As consumers continue to place heavy emphasis on value when shopping for groceries, they are stepping up their interest in also finding quality goods, fresh products and an optimal shopping experience, posing a sharp challenge to retailers jostling for position in a highly competitive market, according to a report published last week by Boston Consulting Group.
Club retailers are especially benefiting from this trend, the consulting firm said. That sector, which includes chains such as Costco, Sam’s Club and BJ’s Wholesale Club, is winning over shoppers by placing growing emphasis on fresh goods while helping people save money on those products, BCG found.
“As they’ve increased turnover in those sections of the store, they’re able to continue to double down on that. So the faster the turnover, the higher the quality, the fresher the product,” Aftab Hussain, global lead for grocery for the consulting firm and one of the authors of the report, said in an interview.
Heavy demand from shoppers for low prices is also proving beneficial to discounters as well as Walmart, which have emerged as the only grocery channels that people associate with “affordability,” the consulting firm found. Those retailers are also attracting shoppers by broadening their fresh assortment while offering shoppers added convenience.
Walmart is especially well positioned because of its scale and focus on omnichannel, BCG said.
While national grocers have been successful in demonstrating to shoppers that they offer convenience and reliability, they’ve had difficulty standing out in terms of value or quality, according to the report.
“They don’t have to win and beat all other players on price. But that combination of being able to be convenient, being able to drive out some fair value and drive quality is an important piece to them overall,” Hussain said about national and regional grocers, adding that for all types of grocers, the key is to focus on their strengths instead of trying to differentiate themselves on all fronts.
Hussain said discounters have been able to benefit from paying especially close attention to private label goods while national and regional chains have placed a greater focus on national brands. But he added that as retailers across the board place more emphasis on building their own brand portfolios they’re finding ways to provide more choice to shoppers who demand quality and low prices.
“The race for having great private label, having choice for the consumers that does not compromise on taste and quality at a great price, is something that all the retailers are pushing forward on,” said Hussain. “That also means that the branded players are upping their games as well, bringing great products to the market, bringing great assortment and great new tastes and flavors.”