Other Retailers Can Learn a Lot From Grocers

Facing commoditization, measly margins and outside-channel competition, grocery stores have become the hands down winners among channels at delivering top-notch "experiences" to shoppers, according to a report from PwC US.

The report, Experience Radar 2013: Lessons from the U.S. Grocery Industry, measures the experiences of about 6,000 U.S. consumers across multiple industries. Unlike traditional customer segmentations based predominately on demographics, the service analyzes "hard economics" like value measures, price elasticity and churn metrics to reveal customer trade-offs between different sets of experiential features and the value and willingness to pay consumers place on each. It also probes into other areas such as purchase behavior, moments of truth (MOT), and word-of-mouth marketing within each industry.

The report identifies five behaviors that retailers in other channels can adopt from grocers to enhance customer experience and create value:

Make it fast: While 37 percent report purchasing based on price, 28 percent buy on convenience. Fast checkout times account for 30 percent of "memorable great experiences." In addition to having adequate checkout staffing, retailers should "be transparent" by providing details on expected waits. Mobile checkouts — either through staff handheld devices or apps that let shoppers do it themselves — are expected to increasingly support the need for speed.

Emotionalize shopping: Evoke "positive emotions based on what they care about." In grocery, that includes embracing trends such as expanded organic offerings and offering sustainable solutions that reinforce consumers’ lifestyles,. Personalized deals through loyalty programs can also build loyalty, although they must be highly-personalized.

Balance high-tech with high touch: Staff quality influences where customers shop one-third of the time. While self-checkouts have become "essential," some customers will pay a premium for an attendant checkout to avoid technology difficulties. Wrote PwC, "As most customers still shop for groceries in person, invest in employees to deliver engaging experiences, motivating shoppers to return and employees to stay."

Avoid spoil: Two in five customers never return after a bad experience. While customers don’t typically provide feedback to their grocers, they do vent on social networks. Wrote PwC, "Create a vigorous social media strategy to listen hard to your customers to fix issues and create incentives for customers to provide feedback. Develop a thorough, well-advertised service recovery strategy that includes a catch-all return policy."

Empower customers to make satisfying choices: While 20 percent of shoppers rank product selection as a top purchase driver, they’re also bombarded by product information. Wrote PwC, "Invest in a labeling strategy to help customers cut their clutter. Establish yourself as a trusted go-to resource by offering recipes, nutrition tips and advice to create stronger relationships. Offer new product samples and let customers try new products and return them if they aren’t satisfied."

BrainTrust

Discussion Questions

What grocery store practices would other retail channels benefit from adopting? What are the advantages and challenges to segmenting consumers by in-store experiential values?

Poll

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J. Peter Deeb
J. Peter Deeb
11 years ago

Grocery retailers have done a good job of gaining additional sales through impulse purchasing. Eyecatching displays, creative merchandising, cross category promotion are all enhanced by a good in-store experiences. Many of today’s more sterile retailers can learn from a good grocer’s ability to build a basket. In higher profit margin retailers this can mean the difference between surviving and good profitability.

Tony Orlando
Tony Orlando
11 years ago

I think that customer service is the common theme that all of us must start with. Insist on hiring people who really are friendly, and they can learn the details as they go. We are so focused on high tech solutions, but low tech still is what brings them back.

Always back up what you say to a customer and stay innovative by creating fresh ideas that go with the community you live in. Always get your community involved, and always, always be networking in the schools, and other local events, as this is the best form of advertising there is.

I have a question…. I’ll be in Vegas as usual for the NGA, and would like to get together with the panelists and store owners who contribute to this great website for a few laughs and a nice glass of wine….

Who’s in?

Dave Wendland
Dave Wendland
11 years ago

The advantages of segmenting customers and catering to their specific likes/dislikes are paramount for ALL retail formats. Every shopper enters the store with a different purpose, mindset, and anticipated experience. It is essential that retailers recognize these differences and arrange categories, product solutions, signage, displays, and other stimuli to intersect with customers.

The path to gaining shopper loyalty—and the entry point for each individual on this journey—is unique. And worth every ounce of energy paying attention to meeting and exceeding expectations!

Shep Hyken
Shep Hyken
11 years ago

The system behind running a grocery store may or may not work for other retailers. But what can work is the concept of “local.” Grocery stores tend to stock localized food and other products that are specific to their location. Some of what they stock depends on geographical location, culture and other demographics. That means that a chain of stores might stock different items than another store in the same chain.

Mel Kleiman
Mel Kleiman
11 years ago

The great grocers not only realize the need for great selection but they also realize the need for at least good if not great employees. If retailers staffed like leading grocers, they would be leading retailers.

Brian Numainville
Brian Numainville
11 years ago

I agree with Tony. It is all about customer connectivity through outstanding service, customer satisfaction and local community involvement/networking. Grocers do these things well and other retail channels could benefit from their example.

Ed Rosenbaum
Ed Rosenbaum
11 years ago

Another area retailers can/should take a page from the grocers business model is training. The employees in a grocery chain are usually better trained and more customer friendly than a typical retailer model.

Martin Mehalchin
Martin Mehalchin
11 years ago

Leading grocers like Whole Foods and Wegmans do a great job of serving two divergent customer types well. The mission driven shopper, who wants a stick of butter and a liter of juice and wants to find and pay for them quickly as well as the experience seeking customer who wants to discover new items and linger in the store.

All retailers should figure out whether there customer base is mission-driven, experience-seeking or both, and then should design their in-store operations to serve the customer base that they have or aspire to have.

Kai Clarke
Kai Clarke
11 years ago

Eliminate out-of-stocks! Competitively price your best selling brands and products. These two habits alone keep most grocers ahead of their other retail brothers. Ever gone to a grocery store and not been able to buy milk, eggs or tomatoes? Of course not. Other retailers need to see, follow and use the same examples that grocery stores bring to their customers.

Craig Sundstrom
Craig Sundstrom
11 years ago

Nothing wrong with offering up ideas—presumably the point of this article, but I question the wisdom of quoting percentages, and trying to shoehorn them into a one-size-fits-all template. Surely if I was selling, say, fine menswear or Waterford Crystal, qualities like staff knowledge and price would be (relatively) more important than check-out time or (overall) convenience.

M. Jericho Banks PhD
M. Jericho Banks PhD
11 years ago

It’s important to keep in mind the contributions by national brand marketing to the “five behaviors” attributed to supermarkets. It’s significant. And, other types of retailers already tend to maximize the impact on consumers of the advertising, design, and customer satisfaction provided by the brands they sell.

Ralph Jacobson
Ralph Jacobson
11 years ago

Actually, there are just as many best practices that grocers could or should adopt from non-food retailers, including department stores, apparel, etc. Merchandising strategies are far more effective in department stores. Also, shoppers will gladly drive to the non-food store of their choice, an act of true loyalty, while 90% of grocery shoppers shop by location convenience, regardless of how many times they are disappointed by the grocer. Therefore, why should grocers even have a “loyalty” program? These programs are typically simply frequent shopper discounts given in an en masse, untargeted fashion.

Grocers definitely do exhibit the qualities enumerated in the article. However, there are most assuredly learnings to be had by every segment of retail, by investigating those segment that do not necessarily compete.

Mark Price
Mark Price
11 years ago

The best retailers across all categories segment their customers by behavior rather than by attitudes. Attitudinal segmentation provides valuable insight for overall positioning, company differentiation and mass media. However, when you have to target customers on a 1:1 basis, there is not way to determine which customers have which attitudes.

In addition, behavioral segmentation has consistently proven more predictive of future customer behavior. Grocers have built this foundation decades ago. The best retailers across all categories use this approach now.