Grocery store business is now an ultra competitive industry with innovation, customer service and a high level of efficiency the measure of success. Chains large and small battle for customer trust and are using technology, data and distinctive retail shopping to set themselves apart. There are still price wars on the rise, discounts, offers and loyalty programmes slashing through price-conscious customers. These tactics often translate to extremely low margins, where stores have to become leaner and based on economies of scale.
It’s tech that is shaping this battlefield. AI and Machine Learning are used to forecast demand, inventory and optimize customer experience. Automatic tills, smart shelves, cashless stores, all offer convenience at an even lower cost to the customer and a higher transactional speed. Meanwhile, data-based insights help retailers see what consumers are buying so they can run specific deals that jack up baskets and generate repeat business. Businesses who lack the technological maturity in this area risk competing with companies that deliver fast, frictionless experiences.
The fight has been pushed all the more into the mouth of the Internet titans who combined internet and brick-and-mortar commerce to deliver unparalleled ease. Delivery and pick up in a few hours is standard nowadays, and grocery stores are putting serious resources into logistics to keep up. The move to omnichannel has thrown traditional grocery into the mix along with online stores and marketplaces, putting stores under pressure to be online and in person. They that are just right tend to win a better market share and the bad guys lose their relevancy.
Price wars are still a part of this competition that doesn’t let up. Chains will aggressively compete to sell at lower prices than their competitors, where razor-thin margins have to be balanced with the requirement to attract chubby shoppers. Private-label, with their higher margins and resolute price-setting, has become so prevalent as stores are looking to stand out. At the same time, bulk-buying clubs and discount stores challenge the old-school retailers, pushing them to innovate their prices or lose their customers.
Diet and wellness crazes also made the wars of the grocery store a whole new game, as stores competed to stock their shelves with products for healthful living. Gluten-free, keto and plant-based are now no longer a cult, but an integral part of a competitive grocery basket. Even more complicated by the emergence of functional foods — foods that come with extra health benefits — as stores constantly need to update their product lines to meet changing consumer demands.
Localism and crowdsourcing also position grocers in a competitive position. The more local and attentively tuned the stores are, the more loyal the customers. This might include carrying ethnically based items, having events or using small manufacturers. In providing community, these stores stand out against insipid, big-box rivals. But implementing these kinds of strategies involve some finesse and local market expertise which is hard but worth it.
And the grocery store wars are not stopping there either, with customer experience. Stores are pouring money into offering convenient and friendly shopping experiences.
Combinations and alliances are now the most popular tactics in the competition for market share. Stores partner with a local company, tech company, or food brand to get more product and reach new customers. These relationships typically result in new products, services or in-store experiences that differentiate a grocer from the competition. But those kinds of partnerships need to be well thought out and goal aligned so that there is nothing to undo.
The grocery store wars are never ending battles of novelty, differentiation and adaptation. Every option from price to technology choice affects whether a store survives and expands. Market is never resting and needs to evolve as per the evolving needs of the customer and changing trends of the industry.