By Jim MacDonald – April 20, 2017
How do traditional grocery chains like Giant Eagle, Inc. compete with the growing onslaught of companies that are capturing more and more market share every year? During my 30 year career in the grocery industry we could count on one slogan: “You’ll always have a job in the grocery business because people have to eat.” While this is still true, only companies that get creative and stay on the cutting edge of their industry will be around to feed us.
Who’s swiped a piece of the pie?
The first modern day “self-serve” style grocery store called Piggly Wiggly began in 1916. Today there’s literally tens of thousands of grocery stores in America. That number alone can make you question how thin each piece of the pie is. And the slices are getting thinner and thinner every day as non-grocery companies invade the marketplace.
For instance, Amazon.com has proven to be successful in every market they enter. Now they’ve entered the grocery industry–is there any doubt whether they will succeed here as well? Amazon is delivering groceries directly to the consumer’s door. Undoubtedly they will take a good size slice of the pie.
The latest newcomer is the ‘meal kit market’. Companies such as ‘Home Fresh’, ‘Blue Apron’, ‘Home Chef’ and a multitude of others are springing up everywhere. These companies package all the ingredients needed for a meal together in a bag or box. The consumer decides which meals they want and how many servings. It’s then shipped to the consumer’s door—and there goes yet another piece of the pie.
Now a grocery store may benefit from this meal kit market if the food for the kits were purchased from their store consistently. However, if I owned this type of business I’d be looking in ads every day for the best deals—having no loyalty towards any one grocer.
There’s no telling who the next ‘newcomer’ to the grocery market will be—though I’d bet someone’s out there right now looking to take another slice. I challenge the traditional grocery chain to re-engage and become the next ‘newcomer’.
Competition for grocery dollars is not new. Traditional grocers have been negatively impacted by super stores for many years. These companies include Wal-Mart, Target and Meijer’s. Warehouse stores such as Sam’s Club, BJ’s, and Costco have all captured market share.
Finally, you have smaller chain stores such as Aldi’s, Dollar stores, drug stores like Walgreens and CVS and a myriad of convenience stores/gas stations which all sell groceries. It seems everyone has a fork in hand, grabbing for the pie dish.
How can traditional grocery chains continue to compete when their market share keeps dwindling? How tight can a company budget get before it starts seriously impacting the standards of operation which customers have come to expect? These retailers must find ways to regain some of the market share. Companies must get creative instead of just protecting their current share of the pie. Otherwise they’ll be in the ranks of LP record companies or Kodak film—still around but just earning the crumbs.
Here are some ideas for traditional grocery stores to consider.
Following is a 10 step program for recapturing market share. The structures of these ideas are based on a local retailer in Columbus which recently closed three of their twenty plus stores in Central Ohio. I’ve taken a 30,000 foot view of their situation and offer possible solutions—thinking outside the shopping cart.
Step 1: Use the small store in the downtown area that recently closed as a Curbside Grocery Pick Up only store. The customer orders online and picks up their product at the front of the store. The arrangement of the product in the store can be strategically planned in order to make it easier for the picker to pull the products for an order. A process would need to be established to facilitate the system.
— Benefit to the consumer: The consumer leaves work, and swings by the pickup area. A friendly clerk places the groceries in their car, collect the payment and the customer heads home, hardly missing a beat. The customer is happy because they saved time not having to shop or even get out of the car.
— Benefits to the retailer: less labor; virtually no shop lifting; less square footage to rent; floor care cost drastically reduced; little or no signage; far less management necessary to name a few.
— No customer interruptions during the operation of the process.
Step 2: Take the concept in step 1 and implement it in small locations around your city. Put them in locations that are easy for consumers to swing by and pick up their groceries on the way home from work. Make it easy to get in and get out so they won’t lose a lot of time before picking up the kids.
Step 3: Have a centralized customer service phone number in one location that can handle complaints and help with any problems ordering over the internet for all the locations.
Step 4: Take item 2 and offer home delivery out of the units. With the units strategically placed around the city, logistics could be handled like a pizza delivery service.
Step 5: Introduce your own ‘meal kit program’. Dedicate a section in the building for the program and have a team of people assemble the kits. These kits can then be sold at that location or distributed to the other retail stores for sale.
The implementation of steps 1-5 will go a long way in recapturing market share as well as competing with the new comers in the grocery industry. Of course, it will have to be an efficient operation and the benefit won’t be for the individual stores. However, the grocery dollars generated will remain with the company instead of going to the competition as they do now.
Steps 6-10 pertain to the marketing plan.
Implementing these steps will prove to be beneficial for this project and every future project going forward.
Step 6: Implement a very aggressive social media plan. What most companies miss about social media is the “social” aspect. Companies need to be interactive and offer reasons for the consumer to come to their website. The consumer wants to be social.
Several ideas to use on social media are as follows:
— Discus a new product that is coming out. Get them excited before it arrives. Get feedback. When it comes out, ask “who has tried it?” Or “how did you like it?”
— Offer cooking tips and tricks. Ask the consumers to share some of their own cooking tips.
— Reward consumers by putting a benefit on their loyalty card—such as “a new product to try for free.”
— Continue to offer information of value to the consumer.
— Develop a following by interacting with the consumer. That BIG no-face company suddenly has a personality people are attracted to and want to respond to/converse with.
Step 7: Offer a free e-book on something that may be of value to them: for example, Healthy eating; Grilling; How to…; etc., in exchange for their email address.
Step 8: Offer a monthly e-newsletter. In this letter, pick a department Team leader and interview them about that department. Discuss a different department and topic every month. Discuss tips for season changes or holidays. This e-newsletter can be of great value and one that the consumers and employees look forward to reading every month.
Step 9: Have email offers, special bonuses, tips, trivia questions. All this is to engage the consumer in your site and with your company. This develops loyalty which is critical in the marketplace today.
Step 10: Have quality content on your website. Keep it updated at all times. This will keep your customers coming back. Don’t just have your ad on the site. Make your site a ‘go to’ location for anything that has to do with food—even if it doesn’t benefit you.
Steps 6-10 are necessary in order to develop loyalty and a following with the consumer. These steps are simply tools of engagement. By implementing them and keeping them active, you can make any new initiative successful in record time. The consumer will already be ‘in the know’ before the program begins and will be eager for its debut.
Conclusion:
It’s no secret that the internet and social media have totally changed the way companies do business. Brick and mortar companies must understand that today’s consumer is well informed. They know what they are looking for before walking into your building. The question is: will they find what they need? Did you provide the information they were looking for? Did you share a new idea with them? Will they walk out of your building with a purchase?
To regain market share companies will need to be creative. Why not bake a NEW pie?
Please visit my website for information on how I may be able to assist you in implementing any of these steps: www.ardentcopy.com
