“People tell us they are faced with a promotional blizzard when buying groceries, so clearing the fog over pricing is a priority. People want pricing that makes a real difference.”
IN the face of huge turmoil, food and grocery companies may be able to turn around declining sales but will have to push shopper satisfaction deep into the heart of the boardroom, focus on value not just price, avoid complexity for shoppers and adapt to technological developments.
That was the message in a speech last month from arguably one of the best-informed people in food and drink retailing, Joanne Denney-Finch, chief executive of food and consumer goods research organisation IGD.
Denney-Finch stressed current circumstances – that have included considerable falls in overall food sales and remarkably negative performances by some of the supermarket giants – resulted from major changes in consumer attitudes.
“We’ve seen remarkable growth for the UK economy this year, but food stores’ sales in the year to July fell for the first time on record,” she said.
“I’ve never seen so much turmoil during my lifelong career and to understand why, we’ve examined how shopping behaviour has fundamentally changed in recent times.
“People are now shopping around more, investing more time to get the best quality and ethical standards possible for their budget.
“On average, we make 24 shopping trips per month and use four different types of retail formats when buying our food and groceries. And yet people still don’t want to spend any more time and effort than they need to.”
She said food retailers should be particularly aware of five issues identified by IGD shopper research:
• More than just price, shoppers care more about value for money – and the perception of value differs from person to person.
• Shoppers want greater personalisation of the shopping experience.
• Retailers need to use technology to let consumers shop smarter.
• Small companies are increasing in importance to shoppers.
And companies have to earn trust, as shopper loyalty becomes more important and more challenging to achieve.
“People tell us they are faced with a promotional blizzard when buying groceries, so clearing the fog over pricing is a priority. Promotions will always have their place in retailing but they should be used decisively and be guided by shoppers. Over half (55%) of shoppers want price cuts more than multi-buys … three times as many (17%) in 2007. People want pricing that makes a real difference,” she said.
“This is one reason why discounters have grown in popularity from a low base. Shoppers have told us the discounters have listened and responded to them.
“And the figures bear this out: over half of shoppers (54%) tell us they’ve used a discounter in the past month, the highest level for four years when we started tracking the data. Examples of good retail disciplines that shoppers tell us they like about discounters include: it’s easy to find things; they can get around the store really quickly; and the meat is clearly labelled as British.
“While more disruption lies ahead, it’s nothing that food and grocery companies can’t turn to their advantage by listening harder to shoppers and acting decisively on what they say,” she said.