Inflation, labor, supply chain, increased legislation, block chain, digital currency, ransomware. The threats to independent retailers are relentless. How will these obstacles impact the grocery industry as a whole? How will they impact the independent sector? IGA CEO John Ross answers those questions and shares how independents can fight and come out ahead in this session presented at The NGA Show 2023.
Watch the presentation and find key takeaways below.
Globalization has changed the way we do business. How can a retailer explain to an associate or a customer why the cost of oil or eggs is rising?
"Globalization has been a great thing for humankind and yet we've also learned that it is fragile," Ross explained. "That something like violence or changes in energy policy by people thousands of miles away can have a profound impact on my community and my customers changes the way I run my business."
"You have to understand what's going on in China to understand what's going on in trade," Ross said. "Not only access to products and information, but their influence on the global markets. As they make decisions on their fuel purchasing with Russia, so changes the gas prices set at your local company."
The recent riots in China will also impact our economy, Ross said, as they try to taper capitalism in their country. "[China] may make decisions that will shrink the GDP, and actually lower our availability to access their manufacturing plants, which will force us to change the way we think about affordable economies."
Inflation has caused grocery prices to rise, which in turn is causing U.S. grocers to lose food consumption share compared to restaurants. During the height of the pandemic, grocery and restaurants were nearly tied for food consumption share, though restaurants have continued to capture share over grocery since January 2022. But Ross is optimistic about grocers recapturing that share.
"One meal, per family, per week," he said. "That's it. You do that and we will be ahead of the restaurants. Ask your customer, 'What would it take to get one more meal a week from you?' Maybe it's prepared meals, fresh deli, a dollar menu."
How To Combat These Issues
Independents can combat issues like rising prices caused by global unrest, climate change, and inflation by focusing their communication to shoppers on their points of difference, Ross said.
Local Equals Fresh
For example, independent grocers can highlight their local, fresh offerings to attract and retain shoppers. "If you ask shoppers why they like one retailer over another, they will say 'local.' During COVID, 68% of shoppers thought local stores and restaurants took their health and safety more seriously than big, impersonal national chains," Ross said.
"70% of consumers say local retailers are connected to farmers and community and supply chain, and they think local is a competitive advantage," he continued.
Compete Against Restaurants
While national chain grocery stores are competitors for independent grocers, Ross stressed the importance of taking on the right competitors.
"Shoppers say they want to do more cooking at home, be more engaged with their family," Ross said. "They learned that cooking at home should be cheaper, that it tastes better and is less calories."
He encourages independents to appeal to those shopper wants by showcasing why cooking at home is better than dining out, like IGA has done in the Quarterly Marketing Kit signage and digital assets. We publish restaurant-worthy recipes on IGA.com and compare the benefits in the quarterly signage, highlighting calories and dollars saved by cooking the meal at home.
Tell Shoppers What You're Doing
"75% of shoppers want high quality produce from their grocery store and nearly 70% want high quality meat," Ross said. That's what independents do best, but they don't tell anyone about it.
"This is what our customers are telling us they want, but do we tell them we offer it? No. We're a very humble culture but we don't ring our bell the way that other kinds of brands do. But we have to. Even if your core customers know what's special about you, their kids don't know and new people in the community don't know."
Ross added, "If 'local' isn't all over your store, then you're doing something wrong, because shoppers want us to win; they want the farmers market that is open every day at grocery store prices."
In short, many independent grocers are already doing what shoppers want — they're offering fresh, local produce and meats; they're supporting the local community; they're providing healthier, less expensive alternatives to restaurants. Now it's time for the grocers to show shoppers exactly what they're doing.
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