The Evolution of Grocery: How Stores Can Retain Shoppers in Today’s Competitive Market

The grocery sector has undergone serious shifts in the past couple years. From upgraded technologies that enable digital ordering to pandemic-era shopping habits that sent certain products flying off the shelves, today’s grocery shoppers are no longer loyal to the same store or chain. They hunt for the retailers with the best products, selection and purchase options.

Now, as Kroger plans to acquire Albertsons, the industry is growing even more competitive. The consolidation of these massive chains is just one of the latest industry shake-ups. Grocers have adapted how they operate amid inflation and difficulties competing with digital conglomerates like Amazon.com.

As the grocery sector continues evolving, grocers must delve deeper into consumer shopping habits and implement fresh approaches that align with new demands.

Padding Brick-and-Mortar With New Digital Options

The in-person grocery shopping experience still holds strong as 82 percent of consumers say they prefer heading to the store instead of buying items online. However, new trends are changing shoppers’ expectations and buying habits. Ever since Amazon acquired Whole Foods in 2017, shoppers have grown used to “phygital” stores, which blend the best of in-person and e-commerce into one cohesive experience. As a result, consumers expect retailers to consistently upgrade and improve their digital presence.

The appetite for and reliance on online grocery shopping grew during the pandemic out of necessity. Delivery services and buy online, pick up in-store options allowed consumers to align with COVID-19 restrictions and general health concerns. Now almost three years later, shoppers are continuing to purchase groceries online over four times the rate compared to 2017.

In today’s market, winning over shoppers will require a seamless digital and in-person experience. For traditional grocers, this doesn’t necessarily mean they need the latest and greatest in CX innovation — e.g., augmented reality shopping. By launching a simple, easy-to-use mobile app and website that allows shoppers to browse deals, discover products and place orders, they’ll be well on their way to competing with industry leaders.

Addressing the Needs of More Fiscally Conscious Consumers

Grocery prices have risen 12.4 percent according to the last Consumer Price Index figures — well above the average of 7.7 percent for all categories. This is driving serious shifts in how consumers shop for products. In fact, Quantum Metric found that inflation is driving 53 percent of consumers away from their favorite labels in favor of cheaper alternatives, and 37 percent are waiting for items to go on sale before even buying them.

Although grocery stores can’t combat inflation all by themselves, there are ways they can better align with customers' needs. For example, consumers are hunting for deals on all items, and 73 percent of Americans say they have a new preference for store-brand products. To capitalize on this trend, stores should focus on promoting generic labels and any products on sale. To cement loyalty, grocers can also offer special discounts or rewards for returning customers.

Launching Initiatives to Earn — and Keep — Customer Loyalty

In the past, shoppers chose their grocery store based on location. That's not the case anymore. Now there are many factors that contribute to shoppers’ decisions, including price, product selection and quality, user experience, and checkout options. To successfully compete for consumer dollars, grocers must launch new initiatives that convince — and excite — customers to shop with them.

As mentioned earlier, offering special discounts and rewards for repeat customers helps them feel seen and valued for their continued business. Through loyalty programs, grocers can better connect with customers to ensure they feel appreciated. Loyalty programs allow grocers to consistently communicate with customers and personalize their experiences, which can be what motivates them to keep shopping with the same store.

The grocery industry will continue to shift in 2023; this is good news for shoppers. From M&A activity to inflation, grocery stores are being forced to get creative in aligning with new shopper preferences and meeting market demands.

Elissa Quinby is senior director of retail insights at Quantum Metric, the pioneer in continuous product design.