Retail Forward Adds Voice to Chorus Calling on Grocers to Change

COLUMBUS, Ohio -- Supermarkets are going to be forced by alternative format competition to redefine their concepts and the shopping experience to capture their fair share of consumer spending, global management consultancy Retail Forward here said yesterday, as it released a new industry report.

While consumer spending on food-at-home is projected to grow at a 4.6 percent average annual pace during the next five years, supermarket sales are expected to perform less favorably, at an average annual rate of only 2.0 percent through 2009, Retail Forward said. Alternative food formats, on the other hand, will grab almost two-thirds of growth in food-at-home spending during the next five years, according to the report, "Food Channel Industry Outlook."

"In the coming years, expect the supermarket industry to look different than it does today, as new formats targeting specific shopper segments take shape," said Nick McCoy, author of the Food Channel Industry Outlook.

"The middle-of-the-road approach historically taken by many conventional supermarkets no longer offers many compelling reasons to shop there," McCoy added. "There will be less emphasis on price and more emphasis on creating value and an improved shopping experience via a focused assortment, better service, and unique technology."

Retail Forward suggested the following strategic changes for grocers:

-- Know what shoppers want: In recent years increasing numbers of shoppers have abandoned supermarkets for more compelling options. To regain shopper attention, supermarket companies must understand who is shopping their stores and what they want.

-- Invest in new formats: Progressive supermarket companies increasingly will test new concepts, including ones that offer more one-stop shopping, extreme value, upscale/gourmet, and convenience.

-- Seek greater efficiency: Grocers will need to continually examine their business processes to reduce costs and eke out efficiency gains.

Retail Forward also contended that suppliers must reexamine their operations to maximize efficiencies while they, too, look for growth. They increasingly will need to take a customer-by-customer approach, rather than a channel focus; and provide flexible programs that meet various needs and markets.

"Food Channel Industry Outlook" is published within the Food, Drug & Mass Program of the Retail Forward Intelligence System. The report includes consumer data collected in Retail Forward's monthly ShopperScape survey of 4,000 primary household shoppers.