IN SUMMARY: As more people purchase products online grocery stores are going to have to adapt by changing product assortments and offering value-added services that online stores can’t match. This is going to represent a huge challenge for brands.
Within a 5 mile radius of my home, there are almost a dozen grocery stores and more are being built. It’s always been believed that convenience is part of the reason why so many grocery stores are clustered within a certain area but today that accessibility is being replaced by online stores and stores that offer same day delivery.
If grocery stores are going to survive and thrive they need to focus on products that online retailers can’t match. The grocery store of the near future will offer:
1ne: Meals to go – Either all the ingredients to cook a meal at home or meals that are heat and eat.
2wo: A reduction in products that are being purchased online.
3hree: A smaller assortment within product categories. Products that may only move a low number of sku’s a month should be cut.
4our: Express/fast checkout.
5ive: A breakfast and lunch bar with a sit down area to eat.
6ix: Offer a better assortment of fresh produce, meats and frozen goods that online retailers can’t match.
What about brands?
Grocery buyers are going to be relying, more than ever, on data that tells them which products need to be promoted and which ones need to be dropped. Brand reps are going to be inundated with requests from buyers as to “why they need to carry a certain SKU”.
ALDI is making inroads here in the US largely because of their superior logistic systems and stores that don’t carry 25 mustard brands.
Brands are going to have to focus on marketing that creates more demand and less on marketing that is ineffective. They are going to be pushing back on their agencies to clearly show a relation between an advertising tactic and sales.
Brand line extensions have been a standard tactic for most popular brands but does a grocer need to carry 20 different kinds of chicken noodle soup? Will customers stop shopping at their closest grocer because they don’t stock a particular brand of frozen pizza?
This is where brands can help. Today’s brand rep does a lot more than take orders he/she is also a category export who can help buyers maximize their product assortments, even if it means dropping some of the products they represent.
Here in Florida, Publix is experimenting with services like valet parking and an online sandwich order menu. They are going to have to continue to adapt to the realities of the new consumer or else they are going to decline in sales.
Brands have to help grocery chains change to the new realities of today’s shoppers. By helping buyers navigate this complex market they are investing in the future of their brands.