By Doug Baker, Vice President, Industry Relations – Private Brands, Technology, Food Marketing Institute
Today, tens of millions of baby boomers are entering into the declining consumption stage of life; they’re consuming less of everything. At the same time, the millennials following right behind them have not yet reached the stage of their lives where they are increasing consumption.
In his presentation at Groceryshop entitled “Compete and Thrive! Realize the Full Potential of Cohesive Shopper Insights,” David Portalatin of the NPD Group challenged food retailers to do two simple things one after the other: Focus on understanding the shopper’s needs, and then execute on the insights discovered.
If there is one data point in NPD’s presentation for me illustrates the competitive pressures in food retail today, it’s this one: Eating occasions per capita (i.e., meals consumed per person) are down 3.8 percent over the last decade.
Eventually, this will all even out, but even when it does, top-line growth for food retail will probably remain one percent or less annually. That means food retailers have to focus on customer data, in-store opportunities, digital opportunities and every consumer trend to find growth. Shopper dynamics are driving change in food retail.
In the Groceryshop presentation from Steve Hasen of Precima, which you can view in its entirety, Hasen outlined several very specific ways a food retailer can take what it has learned about its shoppers’ needs and translate that into revenue.
For example, a retailer’s typical category manager has the capability to drill down into the performance of a specific underperforming brand and learn a number of things. The category manager can find that, while baseline performance is healthy, the brand is missing out on incremental sales. One solution is to ask the brand manufacturer if they have the correct price point.
Or, knowing that for 90 percent of an item’s purchasers, an excellent price is $1.99 if bought at a brick-and-mortar store, what does data tell the category manager about the competitive landscape for that same item online, or in conjunction with promotions? Not only does that kind of information give the category manager the opportunity to personalize the price for smaller segments of the shopping audience, it can also identify new ways to communicate that price to them.
And what about highly promoted brands that come with, say, a 40 percent discount? What if the category manager cuts that discount back to 30 percent? Would the food retailer suffer sales losses, or just eliminate the “cherry pickers” who were probably not going to add additional items to their shopping basket anyway? Data about who bought the product and what else they bought could give food retailers answers.
By leveraging shopper data and making it actionable, food retailers are not only deriving better financial results, but also building affinity with shoppers and for brands.
- Nielsen FMI Digital Shopper free digital assessment tool
- Download Following the Profitable Path to Your Digitally Engaged Grocery Shoppers Executive Workbook 2019 to determine if you are ready for the digital adoption pace.
- Other related topics at FMI.org/Omnichannel