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The pandemic transformed many business models but none more so than grocery retail.

With schools, offices and restaurants still working under restrictions, many emerging consumers trends are going into overdrive.

For grocery retail brands the race to catch up to these trends isn't over just yet.

Besides government restrictions, grocery retail is also dealing with challenges consumer trends.

On the one hand, a lot of people have seen their household finances shrink during the last year leading to many people seeking cost-saving.

On the other, there's a pent up demand for both products and experiences.

Despite consumer sentiment, slowly pulling away from an all-time low, we're ready to move on and do more.

PS. I'm skipping Easter Monday and will be back on 12.4.2020.

How we buy food has changed

Avoid crowds, shop online, or use neighbourhood grocers

After a whole year of learning how to live during a pandemic, both businesses and consumers have adapted to the new shopping behaviour.

Across Europe, fewer people are visiting grocery stores in person but the average basket size has increased by 16%.

According to McKinsey research, changing mobility patterns driven by consumer focus on health and government restrictions will continue to mould grocery retail this year.

Last year online grocery retail grew by 55% on average while big-box retail only grew by 3%, except in Sweden where it grew twice as high as the European average. 

Besides online retail, more people have been using their neighbourhood stores for everyday purchases.

Mobility or lack of it will continue to be a major driver of consumer preference in grocery retail.

Looking to the future new shifts in values and lifestyles will be creating new opportunities for grocery retailers.

Long-term changes in lifestyle and values

We're likely to feel the economic impact of the pandemic long after everyone's vaccinated and the pandemic officially over. 

Many people have had to trade down and spend less. As a result, 31% of consumers across Europe have switched to a different grocery retailer and more than 70% intend to stick to their new behaviours.

Among the consumers surveyed across Europe, better price and delivery options were the biggest drivers behind the shift.

We've probably learnt more about health and safety over the last 12 months than ever before.

Over the course of the pandemic, the preference for products that are healthy, environmentally friendly, and local has also increased.

I'm sure having to feed yourself the same three recipes you know has something to do with it.

Besides healthy things to eat, more people are demanding eco and hygienic packaging across Europe.

Paused but not erased

If consumer sentiment from travel and leisure sectors is anything to go by people are feeling cooped up and can't wait to get back to their social lives.

No mobility restrictions and open bars and restaurants mean the pandemic lead growth will slow down. Once that's over European grocery retailers will have to deal with the real problems affecting the industry long before COVID-19.

Most European supermarkets were already either losing their market share or stuck in a rut before the pandemic. 

Among the problems affecting the market is a lack of differentiation and low digital maturity lead the way.

Between 2015-19 there was a renewed appreciation for speciality stores, online retailers and minimarkets among European consumers. Experts believe that That preference is likely to return, perhaps stronger than ever, as people eagerly seek out new experiences post-pandemic.

This is one of the reasons why 49% of CEOs surveyed by McKinsey think that the grocery retail market situation will worsen in 2021 compared to last year.

The other reason is value for money.

The fact that 37% of consumers are looking for ways to actively save money when grocery shopping is a major concern among brands that operate supermarket chains.

Differentiation based on price alone no longer cuts it. In the last couple of years, many retailers have introduced attractive mid- and low-tier house brands.

The fact is that there aren't many ways to the left to differentiate based on price or product variety alone.

Post-pandemic European retailers not only need to fill in the digital gap, but they also need to do that while building a brand that offers convenience driven by technology and personalisation.

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In case you missed:

  1. China’s travel sector is undergoing a nonlinear recovery: What should companies do? //McKinsey
  2. How Bacardi’s new recipe app builds out its DTC channel. //ModernRetail
  3. So FLoC trials are delayed in Europe thanks to GDPR. Now what?. //Digiday
  4. The savvy data strategy fueling Barbie’s digital growth. //TheDrum
  5. In stores or online, the future of retail is experience. //AdAge

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“Good marketing makes the company look smart. Great marketing makes the customer feel smart.” 
- Joe Chernov

Until next week,

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Thanks for reading and sharing! BR, Aliyar.
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