Traditional supermarkets face threats from all sides - discounters have wooed budget-conscious consumers, digital disruptors such as Ocado have found a profitable niche, and ‘recipe box to the door’ providers such as HelloFresh are growing rapidly.
So how do supermarkets achieve profitable growth? My colleague Mark Essex, from KPMG’s Strategy Group, has an interesting take on this: “If food retailers asked themselves whether their priority was selling groceries or feeding families, the answer could lead to a fundamental change to the traditional grocer model.”
Consider the effort shoppers put in to feed the family: assessing needs based on social diaries, specific requirements such as dinner parties and packed lunches, consulting on meal ideas, checking inventory of fresh and dry items, and then preparing a list.
And that’s before they’ve even begun purchasing. By the time the customer has evaluated offers, and decided what to order from whom, this could add up to two hours a week, or 100 hours per year, on a spend of perhaps £6,000. Looked at this way, the process sounds complex and labour-intensive, especially when most shoppers buy many of the same goods every week.
But what if supermarkets were paid a set amount per month to feed the family? Much of the supply could be planned in advance, with weekly tweaks to suit particular needs. The supermarkets could then provide tailored food, or meal kits according to nutritional, ethical, seasonal or environmental priorities. Reusable packaging becomes practical. Less inventory, less mark-downs, less waste.
Some of the top online players have already started down this road, making it easier for shoppers to buy their regular purchases, but clearly there is more that can be done.
To make this work, retailers would need to invest in knowing the customer in granular detail. But once signed up, as long as the food supplier performs, the customer is far less likely to switch providers.
We only change our banks every 17 years, so imagine if customers behaved the same way when it came to their grocer.
Liz Claydon is KPMG’s head of consumer markets
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