FMI: More Validation that Price Doesn't Trump Assortment
NRF’s Big Show is not the only conference that falls in January. And so less than a week after my time in New York City, I found myself winging off to Phoenix Arizona for FMI’s Midwinter Executive Conference. While there, I had the opportunity to address members of their Independent Operator Program. I also got an early look at a consumer benchmark commissioned by FMI, Daymon Worldwide and the Hartman Group. The report title is “Reframing Retail through the Lens of Changing Food Culture”.
The benchmark is interesting and well worth a read, not just because it highlights how differently Americans are buying, preparing and eating their food, but because consumers were asked about their attitude about price. It also comes to us at a fortuitous time, while RSR is in the midst of collecting retailer respondents to our 2013 Pricing Benchmark survey (yes, we really do still need more retail respondents…if you haven’t already done so, please take the survey here).
Last year, our respondents reported they continue to increase the number of price changes sent to stores, are most concerned about increased consumer price sensitivity, and battle hard to keep up with their competitors’ prices. This year, early findings tell us these concerns have only escalated. Retailers really believe consumers are more price-sensitive than ever, and they’ve ratcheted up their promotions in response to that price sensitivity. I suppose if one watches Walmart commercials where a regional grocer market basket price is compared to the same basket purchased at Walmart, anyone would draw the same conclusion (note: I’ve seen these same commercials both in Miami and in Phoenix – just with different competitors). Similarly, the continued rise of Dollar Stores, and their continued increase in food sales seem to tell the same story.
The trouble is, the consumer is telling a very different story. According to the Food Culture Study,
“Appealing to consumers today requires much more than offering a wide range of products at the lowest price. While this is an effective way to attract shoppers, it does not secure loyalty. Instead it conditions shoppers to look elsewhere to find a lower price. Another way to offer value and build loyalty is to understand what consumers want that they can’t get elsewhere. Part of that is offering consumers products that go beyond the usual…which involves creating a compelling retail environment that inspires shoppers.” [bold typeface is mine]
The piece goes on to highlight the importance of creating optimized assortment, which in their view is “curated” by the retailer to include those items customers care about, and specifically exclude products that are not relevant to them.
“Most consumers (62%) want to shop where there are always unique products to try. But presenting the right product mix is critical. Shoppers expect retailers to be good curators, and to carry what they want and omit what they don’t want.” [bold typeface is mine]
Of course, this (curated assortments) is the sweet spot of the Independent Retailer, so the results were cheering to the group I spoke with. But there is significant relevancy to the larger retail world as well.
Back to our current retailer pricing survey, so far, 41% of survey respondents report the number of price changes sent to stores and other channels has “increased significantly”. We continue to ask the question “Why?” Do mobs at stores on Thanksgiving Day really mean this is our only option? Do we mistake hysteria for loyalty? And if we look at our annual financials, don’t we see that the overarching impact of this hysteria on our business was mostly “Much ado about nothing”?
I’m really grateful for the opportunity to attend the FMI conference, even if only for a short time. I got the chance to read a fabulous report, to meet some interesting people and (as a real plus) to finally solve the Holy Grail of finding a great bottled marinara sauce. Thanks to Norman Mayne, CEO of Dorothy Lane Market and shopdlm.com, and this year’s winner of the Robert B. Wegman Award, for sending along a huge jar of Dorothy Lane’s great Marinara Sauce to me. It’s almost worth moving to Dayton for! He also included one of the company’s famous “killer brownies”, but I’m not quite ready to tackle that one yet!
I’m also still trying to figure out when our industry at large is finally going to recognize that consumers of all income brackets value their time. We hope the focus will turn more to better assortments at a reasonable price. Hope springs eternal.