Editor’s note: We recently asked Peter Larkin, president and CEO of the National Grocers Association (NGA), to share his thoughts on what grocery retailers have to do to be successful in 2014. These are his complete remarks, which were excerpted in PG’s December 2013 print issue.
Perishables, particularly in the meat and produce departments, will remain an area where independents hone their focus. Independents continue to focus on identifying that niche of what their customers want, such as specialty in-house smoked meats or local sourcing of fresh produce, and will work to meet and exceed their customers’ expectations.
While independents are likely to excel in the perishable departments, they aren’t willing to give up the center store. Independents are eager to push the envelope, and the center store is no exception. This includes working with CPG companies to execute promotions and opportunities that may be more targeted towards a specific customer or demographic.
The focus on the customer will continue to be an area of differentiation, which includes the ability to evolve to meet the customer’s needs and expectations. This goes beyond basic customer service to possibly include implementing or growing a home delivery service or a curbside pickup program, to developing new formats that can better serve the ever-changing demographics throughout our local communities.
If you look at the setup of our expo floor for the NGA Show [Feb. 9-12, 2014, in Las Vegas], we have developed a number of pavilions to allow attendees an opportunity to focus on key areas of their business, from meat to produce to GM/HBC to technology, and a lot in between. Focus on these key areas will carry into our education seminars and general sessions. Our goal is to give our attendees the necessary tools and resources to go back to their companies and execute a strategy that will ensure they are able to continue to differentiate themselves in the marketplace.
Involvement in the local community will be an area of differentiation that will become more essential, especially in the age of instant communication such as social media. Support for activities such as Little League or a cancer walk, or providing meeting space for community groups, will be important, and an area where independent grocers can really set themselves apart from the competition.
Technology is an area where we expect to see independents embrace new and exciting opportunities in 2014. For many years, the sophistication of numerous national chains was superior to the vast majority of independent grocers, especially when it came to understanding shopper metrics and being able to tailor promotions to a specific customer. NGA is working to change that.
This year, NGA, in partnership with the Center for Advancing Retail & Technology (CART), launched the NGA Innovation Center and the NGA Solution Center. Projects are already under way, using NGA member stores as live learning labs to implement the latest technology and test new products and services. We are also developing new tools that will allow CPG companies to use our members’ shopper-specific data to directly market to a particular customer.
With more than $130 billion in annual sales and more than 20,000 storefronts located in every community across the country, the independent grocer is well positioned to take advantage of cutting-edge technologies to reach new customers and better meet their needs, while also partnering with CPG companies to meet their goals of reaching a diverse set of new customers.
The customer continues to become more sophisticated with the proliferation of smartphones and other technology. They are demanding instant information, transparency and convenience. Those retailers that are on the forefront of implementing new technology and embrace this consumer are positioning themselves for success.
As competition in the industry remains fierce in the wake of a relatively weak economy, we can expect to see a continued consolidation by many of the national chains. We are also likely to see consolidation among some mid- to large-size independents. Those independents that excel at setting themselves apart from the masses can expect to do well and position themselves for growth.
A recent study by Booz & Co. highlights the shifting consumer demographic and new challenges retailers, wholesalers and manufacturers will face. Hispanic and Asian populations are expected to increase 41 percent and 31 percent, respectively, between 2010 and 2025. The total ethnic population will increase to 47 percent of the U.S. population in 10 years. Similarly, the U.S. population continues to get older: Consumers age 65 and older will increase 7 percent as a percentage of the U.S. population.
Independents need to be able to meet the changing ethnic and aging customer as demographics will undoubtedly shift. Retailers and wholesalers need to embrace these shifts and adjust their offerings to serve these demographics. From product offerings to properly trained employees, retailers that are agile enough to change along with their customers are positioned to be successful in 2014.
Finally, the development of the next generation of leaders in our industry will become even more important to our industry. I think we will see a focus on enticing tomorrow’s leaders to consider a rewarding career in the supermarket industry. We will also continue to see a focus on developing tomorrow’s industry leaders as many of our family-owned companies pass on responsibility to the next generation. That is one of the reasons we have launched a next-generation share group at NGA that is off to a great start.