The Supply Side: Consumer demands dictate grocery changes

story by Kim Souza
ksouza@thecitywire.com

Editor’s note: The Supply Side section of The City Wire focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by The City Wire and sponsored by Propak Logistics.

Convenience, coupons and better cuisine top the list of what shoppers said they are looking for from their local grocers, noted a recent report from PricewaterhouseCoopers.

“Shoppers told us they like traditional grocery stores, 83% of respondents said they preferred them. While they are not completely sold on online grocery shopping, many want to digitally engage with stores even after they have left,” according to PwC report.

The survey of 1,000 shoppers indicated that coupons are valued by consumers who also like loyalty programs that they would like to see tweaked with more flexibility and tangible benefits.

"Grocers can no longer rely on providing a one-size-fits-all customer experience. The next wave of millennial consumers is likely to demand individualized attention and a shopping experience that meets their specific wants and needs," said Steven Barr, PwC's U.S. retail, consumer practice leader. "We're helping our clients look closely at their target customer segments on a micro level to effectively tailor the path to purchase for each shopper when they are in and out of the store. Grocers that truly get to know their customers on a store-by-store basis can find success in the future."

More than half of the shoppers surveyed complained of long lines and crowded stores. Grocers providing a smoother in-store experience by taming congestion are likely to earn repeated shopper visits. Shoppers will increasingly look to store employees as shopping advisors, whether for additional product information, new recipe tips or purchase recommendations, as they will want increased service and assistance with decision making.

While online shopping is growing exponentially in the broader retail sector, the grocery segment is slower to make changes despite retailers from Amazon to Wal-Mart ramping up efforts to win the online grocery battle. Only 1% of survey respondents consider online shopping their primary way of getting groceries, though 92% reported having the online option available to them.

"While online channels may not become a common way to buy groceries in the near future, technology will still play a major role in the evolving grocery experience," said Sabina Saksena, managing director in PwC's U.S. consumer division.

She said shoppers expect information at their fingertips and, according to the survey, more than half of respondents want to integrate their mobile devices into their future grocery experience.

“Grocers that innovate and build on their digital channels to meet this demand will be most successful,” Saksena added.

The four main components shoppers said brings them back to the store include:
• In-store experience - 52%
• Farmer’s market fresh produce - 47%
• Deli’s and salad bars - 42%
• Convenience options like express checkout, curbside pickup - 26%.

The survey found four distinctly different shoppers, each who have varied expectations from their grocers. PwC said grocers need to be aware of these differences if they are going to stay relevant through the demographic shift.

GOURMET GORDON
Gourmet Gordon is keenly focused on food. This is generally Gen X or Baby Boomers who live in urban cities. Some 80% of them do not have children at home and they are shopping for themselves and a spouse. About one-third of the survey respondents fit the Gourmet Gordon group.

The Gourmet Gordons spent an average of $70 per grocery visit. They are looking for products that are locally sourced, non-GMO and organic and they favor freshness. They care about where and how products are sourced. They shop with a conscience and have average household income between $75,000 and$200,000.

CONVENIENCE MATTERS
Some 26% aligned with “Metropolitan Marsha,” who craves convenience. This group mostly lives in large, walkable cities like New York or San Francisco. They shop often for their entire family. They also share their shopping stories with friends and family.

This group embraces technology in their shopping habits and are four times more likely to use a smartphone to research products, recipes, create grocery lists, order delivery and provide store feedback. They don’t like standing in line and are often frustrated by parking issues. The family spends an average of $50 per trip and annual income ranges between $75,000 and $300,000.

TRADITIONAL ROUTINE
Another 25% of the respondents identified with “Traditional Tim,” a Baby Boomer living in the suburbs, mid-size cities or small towns. This shopper is likely retired and shopping for himself or a spouse.

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This group spends the least on groceries per month at about $400. Price matters to them. They like smaller formats, less crowded venues and are reluctant to change. They still clip coupons and rely on newspaper circulars when preparing their shopping lists.

TOMORROW’S SHOPPER
“Millennial Mel” was identified as tomorrow’s shopper. About 17% of the respondents fit this category as Millennials living in suburbs or smaller towns, often with a roommate or parents. They don’t do much grocery shopping for now, but when they do, it’s usually for themselves, even through they rely on parents to pay for it.

The group is comprised of digital natives already craving 3D maps of stores as a top tech feature they want. They are loyal and want bonus loyalty points for sharing their thoughts and opinions with friends via social platforms. They shop nearby and like to make one stop for grocery and non-grocery items. They were the only group that cited convenience stores and pharmacies among their top three places for grabbing groceries.

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