Vericast recently surveyed consumers and advertisers within CPG, grocery, drug and mass industries and released its CPG + Grocery TrendWatch report to highlight those findings.
In this post, Julie Companey, Director, Client Strategy — Grocery, Drug & Mass for Vericast provides her perspective on the industry and how consumers may be affected.
How do you think the industry has changed in the past two years? Do you think these changes are temporary shifts or more lasting and long-term?
Great question. COVID accelerated the changes grocers and retailers who sell groceries had begun like online ordering, curbside pickup, and improved app functionality. These things were in the works but were not yet fully developed. They accelerated during the pandemic because consumers needed them. And all these moves will absolutely impact shopper behavior in the long term, in my opinion.
Online shopping is going to affect trip missions and consumer activity and behavior when it comes to buying groceries for years to come. The other thing that changed a lot is that COVID drove supply chain issues. Retailers had been using a practice called just-in-time inventory models which meant they brought in inventory and goods just in enough time to get it through their distribution centers to the stores on the shelf so that they did not have heavy backroom inventories or heavy warehouse inventories.
Well, that backfired during COVID, and demand exceeded supply, especially for certain categories. So that changed how retailers manage their supply chain. I think that’s an ongoing change and they’ve learned to be more agile and more resourceful.
Consumer shopping continues to evolve as consumers adapt to various factors — particularly over the past couple of years — first the pandemic and resulting supply chain issues and now economic and financial challenges. What can retailers/brands do to adapt to (and anticipate) these changes to meet the needs of shoppers?
COVID did change the world in unanticipated ways. Retailers have had to become nimbler and adapt their practices in ways previously considered impossible or even impractical. For instance, their staff had to work from home. Labor shortages forced changes in operating hours and supply chain disruption necessitated finding international suppliers, including brands that shoppers weren’t familiar with. But retailers had to fill their shelves for paper towels and bath tissue and the like. I’m personally very impressed by the adjustments the industry made in a very short time and how adaptive and flexible they now are as a result. As we look ahead, what retailers can do to adapt and anticipate is to be mindful of shopper perceptions. For instance, shoppers don’t rate retailers as highly as they rate themselves on many areas and you’ll see that in our survey and our report.1
I think in terms of next steps, retailers should be mindful of where they still need to improve to live up to consumer expectations and consumer demands.
Value remains important to shoppers. This can mean getting a good deal or the best price, or it can be more about perceived quality or convenience. What advice would you give to retailers and brands to stay top of mind with consumers and drive purchase, especially in these inflationary times?
That’s a valid question. Value does mean different things based on your life stage and your demographic. As a busy parent I would spend more on something that saves me time because time is so critical for me — I’m so busy. But someone else may not be willing to invest that level of incremental spend.
From a retailer perspective, tell me how you can help me save time. That might be by promoting your meal kits or your meal solutions or your ready-to-go foods that save me time.
On the flip side, if I’m struggling financially, value means saving money and I want you to tell me how you can help me feed my family for less money because my dollar is not going as far today as it was just six months ago. Maybe it’s how I can feed my family for less than $25. Promote your private label brands that offer quality but at a lower price.
As we think about retailers and what they can do to help their shoppers, what are your thoughts concerning the future of grocery retail and marketing? Are there any new trends or technologies that you believe will make doing business different than it is today?
Well, I think if you review our new research what may surprise you is the attitudes of Gen Z. This is the group that is starting to come of age — I don’t know that retailers are really paying attention to this group. They are starting to have discretionary income. They’re starting to take care of themselves as they come out of college and have their own apartments. They have some similarities to millennials, but they have some differences as well. Like millennials, they expect you to anticipate their needs. But what’s different for Gen Z is they value sustainability. They’re concerned about the climate crisis.
They are looking for retailers that appreciate their values and don’t just put lip service to it; you must back that up with actions and solutions to win their dollars. The other thing that’s kind of surprising about Gen Z is, they’re digital natives and yes, they are engaged in everything that has to do with their mobile phones but they’re also a little overwhelmed and stressed out by all the messaging that comes to them that way. Anticipate that and plan the frequency of your communication so you don’t overwhelm this audience and risk them tuning out. You want to be able to continue to develop a relationship with them as they mature through their life stages and think about ways to market to them specifically. That will more deeply ingrain your brand with them.
The other thing I would add about Gen Z is they expect a seamless shopping experience. They not only expect the same price in–store as they see online but when trying to get ideas and inspiration online for what they can do at home — innovation around meals. Like, “What recipe should I make this week?” — they want you to have that functionality where they can add the items in that recipe right into an online basket and check out right away. So those are functionalities they expect that other generations may not.
As people resume activities outside of their homes and continue to do a mix of in-store and online shopping, what can brands/retailers do to improve the shopping experience regardless of channel? How can they be helpful to consumers as they manage everyday life?
In my opinion, it’s all about trip mission and speaking to that trip mission. People will continue to shop in-store for what they want today or tomorrow, and they like to choose their own fresh products. Many retailers use third-party services for delivery that can prompt frustration with the quality of groceries items they deliver, including missing items and poor substitutions. So, it’s important to make sure that if you’re going to have an online presence you’ve got a buttoned-up process.
Replenishment categories make a lot of sense for online, and consumers have already set up a lot of replenishment orders online for categories that they know they’re going to run out of — everything from personal care products to household cleaning and household paper products. Online is great for those needs. Many retailers have streamlined their curbside pickup process to ensure that frozen items, refrigerated, and shelf-stable products are all held at the right temperature and ready for pickup close to curbside. Shoppers appreciate knowing their ice cream will still be frozen upon pickup!
Consumer loyalty is becoming less and less these days because people go to almost five different retail outlets to buy their groceries, per month. And the mix of retailers that shoppers are going to varies based on their financial situation especially with today’s inflation. That’s a lot of competition. Retailers should think beyond the transaction. Human interaction has been more valued since the pandemic so the human interaction at your store is important. You can’t replicate that online. Online you order, hit ship — and off it goes. It’s a transaction. In-store you can develop a relationship with that customer. You can develop a relationship with their family, you can interact with what they’re purchasing that day and really develop a relationship and a rapport and that will help consumers feel much more valued because it was a friendly, fun experience.
Is there any additional insight you want to offer?
I think all retailers realize how competitive the environment is today and that consumer behavior has changed a lot in the last couple of years. They should be applauded for what they’ve done to respond to past conditions and prepare for what the future might look like. But they also must keep an eye on new competitors and the differences among consumer segments.
There are innovations happening every single day in the grocery space. Storefronts are opening that are simply order online and come pick up curbside — you can’t walk into the store to shop. It’s basically an online pickup depot. There is so much competition in terms of delivery. Uber Eats is getting into delivery, DoorDash has added grocery delivery — be mindful of consumer behavior changes and lean into those that make sense for you.
To learn more about what today’s consumers are looking for in a shopping experience, download our 2022 CPG + Grocery TrendWatch report.
1 Vericast 2022 CPG + Grocery TrendWatch, (consumer survey: n = 1,909; industry survey: n = 305)