The grocery store industry is one of the largest in the world today. In the US, the industry employs an estimated 3.4 million people annually and more than 38,000 grocery stores see annual sales of $2 million or more each year.
According to FMI, total supermarket sales in 2015 were just under $650 billion.
As the industry adapts to changing consumer preferences, these grocery store industry trends will help to ensure that net profits for stores across the US and around the world continue to rise. Millennials in particular are looking for changes in the more than 42,000 products that are offered at the average grocery store, so those that can embrace these trends will likely see the best results.
Why Quality Content Must be a Top Priority
- Nielsen discovered that grocery store consumers are 5x more reliant on content offered to local consumers than they were just 5 years ago. The average consumer today will engage with over 11 pieces of content before making a single purchase at a grocery store.
- Colored visuals are particularly important. A consumer’s willingness to engage with content rises by 80% when colored visuals are included in today’s content.
- If a relevant image is paired with product information, grocery store consumers are able to retain 65% of the information for up to 3 days. This is important because the Food Marketing Institute states that the average number of trips a consumer makes to their local grocery store per week is 1.5.
- Despite the benefits, only 1 in 4 marketing teams have a process in place that allows visual content assets to be managed across all of their marketing teams.
- Visual content provided by grocery stores can also provide consumers with images and video that can be accessed through mobile devices that offer new food ideas to consumers, including meal preparation ideas, that can increase sales when immediately accessible at the aisle. Look for more products to include QR codes and stores to include coding next to pricing details to take advantage of this fact.
- 50% of consumers say that the top reason why they would pick a grocery store over another is “lower costs or an opportunity to save money.” Content access can help consumers quickly compare products at every local store so an empowered decision can be made.
Content that is accessible to grocery store consumers is just as important as it is for any other industry. The appeal of visual graphics in this industry cannot be overstated. This means the direct mail brochure isn’t going to go away any time soon. In the next 5 years, watch for more grocery stores to follow the lead of Safeway by creating consumer-specific apps that offer exclusive discounts to consumers. This will allow consumers to look for specific tags on store shelves that can save them money, access the deal through their smartphone or mobile device, and stretch their shopping dollars further.
Why Targeting Millennials Must be a Primary Emphasis
- 75% of Millennials say that they want to become better cooks, but they want to learn through real experiences instead of following cookbooks or other “old-fashioned” methods of food preparation learning.
- 90% of Millennials report that they are preparing their primary meal at home at least 3 times per week.
- According to Progressive Grocer, Millennials are also recession-resistant as a consumer. Even during the height of the Great Recession, when 57% of this generation demographic say their finances were negatively impacted, only 8% reported that they spent less at the grocery store.
- When asked which activity they were most likely to cut spending on as a result of the recession’s impact, 36% cited “eating out,” 30% said “entertainment,” and 21% said “buying clothes.”
- For each trip to the grocery store, on average, 20% of Millennials spend up to $49, 37% say that they spend $50-99, 35% will spend between $100-200, but only 9% spend more than $200. As more Millennials start families, these sales figures are only expected to head upward per trip.
- 47% of Millennials say that they shop with either local food preferences in mind or for items that help their “foodie” habit. In comparison, just 34% of Millennials say that their grocery store shopping style is “thrifty.”
- 57% of Millennials say that they are most likely to go grocery shopping when they need to restock on supplies. Only 1 in 4 say that they’ll go shopping only when there are deals and discounts available. Yet 17% say that they’ll go shopping when planning a meal or designing a recipe, so grocery stores must be able to meet all 3 top preferences in order to meet the needs of their local generational demographic.
At the end of the day, Millennials are looking for an improved value cost. They might be searching for deals, but the quality of local products or organic produce is going to outweigh the small savings that a sale might generate. In the next decade, grocery stores are going to need to transform their content and their products to these preferences. Millennials might not have a lot of time to cook, but they still want to do so, and this means looking for quick-fix options at the grocery store. Look for stores to offer fresh produce that has already been prepped for cooking and similar options to take advantage of these desires.
Why Costs Need to be Given a Second Look
- 11% of the savings-based mentions that are directed to consumers in the industry today mention coupons, savings, or saving money. This creates a net sentiment, according to Digitalist Magazine, that is 11% negative.
- Grocery lists represent 7% of social mentions that include eating habits, food retail, and technology posts.
- Apps used for grocery shopping have a 62% positive rating.
- 81% of negative industry mentions online today involve cost, especially in terms of the cost of healthy food.
- In just two years, the interest in online coupons has risen from 15% to 47% in surveys of regular grocery shoppers.
Whether the core local consumer prefers natural and organic food shopping or they look for the closest grocery store to their home, cost must be given a second look. The largest negative for the industry right now is how much it costs to purchase groceries, even though the average household only spends 5.5% of their discretionary income on food. Consumers don’t have a problem with cost when it is an authentic product with a fair price. It’s when products are unable to fulfill on the value promises offered in the industry’s content where dissatisfaction occurs.
It’s Not Going to Just be About the Brands
- In the past, consumers were brand-loyal when it came to the products they would purchase at the grocery store. In the future, consumers are going to be driven by brand authenticity that is fueled by direct consumer feedback about the products that are offered.
- 87% of shoppers say that they want to have access to loyalty programs, but 3 out of 5 consumers say that the brands to which they are the most loyal aren’t doing enough to recognize that loyalty.
- 68% of Millennials say that they won’t be loyal to a specific brand if there isn’t a good loyalty program involved with their purchase.
- 91% of shoppers say that they would shop elsewhere for the products they need if a competing store offers a promotion on what they needed or a rewards program.
- Yet according to information reported by marketingcharts.com, over 60% of Millennials are still loyal to many of the brands to which their parents have been loyal in the past. Why do people change brands? About half of shoppers say that they do so in order to maximize whatever loyalty benefits are available to them.
- 2 out of 3 consumers say that they are willing to give grocery stores and brands access to their basic personal information in order to receive better products, services, and prices.
- 77% of grocery store shoppers would be more loyal to stores that provide their personal top three customer experiences. More than half say that they would even pay more for the customer experiences that they value the most if they are locally accessible.
What does this grocery store industry trend mean? That consumers are valuing authenticity and value above anything else. They want to receive a genuine experience at the grocery store. Consumers want stores to recognize there is value in each customer instead of looking at them as a resource. They want to be loyal to brands, but they also want those brands to recognize the value in that loyalty. 4 out of 5 consumers say that they’ve never heard from a brand or a store after signing up for a loyalty program. The stores that will succeed in the future, at least according to this data, are going to be the stores that become the biggest advocates for their shoppers.
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