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Wednesday, June 18, 2008

Staycations and Groceraunts: Innovation in the Marketplace

Caroline Foster's cottage "Temple of Abiding Peace" at
Fosterfields Farm, Morristown, NJ.
What's all this talk about 'staycations' and 'groceraunts'? Is innovation afoot?

As easy as it is to focus on the doom and gloom, consider Jack Neff's 3/24/08 article in Ad Age titled "Recession Can Be a Marketer's Friend. From Soap Operas to IPods: History Suggests Slumps Spawn Innovation" [registration & credits required].

So, how is innovation manifesting itself in the marketplace? Read on.

Everyone agrees that shopper habits are changing. Although price comes up repeatedly as the new motivator, it's not alone. Rather, it's a function of value and the optimal bundle of worth that makes sense to us as consumers.

Quality? Who Cares? Shoppers Now Favor Price, Convenience by Sarah Mahoney from 3/25/2008 reports that "a new study from Vertis Communications finds that just 1% of adults say overall food quality is the reason they choose a supermarket, while the perception of low prices and convenience--especially how close the store is to either work or home--is far more important" [emphasis mine]. We are shopping closer to home; stocking up, combining trips, and carpooling. We are more receptive to prepared meals instead of restaurants and appreciative of stores that cater to one-stop shopping [i.e., the parts matter - giving new meaning to 'parts is parts'].

Even though the study reports quality not being important, few would deliberately accept poor quality for low price and convenience. Most, though, want to ensure that they aren't being ripped off and that store selection fits into their modified value equation taking into account shopping distance and frequency.

According to the study, women monitor food prices closely whereas men are motivated more by convenience.

In a previous post, I described The Middle is Gone. Sarah Mahoney's 3/13/2008 article titled Will Upscale Supermarkets Have Egg On Their Faces continues that discussion. According to the article "The chains that are most vulnerable, ... 'are that middle-of-the-road, plain vanilla supermarket'... such as Safeway and Publix. 'It's an hourglass economy. There's room at the high end and at the low end, but in the middle, they are just getting squeezed tighter and tighter.'"

According to Lindsey Robbins in Food fight rages for Giant, Safeway. Grocers overhaul stores, focus on private labels from 05/15/2008, Giant has opted to reduce selection, simplify and renovate. Safeway, interestingly, has chosen to promote its better living/healthful private label brands to other retailers.

Others, such as Roche Bros. in Westboro, MA prefer to create an experience as described in Restocking the store. Grocers want shoppers to enjoy time in the aisles. Wallets and Pocketbooks. [$ to view full article] by Lisa Eckelbecker from 03/02/2008. Roche Bros. is working with FRCH Design Worldwide in Cincinnati, OH to design a new grocery prototype store. "...smaller, with less selection and more prepared foods... 'People are changing their shopping habits.... They're very concerned about where the food comes from. They're concerned about service.... What we've found from focus groups is they want quality, they want freshness, they want service."

The answer isn't to be "everything to everybody" [that would put you right smack in that disappearing middle zone]. Rather, it's rethinking how to offer shoppers value. Here, using technology to bridge old formats with new ones, enabling say a combination warehouse and engaging boutique-type environment that creates a customer retail experience. The focus is on "how to make it enjoyable for the customer?"

P-O-P Times' April Miller analyzes grocery stores in "Not Your Grandmother's Supermarket" [May 2008 issue] and how they are differentiating themselves. From clean-store policies to establishing lifestyle stores where shoppers can complete multiple transactions, the goal is to engage the shopper and provide her with relevant reasons to patronize the store. Other ideas include cooking classes, themed sampling events, displays that blend with the environment, cross merchandising and offering recipes.

Then there's P-O-P Times' description of the supermarket of the future, where:

+ the parking lot goes underground "creating farmland around the grocery store, where shoppers can grow their own vegetables to eat or sell at the store."
+ imagine the produce section actually being a farmers' market.
+ signage communicates provenance
+ "A refill station for various goods in the center store to cut down on wasted packaging."
+ To transform the supermarket into a destination, plan on finding "cooking demonstrations, bookstores, cafes, gyms and other services..."

Might make a 'staycation' even more appealing!

As it relates to 'staycations,' "a Rand McNally survey found that two-thirds plan to shorten or cancel summer road trips" explains Retailers promote 'staycation' sales from 5/28/2008. And, if people don't travel for vacation, they stay home... focusing more attention on their home environment and possibly even spending on projects that enhance the home. [Maybe even carpet, right?]

Wegmans has developed a "coffee university" program to educate and certify its employees in the creation of proper espressos. Wegmans Schools Employees on Coffee from 03/11/2008 explains that the program was developed with the Instituto Nazionale Espresso Italiano.

Have you heard about Bloom? It's a fascinating new supermarket model based on two years worth of understanding what consumers want from supermarkets. The result: an intuitive layout and technology to provide "exceptional convenience, quality and variety" according to "Expanding Bloom designed with 'guests in mind'" by Angie Hanson dated 01/16/2008 from Produce Merchandising. Grocery carts include store maps; shoppers are given a handheld scanner upon entering the store, so they can scan their items and expedite payment. Perishable and non-perishable are in separate sections. The store model is fluid and can easily be rearranged to respond to changes, and interactive kiosks offer information as needed. All of this based on shopper insights.

Some retailers are combining forces to tantalize shoppers. Read In These Tough Times, Retailers Band Together by Betsy Cummings from 06/01/2008 which describes stores within a store arrangements. For example, FAO Schwarz within Macy's, Seattle's Best Coffee within Borders, Sephora in JC Penney's, and McDonald's within Wal-Marts. These arrangements add convenience and variety and enhance the overall consumer retail buying experience.

Then, there is Whole Foods' new 'groceraunt' concept describing a multitude of mini-restaurants within the traditional grocery experience. Natural~Specialty Foods Memo describes the concept in great detail in Retail Memo: Whole Foods Market, Inc. Coins a New Retail Format Term, 'Groceraunt,' for Its New Scottsdale, Arizona Store. For those of you who have had a meal in Galeries Lafayette Gourmet, doesn't this sound familiar?

It's not just new formats that we're seeing. There's also focus on improving logistics, kind of a-la-Zara... Retailers hustle to bring fashions to market by Jayne O'Donnell, USA Today from 05/29/2008 says that software and technology improvements are helping move product faster through stores, reducing the need for markdowns to move product out.

Based on these examples, how might you apply innovation to your marketplace? What customer insights might you address to increase the value you offer shoppers? What about training your staff to be passionate experts?

Can you make your retail experience more convenient? More inspiring? Have you considered clean-store policies? Can you simplify your assortment? Showcase new ideas or colors or combinations of products?

What about including related products? You may sell only flooring, but what about having paint swatches on hand? Borrowing furniture from a local retailer to create a showcase vignette? Allying yourself with neighborhood designers and showcasing their designs in your store? That also enables you to offer your shopper needed services in a one-stop location.

Might you host events in your store? Think of them as the equivalent of a cooking demonstration, or a design how-to session that translates cutting edge fashion ideas to flooring... And, if your customers are taking advantage of 'staycations,' what about offering entertaining tips on which surfaces are best for specific events and how best to care for those surfaces...

After all "slumps spawn innovation."

Related Stories:
+ The Middle is Gone
+ Tony Schiano, Giant Food: Stores As New Media
+ Trader Joe's - Where Values Drive The Brand
+ January Retail Tips
+ A Few More January Retail Tips
+ Lafayette Gourmet - A Feast For The Senses...

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