There is no doubt the UK Grocery retail environment has seen great change in 2011, and shoppers are at the heart of this. With the continuing economic downturn shoppers are sticking to the behaviours they adopted during the credit crunch. Their shopper mindset has well and truly shifted from ‘I want it all’ to ‘do I really need it?’ As a result they are much smarter shoppers than just 2 or 3 years ago. They are more aware of competitive pricing, and are prepared to change retailer, brand, channel or store format to get the value they are after.
This doesn’t, however, mean they are all chasing lowest price – as is clear when you look at the growth at Waitrose this year. Each shopper has their own definition of value, and they are making prudent choices on the basis of this. If budget is an issue, and for many UK shoppers it will continue to be in 2012, it can be dealt with in all manner of ways: trading down from brands to own label; switching from mainstream retailers to discounters or online; or even choosing to shop in smaller stores to avoid being tempted by huge ranges. And to add to the complexity, a single shopper may do all of these things across different categories as they tailor their prudence to suit their own interpretation of quality of life. So the challenge for the retailers has never been greater – and in a lot of respects, this year has been about playing catch-up to the shoppers needs.
Change from the retailers this year was not about introducing whole new product sectors like white goods, or new services like banking. 2011 was the year when change was about how grocery retailers sold, rather than what they sold. So stores have been packed with promotions, and pricing initiatives have changed rapidly across the calendar as retailers try to find the most appealing way to present value to shoppers.
Promotional proliferation and the rate of change in price initiatives are perhaps indicative of what we said earlier about shoppers not just looking for lowest price. If the shopper interpretation of value is so varied, how do you find the right strategy as a retailer? We suspect some retailers will continue to battle with this challenge as we move into 2012 and the downturn continues.
Layered on top of changing shopper needs is the impact of the technological evolution. At the beginning of the year mobile commerce was in its infancy, with few shoppers owning smartphones, let alone using them to shop. In a few months much has changed. Early adopter shoppers are familiarising themselves with QR codes, downloading retailer apps, and enjoying the benefits of click and collect schemes. And if they feel strongly enough, they will Facebook or Tweet their experiences to an audience far beyond the reach of traditional word of mouth. As with all new things there is plenty of experimentation, approaches will no doubt evolve, and there are bound to be plenty of new ideas in the pipeline, as we are likely to see in 2012.
What we can state with a strong degree of certainty is that the ferociously competitive UK grocery sector has seen market leading changes in its retail offer. After all, necessity is the mother of invention.