The grocery market is facing several major challenges. In addition to changing consumer preferences, online shopping and the emergence of value and lifestyle shopping are placing additional pressure on margins. While the overall market may not contract as much as previously anticipated, smaller players may have an opportunity to capture market share if they can excel in one or two of these areas. Unless leading grocery retailers are able to differentiate themselves in all three areas, their share may decline. Listed below are some of the most common challenges facing the grocery industry today.
Grocery stores tend to carry several different brands of a single item. This eliminates the need for multiple shopping trips and gives shoppers more variety. Additionally, many supermarkets carry ethnic and specialty foods. While most shoppers need to stay within a budget, a supermarket often offers lower prices and frequent sales, making it a convenient place to shop. While shopping at a grocery store, be sure to consider the size of the store and whether or not it is right for your family.
By investing in technology, grocers can improve the availability of their product assortments and avoid unwanted substitutions. In fact, substitutions were the number one reason for shoppers to switch retailers in March and April. In the future, more companies will leverage clickstream and past purchase data to create a customized shopping experience and offer shoppers add-ons based on their preferences. According to Matthew Russo, COO and CMO of Gimbal, future pickup technology will also be able to make suggestions based on location.
Global grocery buying power has led to a decline in local grocery stores. Various large grocery chains and regional supermarkets have consolidated their stores, and many smaller grocery businesses have closed down. As a result, grocery chains have emerged. But despite these challenges, local stores are still viable alternatives to national supermarket chains. The future of grocery shopping is bright. So, how do you decide whether to shop at a grocery store? There are many things to consider.
What are the benefits of grocery shopping? For one, the store is ideal for people who have limited time and want to shop without hassle. Grocery stores are usually large and contain many different types of food. Many supermarkets offer special features such as artisan cheeses, fresh seafood, and butchers’ counters. Some specialized grocery stores focus on one particular type of food or a targeted demographic. Ultimately, grocery stores are more efficient because they carry more items than other types of shops.
In addition to low margins, supermarkets operate on thin profit margins. Their profit margins on produce items have decreased by 4 percent from 2005 to 2013, despite rising costs for their suppliers. In addition, grocery stores compete for customer business by avoiding wholesalers and buying directly from farmers. The result is a high level of competition. With only one or two percent margins on an item, a grocery store can still make a profit.