The new normal: Using grocery shoppers’ mindsets to drive margin

Australians are increasingly shopping ‘for now’ and for specific occasions, creating the opportunity to take the narrative away from price, towards qualities that encourage trade up.

How did you or your parents shop a decade ago? Once every week on a Saturday, same time every week, buying largely the same brands?

Basket and panel data tells us shopper behaviour is changing at pace. We now shop more often, buying smaller baskets each time.

New shopper profile
Source: Shopper Intelligence Grocery State of the Nation 2019

This is due to a fundamental change in mindset, particularly over the past three years. Now, 66% of all grocery food and drink shoppers shop specifically for an occasion and 41% of all grocery shoppers shop for today. These numbers are only increasing.

Why personalising based on shopper mindsets is key

Personalisation and big data are the latest buzzwords in retail. Big data + big analytical teams = big prices. Targeting your shoppers based on who they are and what they buy is the technological equivalent of your local shopkeeper knowing you personally.

But here’s the thing: it misses one critical factor. A factor proved to be the fulcrum of accelerated change in grocery shopping. A factor that takes the narrative away from yellow tickets and adds margin back into your categories and brands. A factor we can prove Coles and Woolworths do not execute as well – a big reason why online is threatening bricks and mortar. It doesn’t tell you what your shoppers think at shelf. Or how you can personalise the shelf to meet these mindsets.

The new normal

Misson and occasion shoppingShopping for a specific occasion and for now is the new normal. This is very different from the old school way of pantry-loading/auto-pilot shopping, and the commercial impact on your categories and brands is critical.

Your shoppers in this mindset are less focused on price, more focused on innovation, authenticity, premium, and environment. In short, shoppers in this mindset will pay more.

Our 100,000 post-trip interviews in Coles and Woolworths every year proves this truth, in every category.

The commercial opportunity for brands

This is your opportunity to take the narrative away from price, to a shelf that promotes premium, trade up or innovation. This is your opportunity to drive margin. It’s also the retailer’s opportunity to future proof against BP, Amazon and Uber Eats.

Shoppers buy into these channels because they’re looking for a solution right now. A specific occasion and thirst for ‘now’ is increasingly the norm. If Australian grocery doesn’t improve, it loses share.

Tesco UK
Example of mission-based merchandising at Tesco UK

Despite the clear trend, we’ve seen Coles and Woolworths don’t deliver to this mindset very well. They’re much better at delivering to the ‘pantry-load’ mentality, hardly surprising as this is how most Australians have shopped their stores for many decades.

We analyse the video captured through glasses shoppers wear throughout 2,000 Coles and Woolworths in-store shopping trips every year. Conversion levels of those on a ‘shop-for-now’ mindset are significantly worse than those on a ‘stock-up’ mission.

Put simply, the average category is not delivering as effectively to the way more and more people are shopping. Their relevance and connection with the shopper is gradually waning.

Occasions conversion
Source: Shopper Intelligence Grocery State of the Nation 2019

The quantification of this is a 19% loss. Once a category is visited and seen, those ‘buying for a specific occasion’ are 19% less likely to convert to purchase.

We know this represents two in three shoppers, so the potential commercial uplift is enormous. And this is before we factor in the higher prices they’re willing to pay in this mindset.

Making a persuasive business case

Think store, shelf, pack. Is your buyer reluctant to break the cycle of promotions, disrupt the shelf or try anything new? Here’s the proof you need to win approval.

Start with understanding your shopper’s mindset. How many of your shoppers are thinking of a specific occasion that they’re buying for or buying for today? If you don’t know the answer to these questions, you need to find out.

Next, prove that shoppers want different things. I promise you they will be less price sensitive and more interested in innovation/understanding how your brand solves their immediate problem (eg, lunch, food for tonight). Prove the shelf doesn’t deliver to their needs as effectively: conversion in this mindset will be lower.

Build the business case, with a return on investment, to improve it.

Now you have the buyer on board, you can talk solutions. Think store, shelf, and pack. Where can your category or brand appear in-store to better align with the mindset? Solution centres such as lunch or dinner are good examples. Not everyone can get off locations, but you can influence your main home. Segmentation and signage that talks to the occasion or need rather than the product is a good place to start.

Finally, what can your brand and pack do to help them solve their problems? How can it talk to the occasion or ‘for now’?

Come and talk to our experts today, we’d love to help.

By Shopper Intelligence Managing Director ANZ Simon Ford.