After US supermarket chain Raley’s altered its layout to encourage shoppers to choose healthier cereals, retail experts have given us their insight into what is really behind the decision. Is it within a retailer’s remit to encourage and discourage consumer habits? And is consumer behaviour as linear as it may first appear?
Consumers have traditionally been informed by guidance from the government and health and safety bodies. The step that Raley’s has taken could suggest that this is to change. However, this source of authority may be a commercial strategy on the part of Raley’s.
Shikha Jain, senior director at Simon-Kucher & Partners, said that this is a virtuous cycle which must be utilised.
“Consumer trends and their impact on retailer product placement is rarely linear and almost always reciprocal. Changing preferences in consumer tastes impact on product placement, which in turn impacts tastes and so on.
“However, as a starting point, it is always good to back up decisions with data. In the case of Raley’s, their decision is a reaction to household research done by Neilsen, which shows a clear majority (52%) of customers are actively trying to avoid artificial sweeteners.”
This cycle gives retailers such as Raley’s a good standing from which to positively respond to data. Hugh Fletcher, global head of consultancy and innovation at Salmon, agrees that consumer data must take precedence if retailers wish to attract them.
Fletcher said: “I would argue that in this case, it’s more the consumer guiding the behaviour of the supermarket, rather than vice versa, and this is something to be celebrated.
“Raley’s is positively responding to what consumer data is telling them. The usage of data in inventory and stocking is a trend that we see more and more of, and is the premise of the Amazon bookstore and the Amazon 4-star store. Increasingly, retailers will be forced to listen more to their customers and interrogate their data more intelligently, or risk losing them altogether. The day when customers, rather than retailers, are guiding what they receive and how they receive it, is a day that all consumers should welcome.”
Valuing data makes it clear that a retailer is listening to its consumers and enacting this change is evident in Raley’s willingness to alter its layouts to allow clearer access to healthier products. This then furthers the cycle of consumer behaviour.
Dan Neiweem, co-founder and principal at Avionos, agreed that consumers are driving the change in this situation:
“Brands are adapting to consumers’ demand for healthy choices by offering lower sugar, calorie and fat products, and grocery stores have to embrace those preference changes too in order to maintain or increase revenue. For retailers to be successful, it’s imperative that they listen to what consumers want in a retail experience and reflect those desires in their in-store strategy. While grocery stores are a prime environment for impulse purchases, layouts are highly based on the research around consumer behaviour and shopping patterns.
“With that being said, the placement of Raley’s cereal appropriately reflects how shoppers are interacting with specific products and what they want to see in their grocery shopping experience. This is an example of consumer behaviour driving retail strategy – not the other way around.”
Yet some consumers would be disappointed by the concept that retailers are placing products based on what they ought to buy, not what they want to buy.
Jain has summarised by bringing strategising power to the fore. She said that moves like this could be a strategy for retailers to follow in creating a niche for themselves. In utilising the data in changing consumer attitudes, such as diet changes or attitudes towards traditional mealtimes, retailers can become the next ‘healthy option’ for consumers to approach for the most reliable way to fulfil their unique food and beverage requirements.
She noted: “In a crowded space of grocery and supermarket chains that is consistently facing price pressures in the US from giants like Walmart and Amazon, there is little room for a chain to differentiate on its value proposition. The typical value propositions are either focused on offering the lowest prices (like Walmart), quality produce and meat (like Mariano’s) or on an omnichannel/e-commerce/digital strategy (like everyone these days).
“However, Raley’s is beginning to create a niche for themselves by being the ‘healthiest option’. The question is, will this strategy hold up long enough to attract health-conscious shoppers consistently to their stores for them to make a big move on changing their entire assortment structure as planned?”
© FoodBev Media Ltd 2019
World Dairy Innovation Awards – now open for entries
Enter before 10 May to ensure you are part of the industry’s leading awards scheme. Don’t miss out on having your dairy innovations recognised.