I have to admit: I'm fascinated by what's going on lately in the supermarket industry....


Maybe it's because my firm offers branding and packaging to food manufacturers, so there's a heightened sense of awareness here. But I don't think so.
There's something fundamental, and comforting, to shop in the supermarket when one isn't in a hurry. Lots of fond memories when encountered by so many familiar, beloved heritage products! Not to mention the fascination with a plethora of new product offerings everywhere, and the sweet, matronly ladies enticing us to sample their tasty new wares!
But that's all old news. What's new and exciting is the concept of supermarket as theater.
Stores like Wegman's, Wild Oats and Whole Foods have always had a unique twist, offering mainstream foods and brands alongside natural, organic, international specialties and gourmet foods. These kinds of stores offer cooking classes, wine tastings, cookbook signings with chefs and sushi demos to their patrons, as well as community-oriented events.
The response? Customers go out of their way just to shop in these stores. They're buying more than groceries, you know? They're buying into a certain lifestyle and image. They're paying more, and quite happily, for a great customer experience. That's what I see as the creation a great brand identity and marketing strategy. It's brilliant and it's interesting.
Customers are willing to pay more to buy what they perceive to be better products and better service. While most mainstream supermarket chains experience flat sales and profits, stores like Wegman's and Whole Foods are experiencing solid growth and great profits. Bottom line: they love their customers and cater to them. Customers respond in kind. The upshot of this has created real pressure on conventional supermarket chains to step up to the plate and change their product mixes. They're doing it slowly, adding organic and gourmet foods, for example. They're expanding their prepared foods and deli sections to offer healthier meal options. They're bringing in more international foods, etc.
While Wal-Mart and other low cost supermarket options appear to be doing well, Albertsons and other middle of the road food retailers are not. When recently interviewed, Michael Sansolo of the Food Marketing Institute stated quite succinctly: "Shoppers are now willing to drive to experience something they feel brings them value, and not just in the monetary sense. For some, it's Wegman's; for others it's Wal-Mart.. . .What's changed is us."
This hits the nail squarely on the head: American consumers have changed. We want healthier food choices and we're willing to pay for high quality foods: imported, organic and international foods, etc, if we perceive that the store and its selections offer us real value.
The question becomes: how will the supermarket chains respond and what will they do to rebrand themselves to compete in an arena where the bar has become much higher, thanks to operations like Wegman's?