Go to the website of The Grocer. Under Channels you’ll see four categories of food retailer: Supermarkets, Discounters, Convenience, Wholesalers.
As clear as these choices are, boundaries are starting to blur. New hybrid categories are starting to emerge.
Here we’ll look at what these blurred boundaries mean when retailers starts to operate across traditional channels.
The discounters
When Aldi and Lidl opened in the UK they were widely regarded as the German discounters. Intriguing, competitively priced – but not where you could do a full shop.
This is no longer the case, partly due to the more comprehensive assortment of products that are now for sale.
The second contributing factor is better interior design and richer in store communication and marketing. The improved appearance and customer experience are much more in line with ‘supermarket’ standards in customers’ eyes.
Supermarkets fight back
Supermarkets have fought back with numerous price matching promotions that eat into the discounters’ core competitive advantage.
The UK’s Big Four are now trialling the bulk buys you might expect to see at a traditional wholesaler. Just like Russian discounter Mere introduces its category-creating, ‘hard discounter’ model. This means ultra-low prices, suppliers delivering directly to store, skeleton staff, customers unpacking products themselves and minimal choice.
Customers do not expect to be able to do a full shop but are willing to use Mere for essentials. Those that are much more keenly priced than at any other retailer.
What about convenience?
Here we’re seeing some consolidation among the rapid delivery players as well as competition from the Big Four for a slice of this potentially lucrative, very new market.
Forecourt operators are grasping the scale of the opportunity. They are starting to roll out concepts that go beyond sites for distress purchases, and becoming destinations in their own right.
Given the growing popularity of electric vehicles which require at least ten minutes’ charge and usually longer, this new convenience channel is only set to grow.
In summary?
Grocery is moulding itself around how customers like to shop. Preferences have changed over time and they will change again.
Succeeding in this market isn’t about super-forecasting or accurately predicting the future. It’s about recognising the scale of the challenge and the opportunities it represents, then building a team of like-minded, capable and agile partners to help deliver.
