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.
And it’s consumer preferences that have made all the difference in the ongoing struggles, especially heightened awareness of sustainability and fair supply. The supermarkets who are able to show they care about these values are usually quite reputable. Even packaging has turned into a war zone as chains are going biodegradable and minimal in order to appeal to the eco-friendly consumer. Sustainability is being centralised in supply chains where transparency and low carbon emissions are not just ideals, they are business.
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.
Grocery chains have been able to make decisions on where to put them, too. Stores in the city specialise in small, targeted selections for urbanites’ demands, and stores in the suburbs and country take advantage of space to provide choice at lower prices. Pop-up shops and micro-locations are new experiments in the market-opening, especially in overpopulated places where space is scarce.
The wellness movements have changed product lines and marketing channels in the whole sector. Organic, non-GMO, and plant-based foods are all in the rage, and shops have had to scale up their offerings. The more that stores remain in the know about health and keep their inventory fresh, the more of the health-conscious crowd they draw. But the problem is how to keep them affordable and accessible, since there is always more demand than supply in those sectors with the fastest growth rates.
Branding and narrative are all the rage, as grocery chains attempt to connect with customers emotionally. Whether it is heritage, quality or innovation, good branding works with customers. In an era of competition, a store’s or a product’s story can be the difference maker. The retailers who make a statement about what they stand for are the ones who tend to garner a loyal following; those that don’t stand out will be ignored.
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.
And there remain labour and labour problems in the wider fight. Increasing wages, shortages of workers and the need for specialised personnel push up operational budgets. Food stores need to invest in employee education and health for the sake of ensuring the same service without increasing prices. The happier employees can result in happier customers, which gives you a head start in an overloaded marketplace. If shops don’t take care of their employees, then they lose not only staff but customers who expect the same great service.