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.
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.