Speed to market with new products along with personalized service and signature fresh foods are ways independent supermarket operators set themselves apart from national chains and on-line shopping. Those were some key takeaways from the National Grocers Association (N.G.A.) Show that took place Feb. 12 to 15 in Las Vegas.
More than 3,400 independent supermarket operators, wholesalers, food industry service suppliers and manufacturers attended the annual event coordinated by the N.G.A., which represents the retail and wholesale grocers that comprise the independent sector of the food distribution industry.
An independent retailer is a privately owned or controlled food retail company operating a variety of formats. The independent grocery sector is accountable for close to 1% of the nation’s overall economy and is responsible for generating $131 billion in sales, according to the N.G.A.
“When Americans think of community, their independent grocer often comes to mind,” said Peter Larkin, president and chief executive officer of the N.G.A. “If there were one word to describe this past year for N.G.A. it would be growth. Our success throughout the past year tells a great story of a vibrant industry.”
The 2016 Independent Grocers Financial Survey showed that despite a competitive bricks and mortar marketplace, as well as growing on-line shopping platforms, independents grew same-store sales by 2.1% in 2015. This was ahead of annualized inflation (1.2%) and well ahead of the prior year’s 1.5% gains. There was also improvement in gross margins for many departments as well as the total store.
The survey showed that even with consumers increasingly shopping the fresh perimeter of stores, dry grocery remained the largest contributor to 2015 total sales for multiple-store independents at 38.1%, which is down four and a half percentage points from 42.6% in 2010. The meat and deli departments have shown the most growth, jumping from 17.7% and 4.6%, respectively, of sales in 2010 to 20.3% and 6.6%, respectively, in 2015.
The center of the store, where dry grocery is merchandised, requires attention to keep it relevant. During a panel discussion, Beth Busch, senior category development manager with General Mills, Inc., Minneapolis, emphasized that the center store is relevant to today’s consumers and retailers need to make them realize this by cross merchandising products to offer meal solution ideas and creating quality displays to attract shoppers. Mexican meal solutions are a great way to build baskets, she said.
“A strength of independents is to be quick and flexible, with a willingness to try new ideas,” Ms. Busch said.
Michael Day, manager of digital commerce and innovation for Wakefern Food Corp., Keasbey, N.J., said multiple-store independents like Wakefern will merchandise products differently in its city and suburban locations to better meet the needs of those customers.
“Personalization is key,” he said. “You need to make sure the right message is being served to the customer being served.”
Independent grocers are known for their personal service, said Laurie Rains, group vice-president of U.S. retail consumer and shopper analytics with Nielsen, New York. Ms. Rains provided a first look into Nielsen’s new research on independent shoppers during a breakfast session. The research identified numerous opportunities for retailers to benefit, including with health and wellness, prepared foods and e-commerce.
“Over 8 in 10 independent shoppers spend more than 50% of their fresh food spend in supermarkets versus other outlets where fresh foods are bought,” she said. “To win the trip, independents need to tell the story of the local fresh products they are selling. This includes everything from craft beer to locally churned ice cream. Flag it on the shelf. Tell the story.”
When it comes to merchandising health and wellness foods, the majority (59%) of surveyed consumers want the products shelved alongside like foods. Furthermore, 55% of respondents indicated nutritional ratings on packaging or shelf are extremely or very important.
“Health and wellness items integrated in the store invites trial,” said Frank Puleo, vice-president retail marketing and services with C&S Wholesale Grocers Inc., Keene, N.H. “Shoppers can compare labels and make better-for-you choices.”
Mr. Puleo also believes it is important for independents to emphasize what they do best in order to compete against national chains and on-line shopping.
“Only in a store can you smell fresh baked bread,” he said. “You need to offer value. I want to hear that a customer drove past my competitors to visit my store because of the value I offer, rather than they shop my store because it is convenient.”
An example of offering value was provided by Dennis Host, vice-president of marketing for Coborn’s Inc., St. Cloud, Minn., who said, “In two of our metro stores we now offer a produce chopping service called Chop Shoppe. Our customers did not ask for this. We anticipated the need of the urban shopper whose time in the kitchen is often limited.”
In-store fresh-cut produce has become common, but providing custom cuts from a “vegetable butcher” is a new value-added service. Customers get their produce cut on demand and may observe the process.
Recognizing that everyone cannot always make it to a store, the chain recently added quick-preparation meal kits to its on-line shopping home-delivery service. Each kit includes fresh ingredients to create a complete, chef-inspired meal at home.“In an extremely competitive industry, independents are finding innovative ways to differentiate themselves in the marketplace and are doing so with much success,” Mr. Larkin said. “With their strong community roots and the agility to respond quickly to consumer demand, independent grocers are on the forefront of meeting customer demand, particularly in areas such as local and fresh.”