agencies.
Importantly, we are pragmatic, focused, and energetic. We get assignments done well, and quickly.
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