It’s no secret that we are seeing multiple economic and political issues that are affecting food retailers on an unprecedented scale. The issues that retailers face are not compounded to a single source, but a magnitude of factors. Economically, the imminent impact of rising energy costs has seen shoppers make fewer shops in recent months, with like-for-like sales volumes down by 10% year on year. The overall impact of inflation currently reported at 10.1% protects supermarkets from profits falling as dramatically, with some retailers even reporting record profits.
However, the grocery market is split. While there’s potential to profit from higher costs through inflation, the reality is that to stay competitive, prices would need to remain lower to attract and retain customers, and this comes from retailers absorbing those costs. The true impact of inflation has not yet hit and this could also add further pressures in decision making.
Discounters continue to increase market share, accounting for a record breaking 16% as consumers look for deeper levels of value. On the other hand, other retailers’ market share continues to stay relatively stagnant. Consumers are effectively choosing to buy more own label products overall, with this category seeing a 2.9% increase in recent weeks, whereas sales of other CPG brands are slowly starting to decline.
There continues to be a number of supply chain issues that can not be directly pinpointed to a single source. Namely the effects of the devastation seen in Ukraine has brought about global wheat supply chain issues, which ultimately pushes prices up. In the UK, the price of dairy imports could increase by nearly 30%, and the price of a dozen eggs has risen by 40p to offset the rise in farming costs. The lack of product availability and the rise of empty shelves, to some degree, is also pinned on staff shortages across distribution, picking and packing.
Aside from the logistical and economic pressures, UK retailers are faced with the additional challenges of HFSS legalisation. Whilst paused for now, the legislation restricts the promotion of products that are considered high in saturated fat, salt and sugar. This has upended the way grocers can offer promotions, and brings into question how responsible retailers themselves are for the health and wellbeing of their consumers.
Now more than ever, retailers have a part to play in supporting the health and wellbeing of their shoppers. With competition, price and supply in a critical position, catering for the needs of all customers is a fundamental new standard requirement. This is an advancement from the generic ‘free from’ section that has been considered the basic tick box prerequisite for dietary requirements.
What’s clear is that the shopper journey has dramatically changed, and may continue to do so in the next year and beyond, with limitations in assortments, increased prices and price stresses between CPGs and retailers.
The in-store journey
Digitally, the ability to enrich your product data to the extent that you power ‘shop by diet’ journeys and ‘allergen preference’ in a personalised way is effective, but how do you replicate that journey in-store?
We recently completed a small piece of research that explores a number of popular supermarkets that have a traditional ‘brick and mortar’ offering. Across the 8 retailers we visited, we offered a score out of 20 for the customer journey. The 20 points available were split across 4 areas, respectively offering up to 5 points in each area.
The 4 areas were:
1. Overall Health
As you walk into the store, how much do you feel that the retailer supports your health decisions?
Overall health results go from 0, where there is absolutely no attempt to support customers in making healthy shopping choices, through to 3 where there is a significant attempt to nudge healthier shopping behaviour. The positive factors include clear symbols or messaging across the store for a targeted health campaign or range, large fins, barkers and POS highlighting healthy eating of applicable foods, and value messaging prioritised for health over promotion.
For those retailers that score lower marks, there is none of the above, unclear messaging or as we have reported, empty shelves.
2. Diet & Allergens
If you were a customer with a specific need (e.g. Gluten) how easy is it to know what to find?
Results here range from 0 to 4. The best retailers provide on-pack labelling (standard), on- shelf colour codes, specific dietary areas, and clearly visible help & information points.
For retailers that scored 0, it’s difficult to find products that suit even the most basic dietary needs, including gluten free pasta.
If you were a customer with a specific lifestyle (e.g. Vegan) how easy is it to know what to find?
This is particularly important, and we were clear to allow some point fluctuations for demographics such as communities that are accustomed to a Halal diet. Points in this area range from 0 to 4 again.
The higher scorers have clear dedicated isles and bays for plant based, meat free, halal, and quadruple bays for vegan.
Lower scorers have minimum examples of appreciating lifestyle diets, again for fresh produce there was a clear supply chain issue with many empty bays.
How well do you feel that this retailer supports sustainability, and how is this communicated?
This was another interesting area, with another 0 to 4 range. The stars scored high because of their approach to messaging across the store, including provenance tracking and traceability standards for fresh meat, as well as electric car charging points, free reusable bags, and the bring-your-own-container refill points. Although they have been slow to roll out in the industry, they have proven to be a very interesting sustainability implementation.
Those that scored 0 showed little or no obvious markers to support sustainability.
Meeting the needs of customers in health and lifestyle in-store proves to be a challenging mission for retailers overall. It’s coupled with a host of other issues that make it difficult to prioritise. However, now more than ever, where choice is wide, customers need to be able to shop to meet their needs.
Spoon Guru offers a number of intelligent food discovery interventions that not only guarantee the accuracy of your product data, they can also power a number of missions that allow customers to find the products they need to suit their dietary and lifestyle requirements, including Search & Filter, Shop by Diet, Recipe Filtration, and Healthy Swaps which suggest healthier alternatives against a chosen product.
What’s more, our capability stretches into the in-store journey.From promoting healthier ranges and assisting with product list curation for health zones, to supporting in-store digital touchpoints and nudging healthier alternatives through scan and pay technology.
We can enable your customers to discover products online and in-store that meet their dietary, lifestyle and sustainability needs in a personalised way. Talk to us today and find out how.