Modest Industry-Wide Revenues Increase Progressive Grocer’s 85th Annual Report of the Grocery Industry states 2017 sales for stores with $2 million or more in annual revenues increased 2.1% to $682.72 billion, compared to a 3.0% increase for 2016. Grocery chains (11 or more stores) accounted for 94.7% of the total 2017 revenues, or $646.63 billion, with the largest percentage, or 22%, among chains with $20–$30 million in annual sales. Independent grocers (10 or fewer stores) generated just 5.3% of the total 2017 revenues, or $36.09 billion, with those in the range of $4–$8 million in annual sales with 3.1% of the total, or $20.93 billion

Fighting for Every Consumer Dollar Most of the supermarket chains that were customers’ favorites during 2016 maintained their dominance during 2017. In the American Customer Satisfaction Index rankings, Publix moved to first from the #2 spot, replacing Trader Joe’s which became #2.  In the Temkin Group’s 2018 Experience Ratings, Wegmans was #1 with a score of 86, while H-E-B and Publix tied for #2 with scores of 83. Other companies at #2 were Citizens Bank, any credit union and Subway. In a 2017 online survey of 11,000 US households from Dunnhumby, a global customer data science company, Trader Joe’s ranked first, followed by Costco, Amazon, H-E-B and Walmart.

Industry Executives’ Cautious Optimism Progressive Grocer reports 26.0% of the supermarket executives it surveyed for its 85th Annual Report of the Grocery Industry ranked their 2017 performance as a 7, with 10 being sensational and 1 awful, followed by 20.6% assigning a ranking of 6. For 2018, a ranking of 7 had the largest percentage, or 22.3%, but the second largest ranking, or 21.5%, was an 8, followed by a 9 and 6 ranking, each at 17.7%. A larger percentage of the surveyed executives were optimistic about the 2018 retail climate for supermarkets than 2017, or 51.2% and 45.5%, respectively, despite Southeastern Grocers’ 2018 bankruptcy filing and the closure of 63 Sam’s Club stores.

Still Behind the Tech Curve Compared to Other Retail Sectors As indicated in the table at the top of page 2 in the Profiler, “being current with technology” is the #3 concern among grocery retailers, having increased 6 positions from #9 in the 2017 survey. This concern is also reflected in grocery retailers stating digital marketing/technologies are the top 3 in their list of marketing and merchandising priorities for 2018: store signage/digital media, 71.1%; digital marketing, 67.5%; and mobile marketing, 57.9%. The survey found, however, grocer retailers still have much to do, as only 28.0% said they had a fully integrated strategy to connect with consumers at multiple touchpoints, including in-store, online and digital channels.

Focused on Best Departments and In-Store Attractions According to 2018 research from Progressive Grocer, produce (65.7%) surpassed meat (59.8%) as the most successful department generating sales and the most successful department at driving traffic, at 57.8% and 51.0%, respectively. Private label captured the #2 spot in the category of the most successful departments generating sales, at 63.7%, and deli/prepared foods tied with meat in the most-successful-department-at-driving-traffic category, at 51%. Grocer retailers surveyed for the research said community involvement, at 73.2%, was their most important customer interaction strategy; followed by seasonal special events, 59.8%; sampling/demos, 55.4%; and wellness events/counseling, 31.3%.

An Industry That Must Evolve Progressive Grocer interviewed 4 grocery retail executives, and they said they will not only have to compete with the online grocery shopping phenomenon during the future, but also with non-grocery retailers increasing their food offerings. Another issue apt to shape the future of the industry will be the need to address excessive retail space, much the same as department stores, shopping malls and big-box stores have had to do during the past 12 to 18 months. Infarm, a company headquartered in Berlin, Germany, has developed an “indoor vertical farming” system that grows herbs, lettuce, vegetables and fruit. The company’s long-term goal is to install the system in grocery stores.

Advertising Strategies Although TV is the last of the advertising tactics grocers say they will use during 2018, you and your station is in an advantageous position to offer them the combination of TV and digital marketing in the form of the traffic to your station’s Website’s news content. According to the Progressive Grocer research, grocers perceive community involvement as the most important customer interaction strategy and your station’s robust promotion of community events provides grocers with excellent sponsorship opportunities. With more consumers focused on eating healthy, independent grocers can distinguish themselves from the big chains by adding more produce choices and other food products to attract more health-conscious customers.

New Media Strategies Small, local grocers and independents can highlight the healthy food products they add to their stores by sharing recipes and food-preparation tips that make it easier for busy parents and individuals to prepare meals quickly. As many major grocery chains are concerned they are not using current technologies, independents have an opportunity to make strategic investments in a mobile app, home delivery, curb collection and other services to give them an edge. Seasonal special events and sampling may be some of grocers’ most important customer interaction strategy, but they will garner more value from these strategies by recording and posting videos of the interaction with customers on their Websites and social media.