Perhaps the most lasting effect of the economic downturn has been the creation of a class of food shoppers whose definition of value extends well beyond price — and who are challenging retailers to adjust to their demands on the fly.
For these shoppers, price is still paramount — but nearly irrelevant if not woven into an experience also providing sufficient levels of service, selection and convenience.
“It seems like the notion of value over the last couple of years has taken on more texture than just being purely about monetary value,” Mike Paglia, senior analyst at Kantar Retail, told SN in an interview last week. “Despite the fact that shoppers want to save money, they also want an attractive store. They also want a store that's easy to navigate, and where they can get the help that they need. A store with the items they want. You're seeing the definition of value take on added dimensions in the mind of the shopper.”
Retailers including Delhaize and Supervalu this month detailed initiatives to better reach this demanding shopper. While Supervalu acknowledged its conventional banners are still struggling with a price image, Delhaize's Food Lion debuted new service offerings in addition to widening an existing pricing program in two pilot markets. Supervalu in the meantime said its stores are moving to emphasize local products and local expertise, as well as new technologies, to “reduce the hassle” of the shopping experience.
While the conditions facing Delhaize and Supervalu are quite different, both programs speak to a need for retailers to adjust strategies to suit a more demanding shopper. And that, observers said, is the price of doing business with post-recession consumers.
“If I'm a retailer that's going to explore new initiatives, I have to make sure that they align with shopper expectations; that they're relevant,” Paglia said.
Indeed, Food Lion introduced the changes to its brand earlier this month at its stores in Raleigh, N.C., and Chattanooga, Tenn., as a response to marketwide consumer surveys. They include programs that address non-price aspects such as checkout speed, cleanliness and brightness in stores, and fresh presentations in addition to expanding a pricing program it launched a year ago.
Speaking in a conference call with analysts earlier this month, Cathy Green Burns, president of Food Lion, said changing the shopping experience would help the pricing effort be better recognized by shoppers.
“We've reduced prices in the past and I don't think we got the credit for it that we should have because customers were not happy with other parts of the experience,” she explained. “To put a finer point on it, customers are saying we need to get in and out of your stores quicker. We want your parking lots to be brighter. We really want you to showcase produce, and want you to improve the experience we have in produce.”
In the meantime, stores in Food Lion's test markets of the new concept are featuring lower prices on additional items than those already addressed in a chainwide low-price program launched last January. That program reduced prices on the most frequently purchased items so as to achieve greater price parity with Wal-Mart and an edge on conventional banners; the new agenda broadens those reductions so as to be more competitive on a basket basis.
“This is what [consumers] expect from the Food Lion brand and what you're not delivering today,” Green Burns said.
At Supervalu, where sales have struggled badly in recent years in part because of a poor reputation for price, a comprehensive turnaround program is nonetheless heavy with non-price initiatives.
“We know we need to bring better everyday value to customers, and we will,” Herkert said. “However, we know that value is more than just dollars. It's about providing solutions for our customers.”
