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Price still rules the grocery sector. But the rising popularity of private-label brands and diverse store concepts are proving to be viable recession-busting strategies.
By Anne DiNardo
Grocers have been busy over the last few years trying to keep up with shoppers’ changing habits. While a few years ago, it was all about the foodie and health and organic food options, today’s consumer has one thing on her mind when it comes to grocery shopping: Price. She’s still eating more meals at home, choosing brands based on price alone and seeking new places to fill her family’s food pantry, including hard-discount food retailers like Aldi and Save-A-Lot, or price behemoth Walmart.
And this frugal behavior is not likely to change any time soon. Sixty-four percent of consumers say they’ll shop at a different store with lower prices, even if it’s less convenient for them, according to a “New Marketing Imperatives” survey by Booz & Co. Of the 2000 U.S. consumers surveyed for the report, just 9 percent plan to spend at pre-recession levels on household products in the next 12 months.
This “New Normal,” as it’s being referred to, is forcing grocery retailers to rethink everything from pricing and products selection to the types of stores they operate.
For Lee Peterson, vp, creative services, WD Partners (Dublin, Ohio), which works with such retailers as Giant/Stop & Shop and Walmart, the focus on prices is alarming. “To me, that’s sad,” he says. “You should stick to your brand.”
For one, he adds, because “the whole notion of price is dominated by Walmart.” So while last year Peterson says every client wanted to focus on price, he began talking to grocers about incorporating targeted price-based messaging into stores that conveyed a value message without sacrificing a grocer’s true brand identity. “More traditional grocers never had to push price as a number one message,” he says. “It was always more about quality and selection for them. They shouldn’t lose that message.”
Peterson suggests that, rather than cover your store with discount banners and price break tags, retailers can create dedicated value sections within a store or department where price is the dominant factor. Simple, powerful graphics and gondola presentations can draw attention to the area, while leaving much of the rest of the store to the brand’s original message.
Sharon Lessard, vp, store design, SuperValu Inc. (Eden Prairie, Minn.), says another important message to relay to consumers is the broader sense of value. “It’s a strong message, which combines price, products and services.”
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