INDEPENDENT GROCERS: THRIVING IN UNCERTAIN TIMES

INDEPENDENT GROCERS: THRIVING IN UNCERTAIN TIMES

Venu Gopalakrishnan, Founder and Global CEO, Litmus7 Systems Consulting.

Description

There is this independent, silent yet powerful grocery segment awaiting massive disruption.

The addressable market size

  • 25% OF THE RETAIL GROCERY INDUSTRY SALES
  • $131 BILLION IN ANNUAL SALES
  • 1% OF THE UNITED STATES’ GDP

*Source NGA annual report 2018

Question is how prepared are they to embrace the future with a smile?

In the past, the wars for power and trade on land got small nations to unite and defend themselves.

Now those wars are being fought in the invisible digital space; in order to survive, a purpose-driven consolidation of like-minded business is inevitable.

The wars, which will be fought in these invisible spaces today, will become far more intense tomorrow! It’s time to get the act ‘together’.

The territorial understanding

The intelligence of today’s consumers will be exponentially superseded by the future consumer’s intelligence and awareness levels. In this new age of total consumer awareness, TRUST and GENUINENESS are going to be a scarce commodity.

Consumers of the future will be much more sensitive to their health than today. To cite an example,Thanksgiving 2018 witnessed the sale of large-sized Turkey going down by 8.3% from previous year's sales, whereas Toms’ went up by 6.5%. One of the key reasons cited is that people have become more informed about industrial farming;hence they're a little turned off by practices like antibiotics and caging necessary to produce a 30-lb Turkey. So, the point is, the industry will see more responsible consumers than their predecessors.

To illustrate the point about trust, consider this: I have Amazon Prime on my phone, I also have a Safeway and Traders Joe's within a mile, but I prefer Traders Joe’s despite the fact that they are totally ignorant about both the conventional digital conveniences and traditional loyalty programs. I go there because I trust them, I go there because I get to feel their value is rooted in their efforts to ensure the right food for the right people and the fact that they’ve managed to bring enough joy to the faces of their store agents.

Understanding the threat dimensions for Independent Retailers

1. Consolidation of business: Amazon, Walmart, and Kroger will continue to increase their market shares, forcing pressure on independent business.

2. The likes of Instacarts who shields brands from consumers and such intermediaries themselves are susceptible to consolidation.

3. Lack of preparation and response from independent supermarkets to embrace the emerging digital future of retailing

Preparing for the uncertain times (the 7 milestones)

Combining the genuineness of independent retailers with the possibilities of what digital future can offer will help this unstructured segment thrive in the age of uncertain times. Here are some ways of doing it:

1. Purpose driven consolidation: Unlike the equity-based alliances, independent retailers will be collaborating on a larger purpose which has a market size of $130Bn and is the first step towards uniting the distributed segment, which the NGA can facilitate.

2. Reimagining business for frictionless retailing:

a.  All business as stores

b.  Delivering unified consumer experience across the consortium

c.   All connected feeder businesses as services to help design business agility, way beyond any technologically advanced businesses can ever achieve.

3. Connected consumer: Connecting isolated consumers for a better cause and their health.

a.  Re-visioning the purpose around‘Genuineness’ (cause and delight) and therefore establishing ‘Trust’ that can never be broken.

b. Connecting the decentralized consumer community through “Farm-To-Table-Green” Loyalty Program designed specifically for driving good health programs. The NGA can lobby and influence the Congress to get those consumers capitalize their sustainability score to get discounts on their utility bills.

c. Green Score (Sustainability): Driving awareness around sustainability among consumers through the Green Score. Today, only the relatively rich can afford electric cars and renewable energy and they are even given subsidy for their sustainable quotient. However, that community is probably less than 10% of the total population. The NGA can be that agent who drives the sustainability quotient to the rest of the world and become the world’s first agent to lobby and help their consumers get subsidies on utility bills for supporting farm-to-table efforts of NGA grocers.

4. Driving convenience together:

a.   Businesses connecting to Instacart for delivery than consumers choosing them

b.   “You Won’t Run Out of Stock”! Grocers know what their consumers bought and have the ability to track and replenish their home inventory

c.     Always delivering convenience ahead of industry

5. Value beyond grocery. Beyond delivering grocery, help consumers with insights into their lifestyle through the following services:

a.  Dietary check

b.  Food budget check

c.   Sustainability score

d.   Subscribe to events and meet-ups

6. OneSystem® model to drive efficiency: Forget the cost of running a digital platform; long back, businesses used to build systems right from scratch, but today it is more around COTS applications and SAS models. All the systems were designed and built primarily to play around with the intelligence of consumer data and product data. But in the future, what if such information transcends to become the basic right of every business? What if brands and retailers can access such information from a common platform?

Today, independent grocers can bring that future closer to them by on-boarding to a one system model, which is managed through a shared OPEX pool, essentially helping them to secure a Digital future more powerful than amazon.

7. ConsumerX (Intelligent Consumer): Delivering extreme consumer experience by converting today’s transactional consumer into an intelligent one. State of intelligence designed around intents, relationships, historical transactions and product knowledge. 

Shift 'right', to think one step ahead of the curve to understand ConsumerX.

The demographic shifts

a) The shift to ever-smaller average household size. The 2010 census showed the average US household size at 2.58 inhabitants; it is believed that number has gone down since. 
b) Ethnic mix and its impact on food choices 

Conscious shift 

a) At upper income and educational levels – to a greater interest and awareness of health, food quality, and food provenance.
b) Shift in internet shopping - with its demands for O2O capabilities such as BOPUS and BOSFS

Shift towards TRUST

a) Protection of data. 
b) Authenticity of products/services/value proposition. 
c) Consistency of operational delivery.

Aligning with these 7 milestones or more around those lines can save the genuine independent grocers to thrive in the future.

So what does it all mean?
If all of these independent retailers stand united to deliver 'one experience' across multiple channels, we are talking about 21000 stores and $131 billion overall business forming 25% of United States' grocery market! Does it not stand qualified to challenge the biggies? 

If yesterday was all about the size, tomorrow would be all about intelligence. But the people have always loved peace and compassion! Care for them and they will protect you and your business!

All businesses flourish when consumers love a brand or service! The NGA can help independent grocers enter the new age with a smile. 

Embracing the models designed for the intelligence of a consumer in the 1960’s won’t help win the hearts of consumers of the future.

Stand united for a Grocery Revolution. Let your consumers adore you and protect you.


About the Author

Venu Gopalakrishnan, Founder and Global CEO of Litmus7 Systems Consulting.  

About Litmus7 

Litmus7 is envisaged and designed to radically revamp the more than three decades old conventional retail technology practices using newfound, progressive ways of sculpting partnerships. Our mission is to develop quantum innovation in retail. Founded in 2009, Litmus7 has since braced retailers across the globe to stabilize, scale and transform their e-commerce projects. However, we are beyond just e-commerce specialists, we enable retailers accelerate their digital revenue by reducing the cost of uncertainty. Litmus7 is defined by its distinctive work culture. We have the most exceptionally talented team who are passionate about taking up challenges and solving them while being dedicated to foster business emotions and build lasting relationships that enable clients to grow exponentially. 

An offshoot of the Litmus7 Ecommerce Acceleration Program (LEAP), Roots is a OneSystem Architecture that will enable all independent grocers to come together under one system and thrive in the uncertain digital future. The key to survival and sustainability is to stand united for a Green Revolution.


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