LAS VEGAS — The 2022 NGA Show, the trade show for the independent supermarket industry hosted by the Independent Grocers Alliance on Feb. 27-March 1, focused on preparing for the future consumer. The show’s theme—Where Retailers Look to the Future—included programming focused on technology, analytics, shopper retention and product mix.
“Retailers are operating in a marketplace where the shopping experience is evolving rapidly based on the impact of society, technology, economics, environment and policy,” said Greg Ferrara, president and chief executive officer, National Grocers Association (NGA), Arlington, Va . “This new content challenged retailers to look at how innovation can help them continually improve for today and build new capabilities they will need tomorrow.”
The NGA defines an independent retailer as a privately owned or controlled food retail company operating a variety of formats. The independent grocery sector is accountable for about 1.2% of the nation’s overall economy and is responsible for generating more than $250 billion in sales, 1.1 million jobs, $39 billion in wages and $36 billion in taxes.
In 2019, 27% of shoppers were loyal to independent grocers, said Thom Blischok, chairman and CEO, Dialogic Group, Phoenix. In 2021, that number jumped to 33%. Mr. Blischok attributed this relationship to the trust formed during the pandemic when grocers ensured customers they could feed their families.
“Independents have the most loyal consumers in the market but also the greatest challenge of losing those customers if they don’t do things right,” Mr. Blischok said. “Rising prices will cause channel shifting.”
I have identified 10 food categories that independents should keep priced low in order to differentiate and stay relevant to shoppers. They are cereal, cheese, chicken, coffee/tea, eggs, fresh fruit, fresh vegetables, frozen foods, ground beef and milk.
“These are the 10 categories where pricing actions drive decision making,” Mr. Blischok said. “These categories make a difference between staying with a store or not.”
Another area of action for consumer retention that independents are best to leverage is selling and promoting local brands. To get more local brands in the store, he suggests de-investing in national brands and reinvesting in local brands, as well as private label.
Numerous speakers addressed the importance of investing in e-commerce capabilities, which is also a way to better involve local brands.
Neil Stern, CEO, Good Food Holdings, Culver City, Calif., the holding company of Bristol Farms, Lazy Acres Natural Market, Metropolitan Market, New Seasons Market and New Leaf Community Markets, said that the company’s South Korean investors are committed to growing e-commerce sales. South Koreans buy about 30% of food online; the United States is around 10%.
“We have the mentality that we are an online retailer with physical stores,” Mr. Stern said.
Lauren Redman, president and CEO, Rudy’s Markets Inc., Bend, Ore., discussed the critical role that food must play as independent retailers carve out a path toward “retail tomorrow.” This includes investing in new ways to source local, to source produce and to identify unique food items that will drive culinary aspirations in their customers and sales for their stores. It’s all about taste, Ms Redman said.
“Take your employees to trade shows and invest in them,” she said. “You have to taste food or you cannot be a specialty grocer.”
She encourages her employees to engage with customers on the floor. If they show interest in a new product, open up the package and let them try it. Do a taste test together. Others will be curious and join you. That’s how you stay relevant to consumers and sell product.
“We are in the food biz,” Ms. Redman said. “You need to eat. You need to try.”
Dawn Valandingham, senior vice president of retail, Spins LLC, Chicago, said that a growing amount of that trial is taking place in the wellness space, the primary source of innovation and market growth. She offered the valuation of $596 billion for conventional products with a growth rate of 0.6% for the 52 weeks ended Jan. 23, 2022. Natural products are valued at $80 billion (+4.0%), and specialty/wellness products are valued at $117 billion (+3.6%).
“Conventional products, while very large, is not where growth is,” Ms. Valandingham said. “Wellness products have about 25% share of dollar volume but 68% of share of dollar growth.”