As we move beyond the pandemic, the competition for grocery dollars will be fiercer than ever. Our recent U.S. Grocery Experience Survey confirms shoppers expect to continue the online grocery ordering that began as a necessity and is now a valued convenience. And as manufacturers start passing along their higher costs, supermarkets will face even more competition from supercenters, hard-discounters and dollar stores. 

Fortunately, our research points to natural advantages for savvy independent retailers who capitalize on their strengths. In keeping with the theme of this COMPETE issue, we offer the following opportunities for grocers to differentiate based on place, product, people, price and promotion.

Place

On the most basic level, all supermarkets need to provide a physical environment where customers and employees feel safe. The grocery industry as a whole did an amazing job responding to COVID-19 with fixture modifications and new protocols. Our research shows that even as the pandemic subsides, shoppers and employees will have an elevated level of concern about supermarket sanitation. Retailers cannot become lax (or project that image), especially on basics like cart and surface cleaning, as well as avoiding empty dispensers of hand sanitizer.  Missteps on these fundamentals will cause customers (even previously loyal) to shop elsewhere.  

In a broader context, “place” is about community. The local grocer is a community fixture, often family or employee-owned, with ties to local businesses, schools, and organizations. Independents can and should nurture that role as a key differentiator, as our recent survey shows only 70 percent of U.S. consumers agree that supermarkets, “help take care of the local community.”  

Product

Local grocers can and should be in tune with the tastes and preferences of their customers.  These retailers often make and carry signature products like onsite smoked meats or renowned bakery treats. By doing so, grocers elevate the food shopping experience beyond the capabilities of a supercenter or dollar store.  In our recent U.S. survey, supermarkets scored quite low (average agreement = 3.27 out of 5) on “carries or makes at least one delicious item not carried at other stores.”

Independent retailers should also be in a unique position to feature locally made or grown products. Here again, the best stores indeed do that, with everything from craft beers to heirloom tomatoes. But the industry as a whole is lagging. More than one-third of U.S. grocery shoppers do not agree that their supermarket “offers a unique selection of items and products from local sources.” 

People

Having great people is naturally the best antidote to competitive threats, particularly from online options or low-cost operators. Our survey results support the intuitive connection between friendly staff and a positive shopping experience. Customers who feel that their store’s employees are friendly are four times more likely to recommend it as a place to shop. Of course, it’s tough for employees to provide friendly service if they are not happy on the job. Providing a great work experience is a tall order on the tail end of a grueling pandemic, and it might be our most pivotal industry challenge. It is sobering that nearly one-third of U.S. grocery shoppers do not agree that their store’s employees seem to enjoy working there.

The connection between two of the Ps – people and product – should not be overlooked. We asked grocery shoppers if their store’s employees have the expertise to help select/prepare food, and the answer was not especially positive (average agreement = 3.51 out of 5).  Furthermore, only 66 percent agreed to any extent that their supermarket is passionate about food. These are findings that should buoy independent grocers whose strategies are aligned with being true sources of knowledge and service, not just providing items on the shelf.

Price

Supermarkets may not be able to match the general pricing offered by lower-cost or larger-volume competitors, but they will need to be sharp on known value items for their own shoppers. Independents can leverage their local market knowledge to fine tune their models.  And by earning a strong image on quality and service, local retailers can project a favorable total value equation to their best customers. This would certainly be a competitive differentiator, as U.S. supermarkets only achieved a mean agreement rating of 3.63 (out of 5) on “provides good value for the money I spend there.”

Promotion

This last P-word has taken on new forms during the past year. Fewer, more tailored promotions and the expansion of digital and social marketing tools are a key part of the territory now. As local retailers work diligently to stay relevant to younger shoppers and competitive with the largest chains and alternate formats, it is important to remember that promotional resonance is a personal decision. Consumers are the ones who vote with their wallets and feet. Our U.S. grocery survey shows room for improvement on this dimension, with only 31 percent who highly agree that their own supermarket “shows it values me as a customer.”  Independents are in the trenches and need to win this battle.

The road ahead won’t be easy for independent grocers, but there is an opportunity to thrive amidst growing competitive forces. Just remember, it all centers around the letter P.