Your customers are changing. Are you?
I’ve read many articles in the past few months about the rise of household debt and income polarization among Canadians. Overall, Canadians are referred to as being “stretched.”
Statistics Canada reports household debt is rising as Canadians are taking on more debt from mortgages, loans, and credit cards.
How does this affect consumers?
Consumers are changing
Research from Nielsen notes more than six in ten Canadians are changing their shopping patterns to save money. More consumers are shopping at discount formats and retail sales sold on promotion are at a record high.
Canadians are looking for ways to save money and are implementing strategies to save . Some of these strategies may include leaving their conventional grocery store for a cheaper solution. To quantify, Nielsen reports almost $6 billion in grocery sales have shifted to discount retailers since 2007.
How does this affect grocery retailers?
Grocery retailers need to change
Consumers are stretched more than ever. Unless you plan to sit back and watch your customers walk to the nearest discounter, you need to change, you need to evolve, and you need to differentiate like never before.
Although consumers are strapped and looking for ways to save, it isn’t sustainable to compete on price alone. The key is to be competitively priced, but also offer your customers a reason to shop at your store aside from price.
How do you do this?
Know your shopper
One strategy to differentiate yourself and give your shoppers a reason to walk through your doors is to know your shopper. This goes beyond the basic demographic characteristics of your customers and gets into their behaviours.
The opportunities with data are unlimited. Anticipate your consumers’ needs before they know them. Offer your customers personalized coupons on products they actually purchase. Understanding what items your customers are price sensitive to and what items you’re giving away margin on.
There is no one size fits all strategy here, and that’s the beauty of it – you can personalize your strategy to your consumers and your business.
Another strategy to differentiate from discount formats without sacrificing margin is up-scaling.
Looking at today’s market we can see this strategy being implemented in many stores – dry aged beef, in-store chefs, restaurant quality home meal replacements, in-store made sushi, sustainable meat and seafood, fresh picked local produce, and exceptional customer service – to name a few. Here are some examples from Co-op stores:
Offer your consumers something special that they can’t get at the competition. Give them a reason to come to your store and increase their basket while they’re there.
There are many strategies that could be used to differentiate your business. No matter what strategy you implement, it’s important to recognize that the consumer has changed, the grocery landscape has evolved, and you too will have to change if you don’t want to be left behind.