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Retail, Retail Operations Management., strategies

Sarasin Says Supermarkets Must Adapt to Stunning Changes


DALLAS — Conventional supermarkets are the primary choice of only 64% of shoppers — the lowest showing in years, according to Food Marketing Institute research — which should serve as a warning to retailers that they must adapt to “stunning changes” in consumer attitudes and technology, the president and chief executive officer of FMI cautioned.

“Limits on our own experience often prevent us from truly grasping the world-shaping magnitude of what’s right in front of our eyes,” Leslie G. Sarasin told a general session audience at FMI2012 here Tuesday — citing changes in the consumer mindset, technology-enhanced shopping, e-commerce and store formats.

Though these may be familiar topics, she noted, “Please don’t fall victim to letting familiarity blind you to their larger significance. Not only are there trees, but there is a forest out there.”

Among her comments:

• Regarding what appears to be a permanent shift among consumers to shop for bargains, make fewer store trips and reduce their basket size — similar to the long-term changes that followed the Great Depression — she said, “We are seeing how a generation’s economic experience [over the last few years] is creating a ‘new normal’ and is changing the way shoppers approach buying food.”

According to research conducted for FMI by Booz & Co., the number of respondents who said they look for discounts rose to 80% from 60%, an increase of 19 million people; those who said they are learning to live with less jumped to 55% from 42%, or 15 million more; and those with a long-term interest in buying private-label products rose to 78% from 64%, up 16 million.

“We simply cannot afford to let our familiarity with [what we see] result in a failure to register the culture-changing significance of it,” Sarasin said.

• Regarding technology-enhanced shopping, “It’s a bit like the Wild West,” she explained. “There’s a true sense of lawlessness out there.”

According to research, more than half of all customers go online before one out of every four store visits or else they use mobile technologies once they are in the stores — to search for coupons or check prices — Sarasin pointed out.

“So customer service is no longer limited to face-to-face encounters — it also embraces the virtual encounter,” she explained. “In a multi-channel world, we have to broaden our customer-service thinking so that we’re giving them a rich and comprehensive online experience as well as a unique and fulfilling in-store experience.”

• Regarding e-commerce, Sarasin said the number of online purchases overall, which was $12 billion in 2010, will reach $25 billion by 2014 — and though only 2% of those purchases involved CPG products, retailers need to be aware that the generation that has grown up with digital technology will be the shoppers of the future, she pointed out.

The average basket size of supermarket-related items purchased online is greater than the average purchased offline, she noted — $80 online for groceries and beverages, compared with $30 offline; and $30 for health and beauty items purchased online, compared with $10 offline.

“With the addition of online shopping, the playing field has become bigger, tougher and more demanding,” Sarasin said, “and rather than resist the change, you must adapt to its rigorous demands, be open to the possibilities it offers and seize the incredible opportunities it provides.”

• Regarding innovative store formats, Sarasin said supercenters, dollar stores, convenience stores and clubs have added 150 million square feet to their facilities since 2005, while traditional grocery stores have not been increasing their square footage.

Most small-format stores focus on either niche marketing, price or faster checkouts and easier navigation, with most “majoring in two of those areas, with a strong minor in the other,” Sarasin said, “and they allow the possibility of an increased number of outlets for online pick-up sites.”

More of the data from the research conducted by Booz & Co. is scheduled to be released later this month, Sarasin said.

She was joined on stage by a panel of industry CEOs who discussed how these trends were playing out in their stores.

“There are really two different classes — those that are pressed for dollars, and live paycheck to paycheck, and those that are still fairly well off, spending like they did [before the recession],” said Fred Morganthall, president and chief operating officer, Harris Teeter Supermarkets.

Jerry Garland, president and CEO, Associated Wholesale Grocers, said he believes that many middle-class consumers have become more frugal out of uncertainty about the future.

via Sarasin Says Supermarkets Must Adapt to Stunning Changes | Retail & Financial content from Supermarket News.

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About Bob Innes

Who am I and what I do best! I am a skilled Sales and Marketing team player known for performing behind the scenes miracles that increase base distribution, improve customer relationship management, exceed annual sales volume,and profitability for Consumer Packaged Goods companies. And I've been doing it for over 15 years. My successful contributions include such clients as Kraft Foods, Mars, Bumble Bee Foods, Unilever, Johnson and Johnson and SC Johnson, and JM Smuckers.

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