How is a neighborhood or regional grocery store supposed to compete with the likes of Walmart, Target and Costco, all of which a short drive away? Not to mention the ease of online grocery shopping thanks to Amazon and other etailers.
Last year, Walmart swallowed over $250 billion in grocery revenue last year. In an effort to compete with Walmart, regional supermarkets have been forced to consolidate.
Not only are Walmart’s low prices killing supermarkets, so, too, is the ability for customers to order their groceries online from the retail giant and pick them up later, or even have them delivered to their front door.
It’s a small miracle there are any neighborhood markets left, or any regional supermarkets for that matter.
In an attempt to compete with Walmart, other regional supermarkets offer online ordering or delivery. But that’s not preventing customers from ditching certain supermarkets for Walmart or other giant retailers.
Why then are many supermarkets unable to compete with Walmart? Is it primarily pricing?
While pricing is certainly a factor, it’s not the only reason. However, there is a singular reason why some supermarkets can’t compete with Walmart. And that reason is: differentiation.
If a supermarket has no distinct personality and offers pretty much what Walmart sells, many customers will choose Walmart over the smaller supermarket. This is especially true if a customer also has non-grocery items on their list. Need to also buy clothes for your kids? Then why not kill two birds with one stone by shopping at Walmart?
Be Like Joe
Perhaps the most successful supermarket chain that characterizes the concept of differentiation is Trader Joe’s (owned by Aldi’s). When you think of Trader Joe’s, what comes to mind? Delicious samples, including coffee. Friendly employees. Good vibes. Inviting decor with mesmerizing murals. Fun music piping through the speakers. Oh yeah, there’s also unique products, clever branding and … wait for it … low prices.
Can you think of any chain of supermarkets like Trader Joe’s? Sorry, Whole Foods, even though the Austin-TX based chain has differentiated itself, it is now owned by Amazon. Thus, Whole Foods is not in jeopardy of sinking into Chapter 11 bankruptcy anytime soon.
If you’re the owner of a small neighborhood grocery store, hopefully your store has mastered the art of differentiation. If not, perhaps these 4 ways to increase grocery sales will come in handy. Every owner or general manager of a supermarket or neighborhood grocery store should look to Trader Joe’s for inspiration. And take it a step further. Shoppers aren’t coming to your store just for price. They’re coming for the experience. Create a reason for shoppers not only to come to your store for groceries, but to stay for awhile and feel part of the community. Host a live music series. Have hourly prize giveaways by having a greeter hand shoppers a raffle ticket.
To hammer the point about differentiation, let’s say a customer has just 10 items on the grocery list to get. And let’s say these 10 items on the list are common to every grocery store (bananas, oatmeal, cereal, etc.). Will the shopper go to Trader Joe’s where he or she can get a free cup of coffee, a couple delicious samples and friendly, personalized service? Or, will the customer shop at a store that sells a bland looking cup of coffee for $1.99, has no free samples and has checkout clerks with barely more personality than a robot?
Many Stops, Make Yours the #1 Shop
The average American consumer shops at a few different grocery stores to complete their shopping list. If you want to compete with the retail giants and be the primary destination for more shoppers in your neighborhood, you must differentiate.
If you lower your prices for the bulk of items in your grocery store, you might succeed in preventing a few shoppers here and there from jumping ship to Walmart. However, that strategy alone will likely not work.
It may be a winning strategy to reduce pricing on a handful of SKUs to fall more in line with Walmart’s pricing, but what will likely be an even more evergreen successful strategy is differentiating yourself from the pack. If customers enjoy the experience of shopping at your store, they won’t mind that you don’t offer online ordering or delivery. Just ask Joe….