Adapting to a changing retail landscape
Assortment matters — it is one of the three influential reasons why consumers pick a particular store to shop. More than half of the respondents (54%) said their store-selection decisions were influenced by whether the store had the products they wanted r
IN THE past decade or so, the modern retail model has evolved from the assertion that bigger is better. According to the Nielsen Global Retail Growth Strategies
report published last year that polled more than 30,000 online consumers in 61 countries, including the Philippines, supply chain process improvements have made it possible to achieve similar or even higher levels of profitability with smaller stores.
Of course, the change is not exactly a boon to big- box retailers. And, the report noted, the retail environment today is more fragmented than ever, with fierce competition for shoppers leading to a dependency on promotions among large retailers.
The survey sought to understand the pain and the pleasure points about shopping experience. It examined the extent to which retailers were meeting consumers’ needs and consumers’ store preference, among other things.
“How can retailers stay ahead in the rapidly changing landscape? They can start by assessing how well they’re doing now. What do consumers think about the shopping experience, and how well do they think their needs are currently being met?” the report said.
Many consumers believe that retailers do not understand and deliver on their needs. For instance, only 49% of the survey respondents believed that their main grocery retailer always or mostly communicated with them in a relevant way, while 53% said retailers always or mostly understood their grocery requirement. It is worth noting that the sentiment was not the same everywhere; compared with retailers in Europe and Latin America, retailers in North America, and to a lesser degree in Asia-Pacific, seemed to be doing a better job.
Price, as every retailer knows, is important; “it has been and always will be,” the report emphasized. When it examined the factors influencing purchasing decisions for 19 product categories, the report found that price was one of the top two attributes with influence on product selection among global respondents, along with taste for edible products and brand name for non-edibles.
“But, as smart retailers have long known, price and value aren’t the same thing,” the report said. “When it comes to store selection, price-related attributes fall below several others.” Among the factors that the survey found to be highly influential in determining where to shop were high- quality produce, convenient location and product availability.
Generating decent returns on trade promotion spend, the report noted, is increasingly hard. “Knowing which categories are more or less sensitive to pricing changes is essential for breaking the promotion addiction and driving growth,” it added.
Retailers have to understand what consumers say they would do if prices were to increase by 10%. Nondiscretionary items like dairy, fresh foods and personalcare products are less price sensitive than discretionary items like convenience foods, snacks and alcoholic beverages. “For the most part, however, consumers aren’t cutting out categories altogether. Rather, they’re simply buying less,” the report said.
When it came to health and wellness, a top priority for consumers around the world, 67% of the global respondents said they actively sought products with healthful ingredients, 62% said they read nutritional labels carefully, and 45% said there were not enough healthful options available to buy.
“Health and wellness isn’t just a niceto-have benefit for consumers. It’s a key consideration in both store- and product-selection decisions,” the report said. In Asia-Pacific, respondents were particularly conscientious about the ingredients in the edibles they consumed. According to the report, across the 19 categories examined, all- natural and organic ingredients were rated as more influential in product selection decisions in Asia-Pacific than globally.
Cater to convenience. “With life moving at hyperspeed, consumers crave convenience for everything from choosing the stores they shop in to buying the foods they eat,” the report said. Fifty-six percent of global respondents said convenient location was highly influential in their decision to shop at a particular retailer. The other influential factors were an organized layout that made it easy to shop and the ability to get in and out of the shop quickly.
Assortment matters — it is one of the three influential reasons why consumers pick a particular store to shop. More than half of the respondents (54%) said their store-selection decisions were influenced by whether the store had the products they wanted regularly in stock.
“Carrying the right selection of products, however, is a careful balancing act, as consumers are looking for more than just their favorite go-to products,” the report said. Many of the global respondents said they often tried new brands, owing to a boredom with the same old things and a liking for variety.
Retailers would also do well to know that consumers are never satisfied with the status quo, as demonstrated by the growth of niche retailing options and premium product offerings. “The way to stay relevant and connected to ever- changing consumer demand is to continually listen, learn and adapt to provide the products and services that will keep consumers satisfied and coming back time after time,” the report said. The most popular in-store services with the surveyed consumers were banking, prepared food and pharmacy.