3 Drivers of Grocery Differentiation and a First Step to Change

In today’s rapidly-changing grocery environment, supermarkets––especially those in high-competition areas––are investing in new ways to stand out and provide a unique experience for customers.

Of course, taking any significant step in a new direction can bring just as much anxiety as it does excitement. Company leaders want to make sure they’re investing in more than just hype. They need to make decisions informed by hard data and reliable market intelligence.

Just as importantly (but often less apparently), leaders also need to make sure any changes signed off on in the boardroom can actually be implemented and supported on the floor. This often means stepping back to consider some less exciting, but incredibly important core functions like inventory management and other areas every store needs to be proficient in before taking on new initiatives.

To help you look past the hype and see where changes are really happening in the grocery world we took a close look at the most recent Annual Report survey to reveal where grocers are actually seeing changes within their stores. We’ll also touch on an important, but often overlooked inventory management fundamental to pay close attention to before implementing any new program.

Drivers of grocery differentiation strategies

Progressive Grocer’s 85th Annual Report survey asked respondents to identify the most influential departments driving their stores brand, image, or point of differentiation. Here’s some important takeaways:

1. Meat and produce are top overall areas of differentiation

Both meat and produce tied as the top areas of differentiation (21 percent)––a possible reflection of consumers’ rising interest in adding more fruits and vegetables to their diet while refining their meat choices through ethical, sustainable product sourcing.

This comes in somewhat stark contrast to last year’s survey results which put meat as the clear winner with 37.8 percent. Produce, by comparison, lagged behind at 12.2 percent.

2. The prepared food space is far and away the top area for merchandising and brand enhancement

Deli and prepared foods, an area which garnered quite a bit of publicity recently, came in at 15 percent (down from 17.6 percent from last year) for differentiation, but rose to the top in merchandising and brand enhancement. A whopping 73.2 percent of respondents described this area as extremely or very important.

As we described in our recent quick-guide to ecommerce preparation in the grocery world, meal kit services have emerged as one of the most consumer-friendly new initiatives shaping prepared foods in general.

3. Produce has unseated meat as the top sales generator

One of the most eye-opening findings of this year’s report was produce’s overtaking of meat as the top sales generator. Meat, the former long-time champion fell to third place, also beat out by private label, which jumped from fifth to second place.

Fresh food has become an extremely important area for consumers over the past few years––a point made clear by a 2016 survey which found the high-quality fresh food was equal to price as the most important criteria for choosing a grocery store.

Differentiation in the fresh food space has taken on a number of different forms, from in-store theaters showcasing fresh offerings, exclusively locally-sourced produce sections, and value-added enhancements such as premium pre-made salads.

Expiration date management: an essential first step to change

The common thread behind all of the drivers of differentiation mentioned above is a focus on improving and enhancing products themselves. As consumers continue to gravitate toward fresher items in particular, inventory management will undoubtedly become a greater challenge––even to those who are confident in the current processes.

Within inventory management, greater focus on fresh offerings will underscore the importance of making expiration date management a priority. In addition to protecting your brand from reputation damage resulting from expired products, expiration date management systems play a major role in green initiatives by preventing significant food waste.

These systems also automate tedious spot-checks, enabling your staff to devote more time to supporting new strategies within your stores while effortlessly managing higher product volumes.

Effective expiration date management systems also step in to help support changes financially by cutting down––potentially significantly—on shrink. Some grocers put as much as 50-72 percent of their current losses back on the bottom line simply by putting such a system in place.

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