Global grocery retailing is undergoing a period of momentous change, according to Joanne Denney-Finch, chief executive of international grocery researcher IGD, giving the industry an unprecedented opportunity to deliver an inspirational, exciting future for shoppers.
Speaking to delegates at APRCE in Kuala Lumpur, two years after last addressing the global retail summit in Manila, Denney-Finch said: “I’m often asked where can I find the world’s best food and drink retailers. My answer to that is – everywhere! Each country has a unique story, and yet wherever we look, we see something consistent – there’s a revolution underway in food retail.
“It’s a revolution in what products are sold, how they are sold and how they are made. It’s driven by technology, social and culture change and the economy, all marching together. The action centres on three big battles: food to go versus cook at home; online versus physical shopping; and big versus small stores.
“There’s been enormous change in our sector in just the two years since I spoke at this event in Manila, and yet the most dramatic change is yet to come. Everywhere we look, the market is reshaping, with the three ‘As’ – Aldi, Amazon and Alibaba – particularly powerful forces of change.”
According to Denney-Finch, big stores will still be important in the future, but they’ll look very different. “They’ll be more inspirational, featuring more fresh food and new products and more ways to taste, learn and discover,” she said. “Retailers will be working extra hard to differentiate. They’ll make a big thing of their values and personality and they’ll have stronger links with their local communities, giving space for local initiatives and small companies. Tomorrow’s retailers will also compete fiercely over health, with strict nutritional standards for every product they sell. And they’ll be super-strict over provenance and ethics.”
Denney-Finch outlined several examples of highly innovative retailing from around the world during her presentation, including many from Asia-Pacific, gathered through IGD’s extensive analysis of global retail trends:
AEON in Japan is planning to set up more than 100 stores tailored to the needs of elderly shoppers. These will emphasise health, for example by giving reward points for customers if they complete a target number of steps in store.
Robinsons in the Philippines displays many of its products in health-related groups, such as weight control or a healthy heart. It uses green tags to showcase products approved by the government Nutrition Unit and gives discounts for these, plus advice on nutrition through its help desks.
A retailer called Ben’s Independent Grocers in Kuala Lumpur has an Oyster Bar offering a choice of oysters from several countries including England, Ireland, France and Australia.
In Hong Kong, the department store Yata hosted a Hello Kitty pop-up supermarket for a limited period, with 250 Hello Kitty-themed products including sushi, soy sauce, pasta and apples.
To win through this revolution, companies must learn to deal with lots of short-term pressures while building for a different future, explained Denney-Finch. She outlined five principles to help companies through the changes ahead:
“First, stay completely focused on your customers and keep adapting to their changing needs. There are always lots of local variations in customer needs and many smaller retailers have been able to outmanoeuvre their bigger rivals by better understanding those local needs and adapting very quickly. But there are also some global trends, including more people living alone. Single people tend to shop little and often, in smaller stores – and they want smaller pack sizes too. Another trend is shopper patriotism. Everyone wants access to the best international brands, but people are also passionate about their local culture. This is good for companies with strong local credentials – which doesn’t always have to mean a locally owned company.
“My second principle is to pay more attention than ever to technology. There’s huge excitement about artificial intelligence and a new wave of automation is surely on the way. Technology and social media companies have become the new gateway to consumers. Technology will also increasingly guide people in store. Is your team thinking about those opportunities in your market? And don’t forget about food technology, because the products you sell are going to change too. Many food companies are working to reduce their sugar content, without sacrificing taste, to help with preventing obesity. New technologies like nano-encapsulation offer great potential here.”
She continued: “Principle number three is to get help from your suppliers. They are deeply affected by the retail revolution too and they also need to change to stay relevant to consumers. New, flexible factory technologies are making smaller scale production runs viable, and shoppers prefer things tailored to their needs. Retailers in many countries are putting private label at the heart of their planning, because they have full control over the standards and they offer a point of difference. So if branded suppliers want to keep justifying a premium, they will have to innovate faster and help their retail customers to differentiate.
“My next principle is do the ordinary, extra-ordinarily well and consistently. The first job in any period of change is to keep your basic standards consistently high. It’s about excellent everyday management, handling products safely, ensuring consistent quality, operating efficiently, minimising waste and providing excellent customer service. It’s very easy for these areas to slip if the managers are concentrating on big change projects. But without the basic disciplines in place, none of your more ambitious plans will succeed.
“And finally, success will hinge on one thing – the quality of your people. Everything else flows from having the right people with the right attitudes and the right skills. It’s always tempting to wait until next year to invest in training, because there’s always something urgent that has to be fixed right now, but this can be a trap. If you don’t invest in skills this year, then next year’s issues will be even bigger and more urgent.”
Denney-Finch added: “We really are partway through a revolution in retail. We all need to keep getting bolder and bolder, taking bigger but well calculated risks and learning how to move even faster. But there’s good news too – we now have more ways than ever to win – and win big!
“If you’re like me, you’ll think that managing through a period of calm is okay, but what’s really exciting is delivering results through times of momentous change. There’s never been a greater time of opportunity in retail. Seize the moment, be a trailblazer, and redefine the term ‘world-class’ for the next generation!”
IGD is an education and training charity that undertakes grocery retail research. Its reach is global, with experts based in the UK, Singapore and North America.