Growth Gain Pain

2. Growth Gain Pain • Regardless of who is doing the measuring, supermarket sales increased only marginally during 2015. Total grocery sales in all channels were $2.1 trillion, or just a 1.9% increase from 2014, and supermarkets’ share declined from 24.6% to 23.4%. • 2016 Nielsen TD Linx research revealed a meager 1.7% increase in supermarket sales, totaling $649.1 billion for 2015 (for all supermarkets with $2 million or more in annual sales). Conventional supermarkets’ share of 64.7% totaled $419.7 billion. • Because the average sales volume per store increased just 0.09% during 2015, Progressive Grocer’s survey of grocery executives found only a slight uptick in their 2016 prospects index, or 69.3, compared to 2015’s 68.1 (on a 100-point scale).

3. Category Shares • According to 2016 Progressive Grocer market research, the perishables category had the largest share of supermarket sales, at 53.8%; followed by grocery, 34.5%; general merchandise, 5.5%; and health & beauty care and pharmacy, 3.1% each. • Not surprisingly, grocery stores with at least $2 million in annual sales had a 70% or larger share of 12 grocery categories of consumers buying from 8 different retail channels, as reported by Nielsen for the week ending December 19, 2015. • According to a 2016 Organic Trade Association report, more than 50% of households purchased organic produce, the sales of which increased 16.4% from 2015 to a total of $5.5 billion. Organic bananas accounted for $165 million, and vegetables $150 million.

4. Supermarket Sales Leaders • The big news in the supermarket industry during the summer of 2016 was the completion of the merger of Ahold and Delhaize to become Ahold Delhaize, with just less than 2,000 total stores located in US East Coast states. • The top 5 supermarkets as judged by consumers in the 2016 Tempkins Experience Ratings were Publix, 81%; H-E-B, 79%; Kroger and Save-a-Lot, 78% each; Wegmans, 77%; and Aldi, 76%. A score of 80% or better is considered “excellent.” • As reported in Progressive Grocer’s May 2016 issue, Wal-Mart Stores retained its #1 spot of the top 10 super food retailers, with almost triple the revenues of #2 Kroger; however, Whole Foods Market had the largest gain from fiscal 2015, at 8.5%.

5. Primed for Promotions and Coupons • According to an April 2016 survey from Market Force Information, 24% of consumers said they almost always shop at a specific grocery store because of promotions; frequently, 38%; occasionally, 35%; and never, 3%. • May 2016 research from Acosta Sales & Marketing and Univision found that 45% of Latino American shoppers used paper coupons received in the mail while 43% used paper coupons from flyers in the mail and 42% from a retailer’s circular. • Retale, a mobile app company, reported during May 2016 that 41% of Millennials said offers sent to their mobile device as they enter a store is the primary factor that would enhance the grocery shopping experience.

6. Creating Consumer Connections • Progressive Grocer’s 2016 survey of supermarket executives revealed that 26.9% said their best company investment to attract and retain customers during the next 5 years will be to remodel and invest in existing stores. • The executives cited associate feedback, at 90%, as the top customer engagement tool; followed by social networks, 87.5%; electronic communications/digital surveys, 62.7%; loyalty card data, 47.5%; and customer service hotlines, 43.6%. • Despite their best intentions and plans, just 9% of executives said they have an omnichannel strategy integrating in-store, online and digital channels. Another 44.8% said they have a strategy they are executing and 25.4% said they were just starting.

7. Online Ordering Offers Convenience • According to a March 2016 consumer survey from Brick Meets Click, the percentage of US households that bought groceries online during the past 30 days increased from 11% during 2013 to 21% for 2015. • The convenience of buying fresh, quality prepared foods is such a growing trend among consumers that 76.1% of supermarket executives in the Progressive Grocer survey ranked prepared foods as their first merchandising/brand enhancement strategy. • According to King Retail Solutions, 28% of consumers said they would purchase fresh prepared meals and groceries online for in-store pickup. Men, Baby Boomers, households with children younger than 18 and suburbanites are more likely to do so.

8. Advertising Strategies • Although supermarket executives consider TV 7th on a list of their 9 most important marketing/advertising tactics, show them why TV is the best medium to drive consumers to digital and mobile channels and content, which executives list #2 and #4 in importance. • Since supermarket executives consider associate feedback as their top customer engagement tool, they should feature a select group of associates in their advertising, expressing how they would enhance customers’ shopping experience. • Information and analysis throughout this Supermarket Profiler indicate that supermarkets should allocate more of their ad budget and messages to promote fresh prepared meals, especially to men and older adults, which can be done effectively with a TV component.

9. New Media Strategies • With videos becoming the primary form of digital media content, supermarkets can create videos featuring selected associates to help emphasize how they will enhance consumers’ shopping experience as well as relate a story of how they helped a specific customer. • The mobile channel is the perfect place to promote fresh prepared food with enticing photos of food items and meals and a simple message that works on mobile, “You could be having this for dinner today” and a prominent call-to-action. • To remain competitive, independent grocers should move swiftly to create a purchase online/in-store pickup app, and then emphasize these services and their benefits with videos, testimonials, etc. in social media as we as offering a coupon to first-time users.