Supermarkets forced to reinvent traditional model

Fragmentation. It's a word we're getting used to. As we've become more connected, everything around us seems to be fragmenting. Yet with smartphones taking connectivity to a new level, 2015 will demonstrate that we've not seen anything yet. And supermarkets will need to redefine themselves for the future.

Take media. In many ways this has been the poster child for fragmentation. Different media types and channels have proliferated, accompanied by an explosion in the amount of content generated. Live TV viewing had remained remarkably resilient, but now the erosion in live TV viewing is accelerating, thanks to time-shifting and Internet streaming. Consumers are ever more difficult to reach, and better informed.

Markets are fragmenting. After decades of consolidating market share, major packaged grocery brands are losing share in market after market. And not to the next big brand, but rather to a plethora of small, niche brands and store brands, which better-fit consumer needs and desires. And it's not just a grocery phenomenon: the major brands in the teenage fashion market have been particularly hard-hit.

And rather than just supermarkets, grocery is increasingly available everywhere, and at anytime: from farmers markets to supercenters, and from your finger to your door. The Food Marketing Institute’s "U.S. Grocery Shopper Trends 2014" reported that nearly one in ten people don't even consider themselves having a primary grocery store, a threefold increase from a year earlier.

Underpinning all this is a key change in behavior. Enabled by today's connected world, consumers can now pick and choose what's right for them, rather than accept a mass-market solution.

This is not good news for the traditional supermarket model, which tries to cater for all needs through a single format, driven by a weekly mass circular. There are many potential opportunities going forward: the supermarket as community center, as a trusted advisor on food and wellness, as an omni-channel retailer, to name but three. But clinging to the traditional model is not one of them.

And so, with fragmentation accelerating, why not make 2015 the year for reimagining the supermarket?

Simon Uwins is a former CMO of fresh&easy and Tesco UK, and author of Creating Loyal Brands (2014). Find him online at www.simonuwins.com.