Why are online, oils and other bricks and mortar channels threatening New Zealand grocery? And what can you do about it? To answer these questions here’s some background…
Basket and panel data tell us grocery shopping is changing at pace. We now shop more frequently, buying smaller baskets each time. Our own shopper research tells us shopping specifically for an occasion (66% of all grocery food/drink), and for today (41% of all food and non-food), are increasing at pace. This is very different from the old school way of pantry loading/autopilot shopping.
Despite these facts, retailers and brands are failing to keep up. They’re not creating in-store solutions to meet shopper demands.
The critical information businesses are missing is what your shoppers are thinking at the shelf. Or the importance of personalising the shelf to meet this new shopper mindset. They’re missing the how and the why. Filling this data black hole allows you to take the narrative away from price and add margin back into your categories and brands.
Here are three steps to win with tomorrow’s shopper…
- Know what appeals to shoppers in this mindset
Understanding shopper mindsets to drive margin
The commercial relevance to your category and brand is much more critical than you think. Your shoppers in this mindset are less focused on price, more focused on innovation, authenticity, premium, and environment. They are willing to pay more for the solution. Our 37,000 post-trip interviews in Countdown, New World and Pak’nSave every year benchmarking over 115 categories prove it. In every category.
This is your opportunity to take the narrative away from price to a shelf that promotes authentic brands, innovation, and premium. 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 New Zealand Grocery doesn’t keep up, it will lose share.
2. Use shopper mindsets to build a business case with your buyer
Supermarkets are currently much better at delivering to the “pantry load” mentality. Hardly surprising as this is how most New Zealanders have shopped their stores for many decades.
The proof this is no longer working isn’t just in what shoppers say, but what they do.
We’ve just piloted a sample of 300 Countdown shoppers, observing their behaviour through glasses they wear as they conduct their trip. It’s the next technology upgrade from eye tracking, allowing us to benchmark 000’s of shoppers, their path through store and conversion efficiencies of shelves. We benchmark all main homes, off locations, gondola ends, checkouts, etc.
New Zealand data is available soon, but let’s look at our Australian results. Across 2,000+ shoppers, conversion levels of those in a “shop for now” mindset are significantly worse than those on a “stock up” mission. Put simply, the main home in the average category is not delivering effectively to the way more and more people are shopping.
The quantification of this is a -19% difference or loss. I predict a similar deficit in New Zealand.
Source: Shopper Intelligence Grocery State of the Nation 2019
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 66% of 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.
I recently spoke to an MD of a dry grocery food business who told me a familiar story. His buyer is reluctant to break the cycle of promotions and doesn’t want to disrupt the shelf or try anything new.
He needed proof to convince his buyer. What does this look like?
Example of mission-based merchandising at Tesco UK
Start by understanding your shopper mindset. How many New Zealand grocery 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 they want different things. I promise you they will be less price-sensitive and more interested in innovation/ ideation/ understanding how your brand solves their immediate problem (e.g. lunch, looking good 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 $ROI, to improve it.
3. Drive price and conversion. Think Store, Shelf, Pack.
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”?
Do you agree with these points? What’s your experience developing new strategies to meet the needs of today’s shopper? Get in touch to let us know your challenges – we’d love to help!
Store Impact
With a combination of our people’s trusted expertise and pioneering technology, we’re working with New Zealand’s major retailers to pinpoint exactly where brands can maximise in-store conversion and drive the biggest return on investment. Watch this short video to see how it works…
Want to know our NZ results? Talk to our team today!