The proliferation of choice in the grocery industry has dramatically changed the customer experience. From club grocers like Costco and ALDI to mass market players like Safeway, Albertsons and Target and natural grocers including Sprouts and Whole Foods, the retailers winning customer’s hearts, minds and wallets are those redefining their offering through the lens of simplicity.
Changing competitive landscape
Whether it’s new entrants like online retailer Brandless, which promises quality products without marked-up brand prices, meal delivery services like Blue Apron and Plated that deliver ingredients to your doorstep, or two-hour grocery delivery driven by Amazon, the expectations for grocery retailers to serve an omnichannel customer experience is unlike ever before.
Today’s customers can pick and choose between a variety of grocery retail experiences. From new grocery store formats and cashless experiences like Amazon Go to more traditional retailers experimenting with sommeliers or in-store bar experiences within their retail footprint, what was once a dreaded errand of getting groceries for the week is now an immersive experience. Whole Foods’ 500th store opening is no exception with its anticipated European-inspired floral shop, hot & cold food bars, and ‘old-world’ style butchery.
Increased choice leads to increased demands
As choices increase, consumer demands are also rising as customers continue to place a higher value on unique, authentic and immersive experiences. Consumers are embracing choose-your-own-adventure options, instantaneous options via on-the-go formats, and door front delivery while also demanding the convenience of a global footprint. And they want it all without sacrificing local products, flavors, and experiences. These tensions are creating new opportunities for competition as retailers fight to create simple, seamless, and intuitive experiences to capture market share.
Just as more non-traditional grocery formats have come into the competitive landscape, new formats such as food halls, food trucks, online food-prep delivery systems, meal kits, grab-and-go options, and grocery restaurant services are all battling to win by creating a new create-your-own-adventure customer experience.
What was once a simple question: do you want to make dinner at home or go to a restaurant? Is now a detailed, multi-layered decision: do you want to go out or stay in? If you want to stay in, do you want to prepare food from ingredients you bought at the grocery store, order dinner ingredients from an app like Blue Apron, eat the meal kit you bought from Plated, or heat the prepared meal you bought from Whole Foods?
While disruption took longer to take hold in the grocery industry than other retail verticals, there is no denying the major changes in recent years that have redefined the future of retail and the way consumers shop, select and consume food.
Clearly how we think of grocery retailers and how we purchase “groceries” has changed dramatically. Yet grocery retail ranked high on Siegel+Gale’s World’s Simplest Brands study — No. 5 of 25 industries, and No. 4 within the U.S.
Globally, club retailers ranked highest in delivering on-brand simplicity: Aldi was the simplest, followed by Lidl and Carrefour. In the U.S., mass grocer Publix ranked highest, followed by Trader Joe’s and Kroger.
Despite the changes in the marketplace, these retailers are winning through simple pricing strategies, intuitive in-store navigation, and a return to simple customer values, placing a premium on customer experience and looking at new ways to provide value to and be part of their customers’ lives.