Thoughts on Food Retail Reinvention

Here in Chicago it’s that time of year again when Farmers’ Markets start popping up all over the city. When growing season kicks in, people gravitate to locally-grown and made foods in search of what they believe is better quality, freshness, flavor and a chance at chatting with the producer.

According to the “Firmly Rooted” local food movement study by A.T. Kearney, local product assortment at food retail is no longer a nice-to-have. It’s now a competitive advantage. Why? Because shoppers increasingly value it, will pay more for it, and it’s a driver not only of purchase but also store visits.

Kearney reports that local was a $12 billion business in 2014, with an annual growth forecast of 9 percent a year through 2018. If anything the local movement is accelerating as fresher becomes a significant factor in consumer preference.

The Kearney study revealed:

96 percent of respondents define local as produced within a 100-mile radius. While various classes of food retail may expand this to anywhere from 400 miles to statewide. Of note, consumers believe the circle is tighter.

93 percent associate local with fresher, a primary purchase driver.

78 percent are willing to pay a price premium for local of anywhere from 10 percent more to upwards of 21 percent (local eggs) in certain categories.

63 percent say they believe retailers are starting to offer wider assortments of locally-produced products, including prepared and packaged foods.

71 percent say by offering local products, retailers are doing more to support small businesses and help the local economy.

Barriers to Business Growth

What’s standing in the way of buying more locally-produced items? Shoppers say they don’t know where those products are in the store due to inconsistent signage and lack of cohesive display. Merchandising and marketing need to catch up.

63 percent say they will visit a retailer if notified about in-season, in-stock products. Doing so will require an investment in social and digital marketing to get the word out.

More importantly, this helps shed light on a cultural shift now influencing retail best practices. In the past, a food store existed primarily to drive transactions. Traditional metric analyses of sales and profit per square foot and average transaction/basket size would certainly attest to that. While these remain important assessments of performance, is it the only measure that should be applied?

As food retail evolves we can expect to see disintermediation of shippable commodities that will increasingly go online, while food and culinary experience becomes a bigger business and priority.

Reimagined food retail must work harder at creating an immersive food experience, bringing the farm and flavor adventure to the store. Yes, even some fresh products may migrate to e-commerce and delivery. However, we believe there is a significant segment of the market that prefers the tactile, visual, emotional and sensory-satisfying familiarity of hands-on food experiences.

Measurement and profit models will evolve with this change as stores further invest in perimeter businesses, commissaries and locally-sourced products.

Food is an emotional category. This sensory appeal can be harnessed to great effect by retailers who understand the era of selling boxes, cans and bags at velocity is narrowing in favor of real, fresh and prepared food options.

Those still trying to compete on price will increasingly face a “race-to-the-bottom” challenge with the arrival of low-price specialist Lidl, and the battle between Amazon and Walmart to leverage scale for difficult-to-match efficiencies.

You have to think differently about the retail business you’re in. If retail experience counts, then rethinking the actual presentation of these products in tactile, informative and experiential ways would follow. Where:

Food retailer = local culinary adventures

Electronics = hands-on demo depot

Fashion = the style guide

Toy = the playroom

Experience is the new battleground, and content is the marketing play to tell the powerful and valued stories of local sources, supply chain transparency, ingredient integrity, culinary inspiration and FRESH.

Go Local!!

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Is this embedded in your marketing plan?

Belief: Something one accepts as true or real; a firmly held opinion (Source: Oxford Dictionary)

Belief is now central to closing the deal with consumers – to earning their allegiance and engagement. Yet, belief and its sibling trust are often not acknowledged directly in marketing strategies, priorities and especially downstream business behaviors.

We already know consumers are fully in control of initiating any conversation (pull) with brands – while traditional business, marketing and media strategies (push) have been upended by cultural shifts and technological disruption. Trust, relevance, and consumer-centricity have become foundational to growth because they mirror consumer expectations, and thus inform brand preferences.

Of all the business priorities clamoring for attention, it now falls on CMOs to become belief managers – working (harder) to build trust between consumers and brands in a business environment where skepticism rules.

Trust is not necessarily enhanced in…

• Paid media channels – the channel and form carries their own liabilities
• Interruption-style tactics, both online and offline
• Brand assertions of quality, superiority and benefit

Areas where trust is cultivated…

• Earned media – a third party provides independent perspective
• Social media – the consumer’s personal opinion is aired, unedited
• Retail and digital experience – consumers witness it first hand
• Verified quality and transparency – credible experts supply the proof

Today, the marketer’s goal is to transform customers into advocates and ambassadors. But to do so first requires belief. Trust is difficult to secure and challenging to preserve. It springs from a point of view that brand relationships are really like friendships, and so trust must be earned and nurtured through actions not just words.

The bargain for Belief Management is consumers determine you are operating in their best interests, that you are devoted to quality and craftsmanship; that your business operates with real values, a tangible soul and is making an effort to improve the world around us.

There was an era when marketers felt they could control and transact belief by ordering up paid influence through advertising imagery, music, message done in an effort to persuade. Now the artifice of concocted, self-promoting story is running headlong into a reality test. The consumer isn’t listening. They are, however, listening to each other – thus ‘social proof’ is a major part of the belief acid test.

Mining moments of truth

Belief Management might be best expressed as a planned effort to identify and activate opportunities to be completely relevant and believable. How? By curating all consumer touch points, from in-store experience to operations decisions to communications:

• Be candid and honest.
• Be transparent.
• Be open.
• Be helpful.
• Be useful.
• Be generous.
• Be an enabler and supporter.

As you read those statements, they sound oddly familiar – as in the type of human behavior that leads to trust and friendship. The more brand relationships mirror characteristics of human friendships the better this gets.

In the marketing plan, belief must manifest in every step the organization takes to put the consumer at the center of strategy. That said, with consumers increasingly skeptical of corporate motivation, the pressure is even greater for brands and retailers to not only represent themselves as authentic, transparent and trustworthy – but TO BE authentic, transparent and trustworthy.

This is why Higher Purpose is such a vital component of installing belief. To the extent the business is shaped and guided by a legitimate belief system that steps beyond the transaction and profit motive, the deeper meaning and values help facilitate company behaviors that ‘prove’ a customer-first commitment.

It should be noted, there’s also a stark reality. In today’s connected world where ‘anything that can be known will be known,’ brands now live in glass houses. Honesty as an imperative is fueled by the reality of hyper-connectivity and the ability of consumers to rapidly obtain information in real time, confirming or denying, what your company does and does not do.

The Importance of Validation Marketing

At Emergent, we started work awhile back on a new planning model. We call it Validation Marketing. We created this series of steps with one fundamental concept that sits underneath: it is a trust creation engine.

If you accept the idea that belief and trust are vital to getting “permission” for any kind of relationship with those that buy from you, then this recipe for belief creation is for you. It is a virtuous circle. As belief managers we establish the foundation for engagement, working hard to build relevance and deeper meaning with consumers. Why? Because we’ve, in effect, humanized the entire operation and, in doing so, created the basis for trust.

For food retailers, if you follow this thinking all the way to the ground of shopping experience, there’s an opportunity to elevate and differentiate the banner brand. Legacy policies suggest some lack this insight or are unable to translate customer-centricity all the way through to offering food adventures in an environment that is traditionally focused solely on pushing transactions.

The irony: transactions will be better served by working harder on belief management.

Digging Deeper

Interested in learning more about harnessing the power of brand purpose, developing belief strategies and becoming the beneficiary of consumer trust?

Watch the webinar we hosted with Fresh Squeezed Ideas on the “Power of Purpose.” Moderated by the Food Marketing Institute’s (FMI) Mark Baum, the webinar features Emergent’s Bob Wheatley and Fresh Squeezed Ideas’ John McGarr, a premier consumer insights provider.

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Become a resource about food, or be relegated to a source of product supply.

Many years ago when I lived in Seattle, I had a near-religious experience at a restaurant on Capitol Hill where I had just wrapped up a client lunch meeting. I ordered coffee at the close of the meal and when I tasted it, my jaw nearly dropped to the floor over the rich, deep flavor.

Hints of dark chocolate, beef roast, spice and earthiness filled my mouth. I had never encountered anything like it before – coffee being a bit of a meal-end ritual and nothing to write home about taste wise, I wasn’t expecting anything special.

I discovered the restaurant had switched suppliers and was now ordering from a coffee bean purveyor in the Pike Place Market – yes, it was Starbucks (before it became ubiquitous). I heard word about this place, but had never investigated. That weekend, I made a beeline for the store on Saturday morning – my intent to purchase the same coffee beans I had at the restaurant.

What I encountered there was truly remarkable and remains indelibly imprinted in my brain. This may be partially why I remain a devoted Starbucks bean buyer to this day. I told the counterman (baristas came later) my story and he gave me this knowing smile and launched into a detailed and fascinating tutorial: the beans, their origin, the tasting notes, the growing region characteristics, how they are roasted. Then, he went on to the steps of making a perfect cup of coffee. We tasted, we talked – he made an effort to teach me a bit of what he knew. I walked out of there with beans, grinder and a wealth of new knowledge and appreciation that coffee might be more like wine than, well, coffee. He probably did not know he helped create a lifelong customer but that’s what was going on.

Today, we see a resurgence of food and beverage specialists from fishmongers to butchers to farmers’ markets, where backstories and details behind the products are shared, along with tips related to preparation and serving.

The economics of food retail may have favored stores as product supply aggregators for decades. But the food world is changing in response to cultural shifts among consumers, whose tastes and interest in all things culinary continue to become more sophisticated.

The butcher at your local supermarket can be an order taker who wraps or a storyteller who raps.

There’s a small butcher shop near our weekend home in a rural area of southwest Michigan. The place is small but the quality is over the top. The owners, a father and son team, always begin with conversations about what they’ve tried lately just to whet your appetite, and once you get into selecting a cut of meat, the stories behind the sources, animal care and feeding begin in earnest.

Along with your selection you’ll also get preparation ideas, cooking hints and seasoning tips, maybe even a wine recommendation. Every visit is special because you learn something and the experience matches the quality of the protein. Prices by the way are in line with other grocery stores in the area.

Kevin Coupe of Morning News Beat had a similar experience in his neighborhood and made a video to share what happened:

Retail brand strategy guidance:

Gone are the days when competition is based solely on location, price and assortment. Retailers have an extraordinary opportunity to approach the customer relationship in a new way as educator, guide and coach.

Here’s what we know:

1. While time remains a challenge, people are headed back into the kitchen where they can control and customize food preparation. They’re looking for ideas and timesaving advice.

2. Food retail can be a temple to food experience or four-walled pantry. Experience now matters as much as the products themselves.

3. Unique taste experiences and curated menu guidance are sought after and stores can step in to help make it happen.

Customer contact areas of food retail are an opportunity waiting to happen. Butcher shop, cheese shop, wine department, produce area, bakery, Deli – all are places where experience can match or even exceed the product quality.

Is it possible for supermarket staff to be trained beyond stocking and cashiering? Can there be a true love of food, so much so the shopper encounters a food-passionate employee in the aisles?

What is food about anyway? It’s a culinary adventure. Retailers who see themselves as facilitators and enablers of this journey have an opportunity to jump the perceptual barriers and engender a new kind of customer loyalty. A loyalty based on a personal retail experience enhanced by culinary guidance and customer service – going way beyond the product assortment.

With high staff turnover rates in most retail channels, how can you make the investment in training? It starts with a strategic mission and understanding about what kind of retail experience you’re trying to create.

So what’s the incentive to up your game? Commoditization is an insidious threat to every retail business, pushing in unrelenting fashion towards some combination of real estate gaming and price war as all things become more or less equal. The milquetoast middle is no place to be anymore.

We believe there is an enormous opportunity for food retail to insert moments of engagement into the store and in doing so, create a form of surprise and delight that transforms the emotional connection between the banner and customer.

Yes, training is required but the outcome and strengthening of the retail brand value proposition are well worth the investment. Not only in changing the paradigm of the shopping experience, but to begin creating the kind of work atmosphere that makes it more than a pay check for the employees.

What happened at Starbucks was an outcome of training and mission, which showed up in the passion, enthusiasm and knowledge of the counter associate and what he brought to an otherwise commodity type product.

The choice is here: become a coach, guide and resource, or remain a source of supply.

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