This year, the industry trade group has a new name and, for the second year running, has a sharper focus and evolving format, one more keenly aimed at getting grocery retailers and their CPG partners to accelerate their efforts to innovate and better serve a rapidly evolving consumer base. In short: Disrupt or be disrupted.
“The reason behind our strategy is to delight and serve customers,” Carletta Ooton, Amazon’s VP of safety, sustainability, security and compliance, remarked in her Saturday keynote address, using words that might be uttered by any grocer. Yet no one can mistake the power behind the strategy when it comes to Amazon and its ongoing march toward a retail world free of friction.
Indeed, there were many messages being sent at this year’s Midwinter. Here are five key takeaways:
Customer Obsession. One might think that Amazon is no longer the specter it once was for retailers, with every new step it takes toward brick and mortar while traditional grocers invest more in omnichannel. But you need look no further than Ooton’s presentation at Midwinter to see that Amazon continues to be a formidable disruptor: an overview of Amazon’s machine learning capabilities that allow the etailer to, among other things, distinguish between personal preferences and food safety issues in customer feedback, and determine whether boxes or pouches are appropriate shipping media in its effort to reduce packaging waste.
More frequently we’re hearing that retailers and CPG companies need to become more shopper-centric. At Amazon, Ooton noted, innovation starts with the customer and works backwards. In fact, the seeds of innovation at Amazon lie in what Ooton called a “PR-FAQ,” a forward-looking “press release” for a product or service not yet developed that answers all the questions about what it’s supposed to do, such as: How does it impact customers? Why should they care? Why this, why now?
Winning at retail demands “omnishopper centricity,” said Thom Blischok, chairman and CEO of The Dialogic Group, noting that retailers must fill the “phygital” shelf to create a seamless shopping experience.
For Randy Edeker, CEO of Midwestern grocery chain Hy-Vee, being customer-centric means “personalization, customization and simplification.”
Chasing Younger Shoppers. There was plenty of talk about courting Millennials but even more about their successors, Generation Z, who are not being shy about sending the pendulum back the other way. On the whole, they’re less liberal, more brand loyal and, while embracing omnichannel, savor the in-store experience. Both generations use smartphones, computers and voice assistants almost equally for grocery shopping, but their social media preference rankings differ. Gen Z’s spend less per month on groceries than Millennials, but spend more in-store versus online.
The New and Changing Consumer. Beyond age, consumers are more ethnically diverse, with differences in shopping habits both among and within ethnic groups, said Oscar Gonzalez, co-president of Southern California-based grocery chain Northgate Gonzalez Market and this year’s Midwinter chairman.
Multicultural segments make up 40% of the U.S. population, according to the last census, and families are experiencing what Gonzalez referred to as “retro-acculturation,” with younger generations rediscovering their grandparents’ recipes.
Hispanic shoppers’ buying power is expected to be $24 billion by 2025, noted Mark Baum, FMI’s chief collaboration officer and SVP of industry relations. With larger households that often include older adult relatives, Hispanic families’ weekly grocery spend is about $20 above average; they favor supermarkets as their primary store and tend to be tech-savvy.
Yet even with technology, delivering a compelling in-store experience and establishing a personal connection with consumers through such things as sampling events and community activities is essential to cultivating shopper loyalty. “We understand the importance of theater in our stores,” Gonzalez said. Omar Jorge Pena, chairman of Aurora Grocery Group, offered in another conference session, “Show you’re a committed partner to the community. If you’re not all-in, don’t even attempt it.”
Thinking About Tomorrow Now: With consumers and the world they live in changing ever faster, retailers and their CPG partners must anticipate and adapt accordingly. That means trying things that ultimately might not work, a step that retailers historically are averse to taking.
“Don’t be afraid to fail,” urged Steve Henig, chief customer officer at Wakefern Food Corp. “Perfection is aspirational, not expected.” The issue, Henig said, is not so much an idea itself but the ability to rally your team around it. “Agility is the most important thing any organization can move toward. The hard part is getting people more comfortable with getting a little messy.”
Troy Datcher, chief customer officer at The Clorox Co., said the key is getting to know your consumers better and thinking of them in terms of audiences rather than microsegments.
Another challenge is how to prioritize what technologies to develop and when to focus on them. As Gary Hawkins, CEO and founder of the Center for Advancing Retail and Technology (CART), observed, we have hit the point of inflection from which change is going to accelerate dramatically.
What’s Our Uber? The only constant is change, but the way we change is fundamentally more complex, noted Steve Pinder, managing director for Kurt Salmon at Accenture, moderating a panel discussion on what’s being called “The New Marketplace.”
As outlined by Pinder, The New Marketplace is an alignment of product offering, store experience and business ecosystem through the common lens of brand and purpose.
Retailers and CPG companies must constantly be looking ahead to how they must change to stay relevant to new audiences. Or, as Giant Food Stores SVP of Merchandising John Ruane put it, “The time now is when we should be looking at things the way Blockbuster should have when Netflix was coming in.”
And now’s not the time to be timid. “We’re going to have to work together and fail forward,” said Judi Kletz, managing director of industry affairs at Procter & Gamble, adding that trading partners must be “constructively disrupting our businesses and our relationships.”
Tim Lowe, president of Carolinas-based grocery store chain Lowes Foods, said the food industry must look at other sectors for ideas, like Airbnb and ride-share services. “They’re not just disrupting industries, they’re disrupting the consumer and their mindset of what they want,” Lowe said. Or, in other words, “What’s our Uber?”