Today's Grocery MarketBy Tom Dougherty
18 September 2020
Grocery market strategies to grow market share
The grocery market has come a long way since its early days. The first stores were really social interactions, as strange as that might sound. Customers simply made a list of things they needed and the grocer found them.
Meanwhile, customers talked among themselves. Catching up on the local gossip.
Things have changed significantly since then. When the first Piggly Wiggly Store opened in 1916, grocers stocked shelves at night. And customers shopped for their items themselves the next day.
And where are we now? Grocers use the same model. Clarence Saunders, the founder of Piggly Wiggly, changed the grocery market forever with his self-service idea. So, we now shop. And the reasons we choose one grocer over another have remained largely the same.
This is why a behemoth like Walmart dominates the industry as we stand now. The largest retailer in the US is also our nation’s largest grocer.
What Piggly Wiggly started, Walmart has ended.
Grocery market still trapped
With customers trained over the last century that grocery shopping is merely a pick and choose experience, why not go to the biggest place?
”So how can other chains in the grocery market thrive when the 800-pound gorilla wrestles everyone to the ground?”
When Sam Walton’s giant began grocery, the end of the mom-and-pop grocery happened. Now they are convenience stores, making most of their money off lottery tickets and beer. When a Walmart grocery opens in any area, start placing bets on which nearby store will close soon.
So how can other chains in the grocery market thrive when the 800-pound gorilla wrestles everyone to the ground? Let’s first take a look at how some approach this problem.
The rise of specialty stores
Some grocers becomes specialty stores. Think Trader Joe’s or Sprouts. They position themselves as offering unique products. And highlighting their fresh produce. Others, like Fresh Market, have essentially become a butchery.
That is, several try to segment the market as thinly as they can. If Walmart is a generalist, they’ll become specialists.
But even they fall under the spell of becoming generalists. They can’t help themselves. They expand into offering health products. Or paper goods. Soon enough, they don’t look like a specialist. They look like generalists as well.
The most dangerous play a grocer can make is copying the market leader. In any category, when you copy the market leader, the market leader wins. The market leader is the default choice when everything looks the same. The grocery market is no different.
”But there’s a major difference between the airlines and the grocery market. Airlines have you trapped because there’s less competition. Near my neighborhood, there’s Walmart, Harris Teeter, Trader Joes, Sprouts, Fresh Market and Food Lion.”
Grocery market competing on price?
Walmart builds its brand based on low price. Its theme of “Save Money, Live Better” serves it well. So what do its competitors do? The same thing.
The coupon flyer is practically as old as the grocery market itself. Yet, the idea of saving money is already taken. You offer low prices? Big deal. I’ll just go to Walmart.
Think about this. Grocers expanded the idea of low prices by offering a loyalty program, of sorts. The key tag or phone number you punch in to get lower prices on some items. (Usually, for store brands.) Some grocers thought it would be akin to the loyalty programs airlines offer.
But there’s a major difference between the airlines and the grocery market. Airlines have you trapped because there’s less competition. Near my neighborhood, there’s Walmart, Harris Teeter, Trader Joes, Sprouts, Fresh Market and Food Lion. I have discount accounts with all that offer it.
It’s become such a table stake that we buy groceries with them without even thinking about it. That’s the definition of a table stake.
Getting squeezed out by the largest players
It’s even tougher for groceries when you consider who else is dominating the grocery market. The rise of wholesalers like Costco are squeezing out even more of the grocery chains.
Basically, the Walmart and Costcos of the world realize that Clarence Saunders was right. The more you offer, the more they’ll come.
But it’s becoming crowded. Even if you were to build a direct competitor to Walmart and Costco, it wouldn’t succeed. They have taken over like the aliens in H.G. Wells’ War of the Worlds.
Of course, the aliens finally died. By the common cold.
What’s the common cold here? What can grocers, who can’t match the inventory or afford the small margins of the giants, do to create preference and steal market share?
“If Walmart is squeezing you out, don’t become the latest casualty.”
Branding the grocery market
Brand. It’s the only way. It’s the only thing that’s left. You can’t fight on price. You can’t fight on inventory. And you can barely fight on unique offerings.
We know grocers. The ones we’ve met know their brands are letting them down. But many are frozen by fear. They fear any stray from the Walmart-like path will set them up as the grocer closing shop nearby.
When, in fact, it’s by copying the market leaders that get you in trouble. All you’re left with is location. And we know that’s a losing battle once a Walmart moves right in.
Brand, though, becomes the only way to create preference in the grocery market. That customers so strongly identify with your brand that they covet it. It’s not the products that Apple offers that make it the most cash-rich company. It’s the brand that implores people to stand for hours. Waiting for the new iPhone which might not even be better than the older model.
Creating a coveted grocery brand
How do you create a persuasive and coveted brand? It’s hard work. First, you must slay sacred cows. Everything must be reconsidered. Those discount programs? Don’t necessarily guard them like they’re Rosetta Stones.
Those coupon flyers? They could be a thing of the past. Just honestly consider it.
Then, you must know your customer. Or, more accurately, the customers of your competition. After all, growing market share means changing their behavior.
At Stealing Share, we see ourselves as brand anthropologists. We dig deep to find the emotional triggers that drive behavior. And it may not always be pleasant. What we find might shake your core understanding of what you think makes you relevant.
Remember, we are all driven by emotion. We simply backfill that emotion with rational reasons for choice.
What Stealing Share can do
So, for the grocery market, growing means finding what emotional intensity exists in the market that’s untapped. Know your competition’s customers better than your competition.
That can only be accomplished with quantitative research. And not the same old usage and attitude studies. Research that tests switching triggers. And, most importantly, the precepts – the strongly held beliefs – of your target audience. That’s what we do.
Once you align your brand with those precepts, you become so coveted that choosing someone else feels like emotional suicide.
If Walmart is squeezing you out, don’t become the latest casualty. Call us, and we’ll show you how to fight back.
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