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Grocers of the future: Room enough for both Amazon and Aldi | YouGov

If the Price is Right

Retail revenue, particularly for food, has increased by as much as 86% between 1992 ($337 billion) and 2016 ($627 billion). Data from YouGov Profiles reveals that retailers like Walmart, Kroger, Albertsons, Costco, and Sam’s Club make up 40% of the market share, but competition is tight between these giants. Consumers still prefer these brick-and-mortar stores to online grocers, which brought in only $12 billion of $627 billion grocery sales revenue last year. But a trend in the last five years shows that in 2021, online grocery shopping will likely be five times what it was 2012.

Price – the strongest determinant for consumers as they’re shopping – is the main driver of growth in this sector. Given that US customers say price (40%) and quality (37%) are the deciding factors in grocery purchase, over convenience (8%), variety (7%), or shopping experience (3%), retailers are forced to focus on making sure the price is right. While traditional retailers who offer weekly sales and deals try to outdo one another, German-based discount retailers like Aldi and Lidl are investing in US expansions to establish themselves as the go-to supermarkets for low prices. With 42% of consumers already saying that discount supermarkets are just as good as others, Americans no longer see low-cost and high-quality as mutually exclusive descriptors.

The Price-Driven Customer versus the Digital Pioneer

Two consumer groups standout as central players if traditional and online grocers want to continue growing in future years. The price-driven customer, who focuses on a product’s value (price and quality) rather than the product’s retailer, are crucial to creating a pricing strategy. Retailers who want to succeed with this type of consumer, which makes up 40% of the market, would do well to know that they tend to buy non-perishable goods in bulk, are enthusiastic about considering new discount retailers, and that though most of them say they have a favorite brand, if another is on sale, they’ll buy that instead.

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YouGov | Grocers of the future: Room enough for both Amazon and Aldi.

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