3 Keys to Local and Regional Grocers’ Survival
balanced Assortment
In today’s hypercompetitive market, local and regional grocers’ organizational operating model and merchandising strategies must align on finding the right mix of established national and local or regional brands, emerging brands, and own brands, especially in the fresh categories — produce, deli, bakery, foodservice, meal kits, and so on — that best satisfy local shoppers on a variety of levels. Even tried-and-true brands can appear to be new to your customers, particularly if these brands have had limited distribution earlier in their life cycles.
Balancing incumbent and challenger brands — national and local, own-label or another label — to achieve ideal composite margin yield, attract a loyal and sustainable shopper base, and give you price flexibility is simply good business.
But balanced assortment is the cornerstone of a larger, total store-brand differentiation strategy that creates a clear identity for your store or stores in the communities in which they operate. It also lets customers know who you are, and that you know who they are and what they want. Tailoring product mix to local markets also gives you the ability to tell — and illustrate — your company’s unique story, allowing consumers to identify and relate to your stores in emotional, not just transactional, ways.
Additional Approaches
What other approaches enable local and regional grocers to compete? Two additional strategies will help. The first is an absolute and unrelenting commitment to offering top-quality products and establishing store-level metrics and operational policies that make sure that everything the customer sees, smells and/or tastes is as fresh and high-quality as it can be, particularly if it has your store’s name attached to it. This has been the cornerstone of successful regional operations as diverse as H-E-B, Wegmans and Meijer.
The second approach involves optimizing your presentation, merchandising and storytelling — illustrating and reinforcing the unique role your stores play in the communities that they serve. For example, if you operate in a region that boasts a lot of local farmers — perhaps even urban farmers — you can showcase locally sourced products and local producers by stocking their items and displaying them alongside other perishables in a way that creates a “farmers’ market” feel.
Localization is also critical when it comes to differentiating through fresh and foodservice offerings that meet the unique needs and tastes of your local community. Given the scale of their operations, by successfully leveraging analytics, regional grocers are also in the best position to authentically offer favorite local and regional prepared foods.
If the history of supermarketing teaches us anything, it’s that local and regional grocers are capable of successfully addressing any competitive challenge, provided that they focus on their assets — like their intimate knowledge of, and connections to, the communities they serve — while embracing and integrating the latest that technology has to offer.