2020 has been a year of contrasts for the grocery industry. On one hand, retailers saw higher sales from the increased demand for household essentials, cleaning supplies, baking ingredients, at-home meal options and other items. But it also was a year of unprecedented challenges brought about by rapidly changing business conditions, stockpiling, shortages, concerns about shopper and employee safety and on top of all that, sharp shifts in consumer shopping patterns and behavior.
What will the new year bring? Undoubtedly, more change. And grocery businesses that don’t adapt will risk falling behind. That’s why there’s never been such an important window of time to make strategic investments in your store(s) to remain relevant and competitive. Even when the pandemic starts to come to an end, studies show that consumer shopping behavior, to a great degree, will be forever altered. “The impact of (the COVID-19 outbreak) will be profound and more far reaching than anything we’ve seen in our lifetimes,” Scott McKenzie, Nielsen Intelligence Leader, told Supermarket News: “The pace of change is also extraordinary.”
Is your grocery business ready? In store, grocers must adapt to in-demand technologies such as contactless payments and check-out free options (i.e. mobile apps) as well as backend technologies such as electronic shelf labels and real-time analytics. With the shift toward online grocery shopping — a trend that’s expected to remain popular with consumers long after the pandemic ends —a robust online presence and grocery ordering system is an absolute must. Its critical grocers pay close attention to the entire pickup & delivery process and other technologies to make sure they’re providing a top notch experience for their customers.
But that’s just a start. Identifying and understanding your customer base has never been so critical. Nationally, two clear and significant sets of consumers will emerge next year, according to Nielsen. There are those with ‘insulated’ levels of spending — in other words, those who have had employment throughout the pandemic and remain largely unaffected by the day-to-day economic impact of the outbreak. There are also those who were negatively affected (job loss, furloughs and other challenges) and will remain restrained in their spending habits in 2021 and perhaps beyond. One group is comprised of ‘value’ oriented and price-sensitive shoppers interested in store brands and more affordable grocery options and the other is comprised of shoppers who are less price-sensitive and more likely to splurge and purchase premium foods. According to Nielsen, 75% of Americans believe it’s important to always get the best price on a product. Meaning that no matter which set of consumers are coming into your store, setting the right price is critical.
The pandemic also has shifted consumer demand toward the health and wellness category, and that’s expected to be a largely enduring change even after COVID-19 comes to an end. According to the Center for Science in Public Interest 79% of shoppers think supermarkets should do more to make it easier for people to eat healthy. This growing demand has shifted health and wellness from a niche market into a mainstream category and, in order to retain customers, stores will need to offer — and properly showcase — the healthy and ‘functional’ foods their customer base wants. Shoppers are looking for convenience, options, and education when it comes to this category, and they will be expecting your stores to provide all three.
In 2021, consumers are going to start eating out at restaurants again. And without a fresh approach designed to foster lasting customer loyalty, the bump in sales grocery stores experienced during 2020 could quickly evaporate, according to a new Bain & Co. report, The Future of US Grocery: Maintaining the Momentum. Steve Caine, a co-author of the report, believes grocery stores have a rare opportunity to invest and innovate. By taking advantage and seizing the moment, “you can retrain some customers to shift more of their share of wallet to you,” he said in the report.
Knowing what types of investments to make in your grocery business and where to start can be challenging. We’re here to help. Our solutions can help your store not only remain relevant and competitive amid all of these changes, but also increase your market share, revenues and profits.
Stay tuned for our next two blog posts in January where we’ll explore specific ways UNFI Professional Services can help you embrace changing trends, adapt and take your store to the next level in 2021. In the meantime, feel free to email us at [email protected] if you want to talk about positioning your store for greater success.
