Independents Empowered to Take on Grocery Giants
No one ever said it’s easy to be an independent retailer. This is especially true in a retail world where the battle for supremacy among giants such as Amazon, Walmart, Kroger, Albertsons, Aldi and Costco can cause collateral damage to independent retailers.
However, as the new decade begins soon, independents have a lot going for them relative to larger rivals. They are nimble, smart, very connected to their markets and communities, and can move quickly if they choose. They can fully capitalize on these strengths by enhancing their marketing strategies to successfully take on the biggest competitors.
Conquering decision paralysis
One of the best ways that independents can improve their odds of success is by taking advantage of enhanced technology capabilities, which mega-retailers possess and routinely exploit. However, it's common for independent retailers to experience a bit of paralysis when making decisions that may involve higher costs. Independents are confused about which ways to turn, and many technology vendors today seem to be selling similar attributes: Personalization. Relevancy. Digital.
Independents are challenged in trying to understand the differences. The result is that many are avoiding decisions altogether, or worse, jumping into a “digital” marketing solution with the perception of “build it, and they will come,” only to find low conversion rates based on the demographic makeup of the typical independent’s geography.
Perils of conventional wisdom
Moreover, many independents have incorrect perceptions about traditional media channels, and as a result are ignoring them in favor of shiny new digital toys. Consider the parallel on the ecommerce side. Many multistore independents are diving head-first into ecommerce selling platforms, only to realize that they don’t have the operational expertise to execute at the Amazon level, which has set the bar high for consumer experience.
While online grocery sales are growing considerably on a percentage basis, they currently still only account for 6.3% of total grocery-related spending by U.S. households, according to a recent report from consultancy Brick Meets Click. Translation: 93.7% still shop for groceries in store.
The reality is that platforms don’t matter as much as effectiveness levels. Returning to the marketing topic, one useful approach is leveraging direct mail, a seemingly mature form of retail marketing, that can be transformed through data-driven personalization techniques to drive profits and traffic. At Smart.Market for Business, we’ve found it’s important for independents to choose proven strategies that offer cost-efficient ways to compete with bigger adversaries.
Strategies for decision-making
So how can independents best move ahead? Here are a few guidelines for them to make decisions on their marketing investments for the next few years:
- Get Personal: Reach customers with personalized approaches through items they like to purchase, and don’t forget to message households that aren't yet customers in a similar fashion. When the second dollar store pops up just down the street, make sure that the marketing platform can specifically target those shoppers in the same campaign. This requires messages like “welcome to the neighborhood,” “somebody’s having a birthday” and “we’ve missed you,” combined with relevant offers. This is a proven strategy to bring ROI.
- Make a plan; then work the plan: Try to avoid worrying too much about the marketing platform, or whether it’s a shiny new digital toy, as long as it’s able to deliver highly personalized and relevant offers. We now see dot-com-only businesses that are turning back to traditional print channels like direct mail, based on the enhanced targeting and measurement capabilities it offers, and the shopper engagement and gamification it provides. This requires making a plan with goals, however. For example, goals might include capturing 50% of my trade area, increasing shopper traffic or rewarding my frequent shoppers.
- Embrace Data: Successful personalized marketing, regardless of the platform, should include the ability to obtain meaningful back-end analytics to measure a wide range of marketing events. That is an important benefit in the short and long term. Results are fed into future campaigns to optimize performance based on redemptions, and ultimately the product preferences at individual household levels. This has tremendous value and needs to be considered at the same level as the overall cost of the campaign.
Independents should feel empowered to make marketing investment decisions that reflect the realities of their businesses now and in coming years. This empowerment will help drive the next level of their success and keep them viable. It will enable them to better understand their choices, and to embrace the winning independent spirit that got them this far in the first place.