Target

Time and again, surveys tell us that consumers value the same basic things in a grocer. It’s all about convenience and price. In a recent survey that Market Force Information conducted among more than 6,500 consumers across North America, almost seven in 10 said that their primary reason for choosing a grocer was its convenient location. That was followed by 54 percent who said it was providing low prices. Good sales and promotions followed, along with a wide array of products and merchandise.

Consumers Value Convenience and Low Prices in Their Grocer

Other important factors such as cleanliness, helpful staff, quality meats and produce also score on the consumer’s radar, but clearly don’t drive as much loyalty as the big two: convenience and price.

In an industry where margins are typically razor thin, that big two mantra actually makes it hard to innovate. Real estate is expensive. Prices can go only so low.

So, when we began looking at some of the other findings in our grocery study, we thought it worth sharing, if nothing else, to give heart to grocers everywhere. There are indeed things that grocers can do to win consumer loyalty that aren’t nearly as costly as building new stores or battling it out for the lowest price. 

The Table Stakes: No One Brand is Winning

If convenience and price are all that matters, you’d think that consumers would be delighted with the brands that offered the best of those big two. That’s not so. When we asked consumers where they spent most of their grocery dollars, and then asked them to rank that brand on a series of attributes. We found that no one or two brands dominated in offering the most convenient stores, the best prices and promotions. Note the results in Figure 2. The percentages in each box reflect the percent of respondents who rated their favorite grocer a 5 out of 5 on each of these attributes.

Convenience and Price Rankings

Ralphs, Food Lion, King Soopers, Sobeys and Kroger score very high among their consumers on convenience. Meanwhile, WinCo and ALDI win on providing low prices. One-stop shopping? It’s Walmart, Target (News - Alert) and Meijer. 

Now take a look at how consumers rank their favorite brands on overall satisfaction and their likelihood to recommend that brand to others. Graph 3 is the 2013 Consumer Delight Index showing how brands stack up in delighting their customers. Brands that really delight consumers are in the upper right quadrant—with the highest scores for both satisfaction and their likelihood to recommend, which tend to go hand in hand.

2013 Grocer Consumer Delight Index

Grocers that received at least 1 percent of the vote are included in this delight index

Note how high the bar is for satisfaction. The average for this list of big grocers is a 4.3 on a 5-point scale. The lowest marks are for Walmart, but it received an average 3.9 satisfaction on a 5-point scale, which is hardly dismal. It’s just that the competition in this sector is fierce. 

But does something seem odd here? The brands that are really delighting – Trader Joe’s, Whole Foods, Publix, Wegmans and ALDI – aren’t the most convenient, which is the attribute that consumers said was most important in their choice of a grocer. With the exception of ALDI, they’re also not offering the lowest prices. What else is going on that’s driving delight?

It’s All About Operational Excellence

We kept looking at the data to understand this discrepancy. We didn’t just ask the study participants about convenience, promotion and prices. We also asked consumers to rank their favorite grocer on operational measures like cleanliness, courteous staff, accurate pricing and fast checkout. When we tallied the scores, some interesting trends popped out. Those favorite brands that dominated the delight index also dominated in the operational measures.

Top Grocer Operational Rankings

Trader Joe’s, the overall winner in the delight chart, won top-two billing from its consumers in all five attributes. Publix was in the top three. Whole Foods was in the top four in two of the measures, while Hy-Vee and H-E-B—both solidly in the upper-right quadrant—also were top finishers in most of these operational categories. 

Clearly operational excellence and consistency across stores are big differentiators in consumers’ minds, whether they rank them as highly as the Big Two of convenience and price in surveys or not. 

This trend was repeated when we looked at other attributes such as quality produce and meat, good private label brands, organic products and sustainability practices.

Top Grocer Quality Products Ranking

Whole Foods, Trader Joe’s and Publix dominate, while ALDI, H-E-B and Hy-Vee also do well.

What can we make of all this? 

Convenience and competitive prices are table stakes characteristics. Consumers expect those from their favorite grocers. But, grocers really differentiate through operational excellence and great products. The good news: Consistently delivering a great customer experience can be done. Executives can understand how individual stores are performing and immediately spot gaps in performance by investing in customer intelligence programs such as customer satisfaction surveys and mystery shops, listening to consumers through 1-800 contact centers and monitoring social media. Tying that data to financial performance is the key to showing executives what matters most to consumers and what specific behaviors will drive the highest satisfaction and financial results. And, investing in training and incentives to spur the right behavior is a critical way to close the loop.

It’s not cheap, but all of those steps can be done for far less than building new stores or dropping prices below the competition, and they have an ROI that is tangible and easily measured.  

So is it all about price and convenience? Yes. And so much more.

Janet Eden-Harris is the CMO of Market Force Information (www.marketforce.com), a global customer intelligence solutions company for multi-location businesses, including major retailers, restaurants, grocery and convenience stores.