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Five major trends for the food and grocery industry in 2013

Issue 1 / 2, January / February 2013

Date: 05/02/2013 Comments: 0
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Five major trends for the food and grocery industry in 2013

Our team of experts have identified five trends to help you plan for the year ahead.

In 2013, we anticipate innovation will drive loyalty and emphasise value in the consumer goods industry. We expect to see further fusion between online and physical stores, and brands becoming increasingly 'humanised'. Stores will have to work harder to meet the needs of shoppers, and digital advancements will drive further integration of different retail channels. Here’s more detail on each of those trends...

1. Living better for less

The macro-economic conditions will mean austerity will continue to be a global theme in 2013 and, as a result, shoppers will further adapt their behaviour.

Consumption patterns are changing and shoppers are finding increasingly sophisticated ways to make their money go further, broadening the repertoire of shopping channels they use.

Successful brands and retailers will help shoppers to maintain their lifestyle on tighter budgets – they will strive to be seen as a money-saving ally.

Promotions will enter new territory beyond grocery to help shoppers improve their standard of living across many different aspects. Fuel promotions, for example, are becoming a common feature in retailers’ promotional calendar. Australian retailer Coles regularly offers shoppers discounted fuel based on a minimum spend in-store, and recently doubled the fuel discount as part of its Christmas campaign.

We expect to see innovation in other loyalty mechanics, as well as continued private label development in a bid to help consumers to live better for less.

2. Brands building a human face

Shopper loyalty is on the decline, and for brands, creating an emotional connection with shoppers is the key to building affinity and trust.

Social media and online stores are creating new opportunities to reach and connect with your customers wherever they are and offer them better, more immediate customer service. However, businesses need to remember that the stronger an emotional connection you form with your customers, the more they will expect from you and hold you to account.

Shoppers are becoming increasingly concerned with the 'behind-the-scenes' activities and integrity of brands, scrutinising their social responsibility more than ever, and on a global scale. In Canada, for example, McDonald’s ‘Our food. Your questions.’ website invites customers to post questions about its products and receive answers they can share via social media. This is a very pro-active way of demonstrating transparency to customers.

3. Digitising the store

The fusion of online and offline worlds is driving retailers to invest in digitising the physical store environment. The proportion of shoppers worldwide who have smartphone and tablet computers is growing at pace, and we expect retailers to find new ways to integrate these devices into the store experience.

Ahold's latest convenience concept, AH to Go in the Netherlands, demonstrates the integration of mobile and social initiatives in store. The store features digital signage, free customer wi-fi, QR codes for product information, and has two ‘Scan and go’ checkouts enabled for mobile payment. It also has its own local Facebook page and mobile site. Success will be about seamlessly bringing together the features shoppers love from the online world with the offline world.

4. Backing winning formats

Retailers are having to adjust their portfolios and rethink format strategies as the multichannel world evolves. Successful strategies will focus on understanding what shoppers want from different store formats, when they want it, and where - tailoring the offer to local people.

In Italy, for example, Conad has opened stores dedicated to selling its Sapori & Dintorni premium private label range in up-market Florence to appeal to both local shoppers and tourists.

Large stores remain under pressure, and retailers need to redefine their purpose and give shoppers more reasons to visit. We expect to see greater convergence as retailers develop more cohesive strategies across all channels to ensure shoppers' needs are being met across different formats at different times.

5. Flexible fulfilment

Today's time-pressed shoppers are increasingly demanding and retailers and suppliers need to be more flexible than ever to satisfy their expectations. There is no 'one-size-fits-all' solution and the key is to understand what your target shopper wants.

Vast amounts of data are available from a variety of sources, particularly online – the challenge is pulling together the right information to find out what you want to know about shoppers.

In order to meet their requirements, retailers will develop new ways to fulfil shopping orders - we expect to see expansion of click & collect networks as well as more rapid replenishment models.

Walmart, for example, is trialling a same-day-delivery service in the US. Collaboration between retailers and suppliers will be crucial as supply chains become more flexible and responsive.

High expectations from shoppers

So in 2013 we can expect to see multichannel strategies evolve and the resulting changes, such as digital features in store, will become more embedded in our daily lives.

Retailers will have to cater for increasingly sophisticated shopper needs and provide more value-for-money to help shoppers maintain, if not improve, their lifestyles. And brands will seek to build emotional connections with these shoppers as the battle for real loyalty intensifies, but shoppers will have high expectations in return.

Abi Lawrence

Retail analyst, IGD

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