How food retailers can address today’s pressing challenges
The world of retail is constantly evolving thanks to changes in everything from demographics and technology to desires and expectations. However, events and disruptions over the past two years have led to a situation unlike any before, resulting in supply chain challenges, rising inflation, narrower profit margins, and ultimately, the need for retailers to rapidly address changing demands and expectations. The question is, how can retailers stay relevant in this shifting landscape, and provide customers with exactly what they’re looking for? Let’s explore some of the most pressing challenges, and how to overcome them.
Challenge 1 – bringing excitement to the supermarket’s shelf-stable aisles
While there’s been significant innovation in the shelf-stable category, it’s still often perceived as a less exciting part of the shopping experience.
“Fifteen to twenty years ago, the shelf-stable products were very straightforward, as was the communication,” explains Antonella Maccarone, Business Insights Leader for Tetra Pak. “The products were more commonly the essentials, so the communication around that would be focused on the necessity of the product in the consumers’ lives. Now, however, there’s a huge variety of products designed to address specific needs and desires, from offering moon milk for a good night’s sleep, to plant-based beverages to help you stay fit, to juices designed to be used in cocktails or mocktails.”
The challenge here isn’t related to what’s available, as there are plenty of exciting products on the shelves. Retailers instead need to think about how to drive footfall to these aisles, and how to best show the products available. Product selection can also be key, and there are many brands and producers that are not only innovating with their shelf-stable products, but also with their packaging.
With an expanding variety in packaging, brands and producers can be bolder with their designs. These can really stand out next to more traditional items, and can help draw the attention of more customers to a new, vibrant shelf-stable section.
“Consumers are paying attention to what’s written on a package,” adds Antonella, “and are attracted by bold designs and statements. Choosing the right packaging option makes this easier to achieve. They are also looking for more connected, immersive and personalised experiences, which is essential for retailers to consider if they want to stay relevant. People now expect a seamless omnichannel ecosystem.”
Challenge 2 – how to succeed with omnichannel in food retail
Since the advent of the smartphone, digital shopping has become an essential part of everyday life, and retailers have had to adapt accordingly. However, brick-and-mortar stores are still vital, and customers are blurring the lines between physical and digital more than ever before. So how can retailers offer an optimal omnichannel experience?
“Brands now have a great opportunity to connect with consumers, and offer personalised communication and advertising, with more touch points across the whole shopping journey,” says Antonella. “Brands and retailers can use these touch points to optimise and offer something even more specific to each consumer, from tailored storytelling to bespoke offers based on previous purchases.
“This can be as simple as utilising QR codes, but as technology is accelerating, retailers can also offer experiences which were previously not possible. Even though emerging technology like the metaverse has limited value to retailers right now, the audiences are significant, so this has huge potential as a promotional tool. We see more people seeking connection online, especially as a result of the pandemic, so retailers also need to investigate the opportunities here. Social commerce is an example, which is when social media becomes an additional sales and communication channel.”
Some retailers are already experimenting with AR (augmented reality) and VR (virtual reality), leveraging these developing technologies to show products, or even entire stores, in a new light. Others are using screens with interactive features in store to direct traffic and draw attention to certain sections, harnessing digital potential in the physical space. Then there are shopping carts that can be integrated with phones, and in-store guidance based on geotagging. The opportunities are almost endless.
“As a retailer, the most important thing to think about is your goal,” explains Antonella, “and how you achieve this in a frictionless way for your consumers. A flexible, frictionless and personalised experience is key when it comes to omnichannel success.”
On the other side, it can be hard for products to stand out on digital platforms. Research has shown that those who shop purely online are faster and buy only what’s on the list. This could mean there’s more potential for grocery websites to learn from brick-and-mortar stores when it comes to product discovery, including how to offer more of an experience as opposed to a simple transaction.
Challenge 3 – making everyday life more affordable for consumers
Everyone is aware of the cost-of-living crisis that’s affected almost every part of the world, and this is making consumers more price-conscious. At the same time, retailers and producers are facing rising costs, and must adapt to external factors which are driving these challenges.
“Rising uncertainty, pressure on incomes and an increasing pace of change means that retailers and producers need to remain agile. This includes managing higher levels of out-of-stock and price increases, as well as private label expansion and more effectively communicating value,” says Antonella. “It also means there must be a bigger focus on the more essential categories, as economic uncertainty will cause consumers to reduce discretionary spending. Retailers may also delay investment on long-term research and innovation projects, instead focusing on short-term investments such as those related to prices.”
A lot of potentially effective strategies are based on honesty, directly addressing the issues faced by the customer. Inflation is an issue for consumer and retailer alike, so France-based retailer Carrefour has implemented an online ‘anti-inflation’ button, which shows the cheapest alternatives of products to try and save the user money.
Others, like Walmart, are communicating that prices on certain products will remain the same for an extended period, so consumers can be sure that they’re buying at the lowest possible prices. There are other retailers, such as Coop in Denmark and Lidl in Switzerland, that even ran a ‘lights out’ campaign, where they switched off illuminated logos and cut down their use of electricity. This helped create a sense of solidarity with the consumers.
In terms of prices though, it’s difficult for retailers to offer significant savings, as costs are rising for everyone. There are other opportunities, however.
“Prices don’t change too much, but some consumers are opting to purchase in bulk to benefit from lower costs per unit. Brands are also offering smaller pack sizes that help drive transactions with customers that are looking to spend less,” explains Antonella. “We also see a dichotomy and polarisation of very low prices on one end, very high on the other. The brands offering premium products know that they need to show why they cost more, as they must still provide value for money, and this is highlighting differentiation versus products from private labels that cost less.”
Staying ahead in challenging times
Retailers are facing a number of challenges in a constantly changing market, but with the right approach, it’s possible to stand out from the competition and offer consumers meaningful and memorable experiences.
