Anyone who’s heard me speak knows I routinely resort to analogies; one of my favorites is grocery stores. I’m fascinated with the operation of grocery stores and feel understanding how they attract and appeal to a spectrum of customers is fundamental to identifying and tackling many marketing challenges.
This is the first of many articles about grocery stores and how their approach to enticing, engaging, and retaining customers can be valuable for marketing other types of products and services.
Why Grocery Stores
The next time you visit a grocery store, park near the entrance and spend a few minutes watching the people go in-and-out. Chances are it’s a mixture from teenagers to seniors, young mothers with children in strollers, adults in work and business clothes, and students with backpacks slung over their shoulders. They are probably of varying ethnic, social-economic, and educational backgrounds.
And, without knowing anything about the visitors, you probably can’t differentiate the young, multi-millionaire entrepreneur zipping into the store to get a box of pastries and donuts for his early morning staff meeting from the living-on-the-edge barista, buying a 99-cent box of macaroni ‘n cheese for his dinner. It doesn’t matter. Everyone – outside of shoplifters — is welcome in a grocery store.
Grocery stores need to be universally appealing because their net profit margins are low. To be successful, they need to attract broad audiences, encouraging them to shop often, and purchase multiple items – preferably those with higher profit margins.
According to Supermarket News1, in 2010 the average trips per month to grocery stores was 7.3 with the top products categories by dollar and unit sales being energy drinks, wine, chocolate candy, salty snacks, bottled water, natural cheese, fresh bread and rolls, beer/ale/alcoholic cider, carbonated beverages, and milk.
Perhaps, you’re thinking, what does grocery stores have to do with marketing electronics, cars, clothing, and other non-food items? Everyone needs to eat and they need to get their food from somewhere.
In developed nations, outside of restaurants and farmers’ markets, most people get their food from grocery stores, supercenters (i.e. Target, Wal-Mart, etc.), club (i.e. CostCo, Sam’s Club, etc.) or convenient stores. Most of these establishments are arranged in the same manner. Aisles for canned and packaged goods along with freezer cases for frozen food are in the center of the grocery section. In a “u” shape, around the aisles and freezer cases are refrigerated cases, displays, departments for produce, meats, diary, floral, baked goods, and prepared foods.
Because of this arrangement, it’s fairly easy to find what you’re looking for whether in a community grocery mart or a giant superstore. Customers get in the “habit” of going to the back of a store to get a quart of milk, look for cut flowers in the front, and frozen pizzas down a middle or side aisles. They get in the “habit” of comparing prices, looking for name brands on eye-level shelves, and store- and generic-brands on the bottom or top shelves.
Instead of grabbing the first piece of fruit or head of lettuce they see, they look for and choose the best piece, according to their personal preferences for color, ripeness, and size. They understand the value of using a coupon and looking for in-store specials.
While some customers might not purchase prepared foods, bother the butcher for a specific cut of meat, or order a cake from the bakery, they’re probably looking, and perhaps, even contemplating a special occasion or event when they might use these services.
Creating Shopping Habits
Because most consumers find themselves browsing grocery store aisles, at least once a month, if not weekly, the way they shop becomes routine or a habit. These habits start to be formed at an early age when a child is pushed through a store by their parent.
They see how their parent shops, perhaps comparing prices or simply grabbing name-brands off the shelf. As they grow older, they start to form their own preferences and habits. And when they become adults, these habits, formed in a grocery store, start to dictate how other purchases are made.
If they’re motivated by using a coupon in a grocery store, guess what… they’ll probably incline to look for coupons and specials when making purchases elsewhere.
According to the NCH Annual Topline U.S. Consumer Package Goods (CPG) Coupon Facts Report for 2010, 33.4% of grocery shoppers surveyed reported using more coupons. In 2010, coupon distribution rose 6.8% to 332 billion coupons distributed.
The type of coupons redeemed is what’s relevant. Instant on-pack coupons accounted for 23.5%. Coupons, which were printed at home, off the internet, were the next largest segment, comprising 16.6%. If customers are looking for coupons online for their local grocery stores, you can bet, they’re browsing the internet for other types of coupons.
Explains Charlie Brown, VP of marketing for NCH, “Consumers have formed new permanent habits for coupon clipping and planning, se we will see continued high coupon use even as they begin to feel better about their personal economic situation.”
Start thinking about your grocery shopping habits. Are they similar to how you make other purchases?1 “Signs of CPD Improvement,” SymphonyIRI CPG Year in Review, Supermarket News, February 28, 2011.
2 “Coupon Use Remains High,” NCH Annual Topline U.S. CPG Coupon Facts Report for 2010, Supermarket News, May 16, 2011