Conventional grocery stores lose out as shoppers retail hop for better prices, higher quality

By Elizabeth Crawford

- Last updated on GMT

Conventional grocery stores lose out as shoppers retail hop

Related tags Supermarket Acosta

The search for the best price on food, product variety, quality and convenience are prompting consumers to hop from retailer to retailer and in doing so conventional grocery stores are losing out, according to recent data from Acosta.

The full service sales and marketing service provider reports in its latest Hot Topic Report that 76% of consumers shop more than one retailer weekly, with the bulk – 44% -- visiting two retailers for staples, 23% visiting three and 9% hitting up three or more retailers weekly.

In most instances, consumers spend slightly more at the first retailer they visit – about $47.93 on average for 12.7 items, according to Acosta. But the amount they spend at the second retailer isn’t that much less, coming in at $44.23 for about 11.9 items per visit.

Price is top influencer for hopping retailers

For 60% of consumers, price is the driving reason they hop retailers, but new retailer entrants with heavy discount business models could change this, according to Acosta.

Given the slim margins in the food and beverage space, Acosta warns against retailers engaging in a price war to win consumers.

“Competing on price is not sustainable over the long run as already razor-thin margins are further eroded,”​ it notes. But if retailers must play on price, it recommends they do so by identifying key value items for consumers – which will depend on the location and community values, and likely be in a constant state of flux.

“Another counterbalance to the price wars is the increasing preference for high quality store brands or private label,”​ which increasingly is a factor in consumer selection of retailers, Acosta said. For support, it notes that in Fall 2016 48% of consumers said they choose which store to shop based on how much they like their store brand, versus 39% in the Fall of 2012.

Quality trumps convenience

Quality is the second most common reason that 41% consumers visit more than one retailer, followed by availability, which 33% of shoppers noted, according to Acosta. Both factors far exceeded convenience, which was listed by only 23% of shoppers.

To meet these changing consumer demands, value and premier fresh grocery stores are leading the way in new store openings and boosting their shopper base – often at the expense of the conventional grocery store.

This shift is visible in the 3.4% decline in consumer trips to the neighborhood conventional grocery store in 2017 compared to 2013, and the 1.4% increase in trips to supercenters in the same time period, according to Acosta.

“Value grocery retailers like Aldi and Lidl are finding traction with everyday lower price, faster checkouts, store brands and the ease of shopping in a smaller footprint store. Premier fresh retailers like Whole Foods, Trader Joe’s and Wegmans are engaging shoppers with higher quality fresh foods, unique items, more natural/organic assortment and a high level of customer service,”​ Acosta notes.

However, it was quick to “keep things in perspective,”​ by also pointing out that “shopping trips are still mostly stagnant for this group of retailers and they still see a fraction of the sales volume compared to conventional grocery and supercenters.”

Key takeaways

Reflecting on consumers’ changing shopping patterns, Acosta recommends that retailers win by keeping shopping fun and aligning space with consumer demands. It also recommends that retailers build brand loyalty by offering “product innovation, variety and engaging digital programs.”

Acosta also recommends that retailers don’t lose sight of the primary reason consumers come to their stores: to solve mealtime.

“For 44% of shoppers, figuring out meals that are healthy and convenient for their family is a pain point. Make it easier for them with meal kits/prepared foods, recipe cards and other programs. Focus on fresh foods that taste great but are also authentic and transparent,”​ it recommends.

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