FMI: Retailers must adapt to ‘new normal’
As the economy gradually recovers, U.S. consumers remain wary, and their mindset has changed permanently.
During a webinar on Tuesday, the Food Marketing Institute released its report “The U.S. Grocery Shopper Trends 2012,” focusing on four long-run “mega trends” in consumer-purchasing behaviors at the retail level.
According to the report, 16 to 20 million households have shifted into the mindset that they have to accept living with less. Per household growth in grocery spending has been anemic and significantly below inflation.
“Retailers must adapt to win in the ‘new normal.’ There has been a permanent shift in value-seeking behavior,” said Nick Hodson, partner at Booz & Co. during the webinar. “Technology has changed the way people shop for groceries. Emerging digital shopping behaviors enable even more consumers to access the best deals available in their local markets.”
Hodson said online shopping encroaching on market share is “overwhelmingly” here to stay. FMI said growth in online retailing within grocery — driven largely by occasional online shopping in select categories — is a trend that is forecasted to continue until at least 2014.
“Technology is making price discovery easier and easier. The new generations coming up are completely familiar with technology and have grown up searching for the best price for everything on the Internet and increasingly on handsets,” said Hodson. “Consumers can use technology to get coupons, in store on mobile devices and to check pries at multiple stores before going grocery shopping. There is almost no barrier to finding the lowest price.”
And as technology continues to advance, bargain shopping will only become easier. In order to stay competitive, retailers must follow another trend identified by FMI — format and merchandising innovation.
“For success, imagine an Amazon experience. Shoppers are saying they would appreciate the idea of assembly. They want to be reminded of the experience they are shopping for and not just ferret out items for that experience,” said Hodson.
Retailers should consider grouping products and rethink formatting stores from categories into departments.
“Retailers are going to have to learn to live with less gross margins,” said Hodson. “Convince your consumer that you understand their economic position.”