Traditional grocery outlets across the Western world have seen margins and sales drop immensely over the past few years. In fact, over 50% of traditional economic profits across the entire sector was lost in the five years leading up to 2017.
The global grocery sector is worth a cool $5.7 trillion annually. Although the growth of 4.5% has been achieved in the past ten years, it’s been patchy, with lower productivity levels and a race to offer the best-discounted prices.
There are many ways the grocery sector is facing disruption and change. According to Mckinsey analysis, it’s estimated that failure to act will result in the loss of between $200bn and $700bn worth of sales revenue across the entire sector. Much of this will be down to e-commerce and typical non-grocery sites taking the business from traditional grocers. It’s highly likely that up to 50% of more traditional grocery outlets will go out of business as a result of this.
The three forces driving this continued disruption to the sector are:
Although the grocery retail sector has traditionally been flexible enough to cope with disruptions like this in the past, it’s the speed of change that’s causing so many contemporary problems.
Unfortunately, the grocers that fail to meet the challenges posed by current disruption are highly likely to be caught out and ultimately face closure. Because, these challenges can be met, and the vast expertise and knowledge within the grocery industry should enable it to compete and, indeed, succeed.
There are countless reasons for this downturn in grocery retail profits, and the rise of internet shopping is probably the biggest factor. Check out the three points listed above once more, and you’ll immediately spot that all of them relate to technology and the rise of internet shopping. If your grocery outlet isn’t keeping up with consumer preferences, yours could be the next failing brand. But, you’re already aware of this and recognise that simply marketing your products via a standard website won’t be the solution you seek.
In the UK, consumers of all ages have embraced the e-commerce revolution, so the grocery outlets feeling the strain of shrinking sales and profits need to take a look at just what they can do to improve their situation and promote long term growth.
Generation Z is a major target market for all retail outlets, and that includes grocery retailers. This generation of young people reaches adulthood from 2020, and is totally relaxed about the use of the internet, particularly via mobiles. If you haven’t already started targeting this valuable sector, there are lots of ways to increase your power in the marketplace to reach out to all these new purchasers. But, first, you’ve got to understand what the Generation Z shopper seeks and how your grocery outlet can meet their needs.
The Generation Z market is at the tail end of the millennials marketplace, and individuals would have been born from around 1998 onwards. These consumers have:
– Active lifestyles
– Place a high value on convenience, but also appreciate the flexibility
– Carry out research on high-value purchases, but place more trust in the word-of-mouth style of marketing than any of the more traditional methods
– Often convert to buying from mobiles, as these smart devices are essential to daily lifestyles
For any grocery outlet to meet the needs of the Generation Z shopper there are three main factors to bear in mind:
From the above key points, it seems clear that simply bundling up a new brand or grocery sector aimed at Gen Z shoppers isn’t going to be that easy. These shoppers want to know where food is sourced, and they want to be able to backtrack all other products, too. This makes it imperative for grocers to develop the environmental and social responsibilities for every item sold. However, Gen Z shoppers are also savvy enough to demand the discount deals and savings needed by cash strapped consumers.
And the final important expectation from the Gen Z demographic is for high-quality ready meals. Cooking and preparing meals is not considered essential for millennials, and Gen Z is no exception.
Another major competitor to traditional grocery outlets is the food service and hospitality sector. The demand for food delivered to the home has already outstripped the food-at-home market. With a variety of convenience stores delivering ready made meals, discount grocery stores, like Lidl, and the increased demand for home food delivery from all types of takeaway outlets, the more traditional grocery sector has been a little slow on the uptake. But, it’s still not too late to turn this around.
If your grocery outlet wants to target the Gen Z market, you’ll need to offer all the digital shopping tools they require. For Gen Z, life is all about taking it easy. They want to be able to purchase directly from social media, but they still like to hang out in physical stores. That makes it easier for them to check out the quality and value of goods on offer. And, that’s where traditional grocery outlets score highest! You may not convert your Gen Z consumer in-store, but creating the best in-store experience and providing the fast and efficient digital interface they need will highly likely pay dividends.
Ubimecs Q-Commerce Module specialises in providing grocery outlets with the e-commerce platforms needed to stay ahead within the retail sector. We can provide you with the Ubimecs omni-channel commerce platform to suit Gen Z consumers and any other target markets. Take time to read all our news posts to discover more or get in touch to speak with our experts today.