Seven things supermarkets need to do in 2012
Steve Smith, head of thought leadership at SMV Group, says moving into 2012 supermarkets are under pressure to acclimatise to new economic conditions, consumer demands and consumer technologies, but also take advantage of the year’s sports and royal events…
Supermarkets are under pressure – the focus of blame for the decline of the high street and local communities, criticisms about misleading offers and pricing, and stagnant consumer spending.
Moving into 2012, supermarkets need to acclimatise to changing financial conditions, new consumer demands and emerging behaviour around technologies, but also maximise opportunities around the year’s highlights, such as the Olympics, Diamond Jubilee and Euro 2012. Below is my overview of seven things supermarkets need to do this year.
Greater focus on social media, and make sure you have the right strategy
Going into 2012, it isn’t enough for supermarkets to merely ‘do’ Facebook, and it isn’t enough simply to use it to promote low prices. Our recent social media research shows that supermarkets have to make sure they meet three core needs of people through social networking: to meet challenges in their everyday lives, to enhance their communities, and to be entertained.
Waitrose performed extremely well over Christmas in our social media behaviour research because it met these very needs, by providing entertaining videos and other engaging content they could also share, by inviting questions from people and so entering into a conversation with them, and by providing helpful tools and advice.
Embrace people’s needs for community and pleasure
Research we undertook in November 2011 using our proprietary research tool spaceID shows that although low prices are important to shoppers, supermarkets need to meet values people have around pleasure and community. This is particularly relevant to Tesco. Although low prices will help retain shoppers who would otherwise be attracted to the likes of Asda, Aldi and Lidl, Tesco is at risk of losing some of its more mid-market and upmarket shoppers to Sainsbury’s and Waitrose, both of whom perform better at delivering on importance of pleasure and community in the eyes of its customers.
More widely, supermarkets are the focus of criticisms around the decline of independent shops and local communities – criticisms given widespread coverage in The Portas Review. Supermarkets need to make a concerted effort to counter these claims through action: by working more closely with and supporting local communities, and in the medium term by shoring up local retailers and services by building in town centres rather than out of town. Some are already doing these. When they do, they need to shout loudly about it.
Take advantage of the high points of the year
Consumer spending is predicted to rise by only 1.2% this year, the third lowest in 40 years (Verdict Research). Although food sales may rise as more people cut back on going out, people will be even more savvy about what they buy, and supermarkets with a significant exposure to non-food items will especially feel the pain (as Tesco experienced last year).
This will be particularly evident in the first three months of 2012 as people cut back after their Christmas expenditure. It is therefore imperative that supermarkets make the most of special events this year. The Diamond Jubilee, Olympics, Paralympics and European Football Championships are obvious examples. But they also need to maximise opportunities around annual occasions such as Valentines’ Day, Mothers and Fathers Day, Easter, and the August Bank Holiday.
These and other events give supermarkets the opportunity to distinguish themselves from each other, prove themselves on providing value for money, engage with local communities, and facilitate people wanting to get together to enjoy them.
Give people information and ideas
People want more information about food and what they eat. And especially in an economic downturn, they want ideas about how to get the most out of food. (One reason Waitrose did so well in our social media research over Christmas was that it gave people ideas about what to cook and how to cook it). Supermarkets can help achieve this through the development of applications and social media content that can be delivered to smartphones, tablets and other devices.
Supermarkets also need to provide greater transparency by developing ways to make clear to people how the food they buy is produced, its origins and its quality. Ways of doing this in-store are providing trained staff who can provide such information, showcasing food preparation, and creating open bakery and other suchlike areas (see ‘Innovate the in-store shopping experience’, below).
Innovate the in-store shopping experience
People don’t like food shopping, or at least, most don’t. Time poor, stressed out mums need help (69% believe they don’t have enough time in the day to do the things they need to do). So do people who want convenience. Supermarkets need to find creative solutions to help people save time and energy. For example, in a twist to online shopping, supermarkets could enable customers to scan items as they go round the supermarket, and instead of lugging all or some of them around in trolleys and then home, organise for them to be picked up by staff and delivered. M&S already offers something similar.
Another proposition is for supermarkets to provide mobile apps that enable shoppers to scan items with their phones, bill their bank directly, then leave. No queuing. Related to ‘Give people information’, apps could provide people with information about product origins.
Many shoppers also look for a more unique, personalised experienced in-store. Supermarkets would do to well to learn from Morrisons’ Market Street scheme, which marks a shift from the uniform layouts characteristic of most supermarkets. This scheme focuses attention upon a range of individual food stalls, from butchers and fishmongers to delicatessens and bakers, which the grocer says is oriented toward characteristics and needs of the local community. Stress is upon staffing these stalls with knowledgeable teams who are able to provide advice and answer questions such as around sourcing, recipes and quality.
Earn shoppers’ trust
Trust is a theme running through these recommendations. Two vital areas on which supermarkets need to garner trust are price and deals, especially in the wake of Panorama’s accusation that the UK’s big four supermarkets are confusing customers with misleading pricing and less than transparent special offers.
With ASDA, Tesco and Sainsbury focusing on low prices, supermarkets need to simplify their deals and provide reasons for people to believe they are getting a good price. Sainsbury’s Brand Match works by shoppers being given a voucher at the till to spend on their next shop, if any of the branded goods they have purchased can be found cheaper on that day at their two biggest rivals. But why not just knock this off the price people pay at the till? Alternatively, why not offer the opportunity to get cash back on a spend – spend £x and you get £y in return.
Supermarkets should also look to create promotions that are more directly relevant to each shopper, for example by using loyalty cards to create more targeted promotions that have greater importance to shoppers in an economic downturn.
Another way supermarkets can build trust is by providing in-store Wi-Fi, which would enable people to compare prices themselves (which Tesco is already doing). Or they could even design price comparison apps for people to use in-store.
Online, supermarkets need to innovate more on Facebook in order to build transparency and trust. For example, offer customers the opportunity to buy online and get something in return, whether that be cash or something of relevance to that person. A social element to this would be to opt in to an automated ‘share’ of the experience e.g. ‘I just received a free …’
Develop internet shopping and m-commerce propositions
This might seem odd given that all the major supermarkets except Morrisons provide online shopping. However, this is one area where supermarkets with significant non-food exposure could do well. With people’s default online store tending to be Amazon, even supermarkets like Tesco, with its extensive online service, should do more to develop and promote their online and mobile non-food and food propositions.
Importantly, this means all sites should be optimised for mobile. Amazon’s iPhone app sets a compelling standard in simplicity and convenience from which the supermarkets could learn.