Brick-and-Mortar Supermarkets are Winning Back Customers
Two consumer studies of food shoppers’ inclinations came to my attention recently. One of them was from Dunnhumby, which rated consumers’ preferences for sixty supermarket brands across three crucial measures known as the Grocery RPI (Retailer Preference Index). The second came courtesy of ServiceChannel, which was more broadly focused on the shopping experiences supermarket customers need most. Used collectively, these studies offer powerful insights into what grocery shoppers value in which brands and a store would be best delivering it.
Physical Stores are essential.
While it looks like web-based ordering, pickup, and home delivery are the most crucial innovations in food retail since Piggly Wiggly’s Clarence Saunders invented the self-service market in 1916, customers so far would instead do their food shopping the old-fashioned way: in brick-and-mortar stores.
Some sixty-six % of the 1,505 recent grocery shoppers surveyed by ServiceChannel in the “State of theirs of Grocery Report,” that are additionally the household’s primary customers, said they really like grocery store shopping most or perhaps most of the period.
Additionally, two-thirds of those shoppers report going to a supermarket one to 2 times per week. Admittedly, ServiceChannel’s business depends on helping retailers keep their store facilities, but Dunnhumby’s investigation confirms the value of the actual physical shop with it being 1 of the foremost RPI measures.
“The consumer that walks right into a supermarket has very little tolerance for a terrible experience,” shared Tom Buiocchi, CEO of ServiceChannel, as we described the survey findings. “The physical store is supreme these days.”
Grocery shoppers expect floors that are clean, carts and bathrooms, in addition to well-organized and clean shelves. Sadly, around one-third of buyers report that a supermarket they just recently visited could have compared better to those standards.
Despite people’s choice for the in-store grocery shopping experience, the comfort of internet grocery shopping genuinely impacts their expectations. In their investigation, ServiceChannel identified a segment called omnichannel shoppers who occasionally shop for groceries online. Not by chance, the omnichannel grocery shoppers (fifty-eight %) are mainly next-generation Millennials or maybe Gen Z.
Even though they value the convenience of internet ordering, they’re more engaged in-store shoppers than people who do not use online. Some seventy-nine % of omnichannel shoppers take pleasure in the in-store shopping experience most or most of the time, and one-half of them visit an actual store one to 2 times per week. Whenever they decide to see a store, they’re drawn there to pick fresh meats and veggies (forty-two %), or maybe they’re searching for services that just a store can provide, such as a restaurant, bank, coffee bar, or perhaps pharmacy (thirty %). The ready accessibility of freshly prepared foods to get home likewise draws them to the grocery store (twenty-four %). While they’re spending time in the shop, they also expect Wi-Fi service, self-check-out, and price-check kiosks.
“Omnichannel shoppers use the grocery stores of theirs in a complete new way,” Buiocchi says. “They have a lot of diverse expectations. The bar has risen. They need something which goes way beyond just groceries.”
As of now, online has yet to produce inroads in the terminology of consumer spending. Coresight Research reports that ninety-seven % of grocery sales continue to be in-store. Digital’s most significant influence has been changing shoppers’ expectations about what they want regarding passing the time in the supermarket.
“For grocers to endure, and thrive, they have to evolve the shop customer experience to satisfy the modern day shoppers’ expectations, that have been clearly affected by e commerce in the latest years,” Buiocchi says.
“Grocers can no longer just provide an area to buy household and food products. Rather, they need to think about a shopping experience which is different and differentiated from the one dimensional, non-sensory and transactional nature of internet food shopping, with experiences, services & amenities which just brick-and-mortar grocers are able to provide,” he continues.
Neighborhood supermarkets are rising on the challenge.
Spurred on by shoppers’ brand-new demands, conventional supermarkets are changing to meet their expectations, dependent on the results of the Dunnhumby study. “This year, standard grocers began to come back,” shares Eric Karlson, Dunnhumby’s director of insights and strategy. “But when I say conventional grocers,’ it is not the existing grocery store that’s been trapped in the 1960s or perhaps 1970s.”
Reporting that traditionalists such as WinCo, ShopRite, Publix, Market Basket, Wegmans, and H-E-B were in the leading percentile ranking across sixty models, he continues, “In days are gone by, standard grocers are fighting and been beaten very regularly by the factory stores, including Costco and also Sam’s, the mass merchants, including Target and Walmart, as well as the discounters, like Aldi. We’ve also seen competition skyrocket, with small format stores like Trader Joe’s and convenience and dollar stores competing in the food space.”
Karlson explains that the relative ratings are derived from an exclusive Retailer Preference Index (RPI) which takes into consideration three crucial values:
Preference Pillars: Measures such as price, quality of merchandise as well as the store customer experience, digital, operations, convenience, rewards and discounts, and pace.
Emotional Connection: Consumers’ ability to recommend (provide feedback), their level of loyalty, and intensity of attachment (Word of Mouth Marketing).
Economic Performance: Grocery market share, sales a square foot (efficiency), and five-year compound annual growth rate.
The preference pillars and mental connection values are produced from surveys of approximately 7,500 consumers. The financial performance information is gathered from publicly available sources.
Compared with other industry reviews, Karlson thinks the KPI rankings do a more excellent job since it links consumers’ feelings and preferences along with the financial benchmarks that companies, the boards of their directors, and investors measure results.
“In taking a look at some other studies which simply rate consumers’ emotion or satisfaction, we discovered they had been coming short,” Karlson explains. “The biggest retailer, Walmart, is generally placed close to the bottom part in the those studies. Though nobody is forcing shoppers to visit Walmart so financial performance must also be factored in. Our KPI associates what retailers do (preference drivers) with the way customers think and also feel (emotional bond) and shop (financial performance).”
With this broad view of food retail, Karlson believes it becomes a far more correct picture of total grocer performance. “Some variables, including cost and quality that pertains to both product assortment along with the shop experience, are definitely more critical compared to others,” he continues. “Speed of getting in and out rapidly and discounts and incentives are much less so.”
Walmart, for instance, does very well on convenience and price, but the store experiences and product quality aren’t ranked as highly, the Dunnhumby survey shows. Price as a preference driver will lose ground to customer experience.
The grocers’ list laggards, whose Karlson didn’t reveal, are likely to over-rely on rewards and discounts, which might have factored much more strongly once the economic system was not as strong. “The dogs in the bottom part quintile employ a value perception problem,” he explains. “Where they’re very profitable in the analysis is in discounts and incentives. They’ve pulled that lever a lot and are over-reliant on it. That’s the one thing they’ve to draw individuals into their store. They truly have to rethink their value proposition.”
Generally, what separates WinCo, ShopRite, Publix, Market Basket, Wegmans, like H-E-B, and the winners out of the losers in the Dunnhumby study is they’ve enhanced their customers’ value perception with fair prices, high-quality products (including private label), broad assortments, along with fresh produce and meats. Additionally, they offer prepared food items along with a customer experience that delights, not disappoints, and this takes us to the ServiceChannel study.
“People continue to like going grocery shopping,” ServiceChannel’s Buiocchi concludes. “But grocers which make the experience better, fun and multi-faceted will record rise in customer loyalty.”
The growth of e-commerce and digital services in the retail food space, such as curbside pickup and home delivery, has changed customers expectations around how much the in store supermarket experience must be, though it has not actually changed very much about the path and exactly where they eventually choose to shop. For that, the shop experience is exactly what truly counts.