Data from analytics company Willard Bishop , part of Inmar Analytics, found that traditional grocery’s paltry sales increase of 1.7% in 2015 wasn’t enough to sustain its market share, which declined by 0.5% (while non-traditional grocery and c-stores gained share).
“The traditional supermarket, a retail format that has at least 2/3 of its sales in food and consumable products, was responsible for the grocery channel’s decline,” said Jim Hertel, managing partner at Willard Bishop.
Formats/channels on the rise in 2015 included e-commerce, which Hertel said had a great 2015 with sales up 20.9%; Fresh Format stores (eg. Sprouts, Fresh Thyme Farmers Market), with sales up 9.8%; and dollar stores, with sales up 6.8%.
These trends show a shifting preference of product and shopping method from American consumers, said Hertel, who advised retailers, especially brick-and-mortar ones, to initiate their own digital-driven changes to sustain business.
Millennials are saying goodbye to cutting coupons… in a way
One method Hertel and his colleague Craig Rosenblum advise retailers to tap into is digitalizing their incentive and customer reward programs.
“Shoppers today want information at their fingertips—and shoppers move seamlessly between online and offline,” Hertel said. He also added that shoppers, especially of the Millennial generation, have experienced a paradigm shift in data collection, and actually don’t mind their shopping data being used as long as they can reap the benefits.
He likened the trend to Netflix or Amazon, two companies that use the viewers’ and buyers’ habits to recommend what they should watch or purchase next. For example, retailers can push offers and savings to consumers based on their next most likely purchase.
Data from Willard Bishop found that 59% of Millennials, aged 18-36, prefer a digital promotion experience vs 37% of non-millennials.
Mingling with the online world
Though e-commerce is experiencing rapid growth, it does not mean the death of the brick-and-mortar store, however. The 2015 Inmar Shopper Research report found that more shoppers are online even when shopping in a physical store. These digital interactions include researching a product, looking at reviews, or comparing prices.
“It’s influencing their decisions not just on what they buy but where they buy,” Blumenthal said.
“As more retailers now digitize ads and put their data out there, consumers get pricing transparency—it drives their shopping experience.”