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Understanding why in-store dining, culinary experiences and other services are proving so successful for grocers
Grocery stores are no longer just a place to pick up the weekly shop. Far from it. Alongside the expected shelves of products, in today’s stores consumers have the option to dine in-store at a restaurant or bar, participate in tasting experiences and even hire a handyman to install their new purchase. Services like this are now part-and-parcel with the grocery shopping experience but what are the drivers behind them?
Whether buying food for the home or eating-out, consumers now have an almost overwhelming choice when it comes to getting fed. Both grocers and restaurants are having to meet the demands of increasingly pressurized and time-poor demographics who are feeling the strain of demanding careers, raising families, longer commutes and brimming social calendars. Knowing this it’s clear why convenience plays a central role in retail strategy. Grocers are embracing the challenge and to gain a slice of the convenience-pie for themselves, have begun to push products aside and make way for dining services within their walls. Now customers can eat, drink and do their grocery shopping under one roof.
It’s hard to ignore the presence of smart speakers nowadays. A recent poll conducted by US radio syndicator NPR and Edison research, suggests that approximately 39 million Americans now own one. This roughly translates to 16% of all Americans, a 128% increase from 2017. And it’s not just in America; in the UK a YouGov poll indicated that between Q3 of 2017 and Q1 of 2018, the adoption of smart speakers doubled from 5% to 10%.
So, consumers have them in homes, but more interestingly for retailers and National Brands, OC&C Strategy Consultants have predicted that shopping via these devices will grow to $40 billon by 2022, up from $2 billion today across the US and UK markets. But the same report suggested that only 39% of consumers trust in the "personalized" product selection of smart speakers and only 44% believe they offer the best value selection of products. This shows the opportunity that lies ahead for the Private Labels and National Brands that are able to get the right products in front of the right customer effectively.
Worldwide prevalence of obesity more than doubled between 1980 and 2014, with 11% of men and 15% of women (more than half a billion adults) being classified as obese.
Source: World Health Organization
We all know that what we eat and drink has a direct impact on our health, but do we always make the right choices? With obesity and diseases such as Type 2 diabetes rising globally, governments are taking heed of the World Health Organization’s recommendation to legislate so that people make better informed – and hopefully healthier – choices. In May 2018, the UK Government introduced the Soft Drinks Industry Levy (nicknamed the “sugar tax”) as part of its initiative to reduce childhood obesity.
The UK is by no means the first - other examples include France’s 2012 levy which has since been extended to incorporate specific taxation for energy drinks, Mexico’s 2014 initiative which is reported to have directly contributed to a reduction in the country’s overall sugar consumption and cities across the United States where soft drinks producers and public health bodies are going head-to-head with opposing marketing campaigns in a bid to influence public opinion.
This article sets out to explore the challenges and opportunities presented by sugar taxes and reflect on how, whether National Brand or Private Label, the impact is felt by us all.
The beauty of Private Label is that it allows food retailers the freedom to develop their own offerings based on a deep understanding of their customers. It provides a point of differentiation and gives consumers greater choice. Where a national brand makes industrial-sized decisions based on driving millions of units, Private Label can deliver a more nuanced experience influenced by a specific geography or customer demographic.
A vital component of Private Label success is the quality of collaboration between suppliers. In this article, we examine how Private Label organizations can make their collaboration experience even richer.
Compared to suppliers of national brands, Private Label suppliers are small organizations. For the retailer managing a Private Label range, this could mean dealing with as many as 500 small organizations. This could be due to a very wide range of products, or because the retailer wishes to spread their risk by engaging with multiple suppliers for particularly successful ranges (i.e. Private Label cereal). This can present a communication challenge when a supplier who ‘goes deep’ on their particular product or ingredient, is working with a retailer who has to manage a breadth of relationships.
A key selling point for Private Label is the ability to create products that national brands either don’t want or don’t have the time to invest in. On the supplier side, the ideal state is to have consistency, whereas retailers want to differentiate in the market by offering innovative products that other grocery stores do not have.
A good example of this is bakery muffins.
The food and technology industries have been working hand in hand for decades. What’s evolved most recently is the emergence of an entire sector dedicated to changing the way people farm, shop and eat: FoodTech
FoodTech has the power to transform all aspects of the food supply chain – from the way crops are grown to the final mile delivery of goods to the consumer’s door.
For consumers, this heralds a wave of enhanced transparency and increased convenience. For retailers, this offers both challenges and opportunities – whether it’s the introduction of IoT sensors to indicate product freshness or the ability to make recommendations directly to customers’ smartphones via beacon technology. These in turn, offer opportunities for retailers to increase the sales of their Private Label offerings.
This article will discuss some of the ways in which FoodTech is already changing the face of grocery retail, and what can be anticipated for the future.
Go back three or four generations and food transparency was a relatively straightforward affair – people bought or grew seasonal produce and used local farmers or raised their own livestock.
The introduction of refrigerated transport and centralized distribution created a global food economy that was high on choice and convenience, but low on transparency. Aside from rising consumer demand to understand where their produce was sourced from, this presents potentially serious food safety issues – in 2017, 456 food recalls were made in the US alone1.