With increasing competition from home delivery meal kits and online grocers, brands are wondering how to increase sales in grocery stores. By adopting strategies that focus on boosting brand awareness and consumer convenience in order to build brand affinity, brands can compete with eCommerce grocery sales; especially with studies showing that 90% of shoppers prefer buying groceries in physical stores versus online.
How to Increase Sales in the Grocery Store
Increasing sales in the grocery store can be complex, but following tested, tried, and true strategies will set you on a profitable course for 2020 and beyond.
Keep it simple, keep costs low, and expand thoughtfully.
It took two decades for Aldi to reach 500 stores in the U.S. market, but today they have 1,900 stores across 36 states. The retailer is on track to becoming the third-largest supermarket chain behind Walmart and Kroger by the end of 2022 with a goal of 2,500 stores. The formula for Aldi’s success is to keep it simple, keep it quality, and keep operating costs low. This, in turn, helps them pass on the savings to budget-conscious customers.
Consider how Aldi has innovated to increase grocery sales:
They keep operating costs low. Rather than employing a team of workers to retrieve carts from the lot throughout the day, Aldi entices shoppers to return their own carts by charging customers a quarter deposit that they get back. Aldi employees are cross-trained in every area of the store, enabling three to five workers to do what it might take 20 to do at another store. Compared to an average Walmart location of 178,000 square feet, a typical Aldi store is just 12,000 square feet of space. These tactics are part of how Aldi has slashed operating costs by 50% off what competitors are shelling out.
They keep the layout and the choices simple. Aldi stocks just 1,400 items—compared to the 40,000 at other stores—down five or six wide aisles. This simple layout appeals to busy moms, seniors, and other consumers who don’t want to sift through 50 different varieties of salsa. Aldi’s private label brands like Millville, Simply Nature, and Burman’s account for more than 90% of its sales. In that way, they’re a lot like Trader Joe’s—another successful grocer.
They cater to convenience shoppers. The cash-out process is fast, appealing to shoppers who don’t like long lines. Bar codes are larger and printed on multiple sides of packaging for faster scanning. There are no baggers—the items are dropped directly back into the shopping cart.
“The Aldi Way” has worked wonderfully, enabling the chain to grow in measured steps. First, they’re ensuring all their existing stores are up-to-date. They’re investing $1.9 billion to remodel 1,300 stores with natural lighting and improved produce, dairy, and meat sections. They increased their fresh food offerings by 40% in 2018 and added new vegan and vegetarian options. The new stores tend to be concentrated in populous, middle-class suburbs, where the average household income is $65,822.
Focus on wellness and innovate from within.
While the overall grocery industry has steadily increased sales by 1% per year, Nestlé has seen profit increases of 3.7% and $68.4 billion in sales for the first nine months of 2019. They remain on track to meet their target of mid-single-digit expansion in 2020.
How are they achieving steady growth and hitting their milestones?
They offer partnership opportunities for small startups and turn inward for innovation. While other food brands are outsourcing to become more competitive, Nestlé has turned inward to its own employees for solutions. They invest in workers who can create new products within nine months in their Founder Foods division, which acts as a fast-paced incubator for new ideas. Emily Hoffman recently launched Wildscape, a frozen food brand featuring big vegetable pieces, whole grains, flavorful sauces, and quality pieces of meat. Her goal was to introduce consumers to ingredients they know and like in recipes they may not know how to make or have time to make for themselves from scratch.
Furthermore, Nestlé enters into lucrative partnerships with small startups looking to expand. Sweet Earth Foods was already bringing in $25 million a year when they partnered with Nestlé in 2017, providing them with access to bigger manufacturing facilities, wider distribution, and the ability to source ingredients faster and more efficiently than ever before. The deal took Nestlé one step closer to becoming a lead in the plant-based food segment, which is expected to reach an estimated $5 billion by the end of 2020.
They focus on wellness. Wellness is expected to be a burgeoning consumer trend into 2020 and beyond, as shoppers become more conscious about ethical/local food sourcing, packaging for earth sustainability, and choosing healthier, whole-food, plant-based ingredients. Going one step further, shoppers are increasingly interested in personalized health solutions and self-medicating for conditions like Alzheimer’s to Crohn’s. The market for so-called “nutraceuticals” is expected to reach $50 billion by 2025, and Nestlé Health Sciences has taken note by investing in Persona, a vitamin home delivery service. So far, more than 175,000 people have filled out a questionnaire to receive the tailored cocktail of vitality-improving vitamins.
They continue to move the needle. Nestlé’s biggest sellers remain nutritional shake products Boost and Meritene—which account for a quarter of all revenue. Yet, they haven’t discontinued well-known products like Hot Pockets and Hӓagen-Dazs. Rather, they’ve looked at ways to tailor these staples to consumer expectations. Persona CEO Jason Brown explained: “Consumers recognize what Nestlé is doing to reduce the amount of sugar and salt in its products and to reduce its packaging impact on the environment. We’re moving the needle on a number of things, and consumers recognize that and trust us.”
Partner with a third-party mobile app to increase incremental sales.
Retailers and brands can benefit from the same profit-enhancing strategies as Aldi and Nestlé. For instance, they can make use of the latest technology to launch omni-channel campaigns that bring in new customers, convert sales, and drive continued loyalty. Shopkick is an established third-party mobile shopping app with a highly engaged, highly loyal user base. To leverage its benefits, brands and retailers should consider how partners are using the platform to increase sales in grocery.
Entice customers on-the-go through mobile. The first step towards increased sales is in soliciting business and creating intent to purchase. This is best done through mobile, as it reaches shoppers during their breaks at work; while waiting in line at the bank; or on their sofas just moments before they venture out. Shopkickers check the app to see what deals are located nearby as they are first making their lists, deciding where to go and what to buy.
Engage shopper interest. The crucial moment for converting sales comes when a shopper is in the store, with a product in hand, deliberating whether to put it in the cart or back on the shelf. Once a Shopkicker arrives at a partner location, they check-in to the app to see which products will earn them points (called “kicks”) that they can use toward gift cards of their choosing. Points are earned when shoppers watch branded videos, step into a partnering location, scan barcodes, make purchases, and more. Shopkick introduces brands to consumers that they may not have known about or previously considered, driving incremental, unplanned purchases.
Promote particular products with a targeted campaign. Tyson partnered with Shopkick to drive awareness and consideration of their Chicken Wings & Bites product at Sam’s Club stores in the run-up to the Super Bowl. When Shopkickers checked into the app, they saw that they could earn kicks by flipping through the Tyson lookbook in the app at-home or on-the-go, watching a branded Tyson video, walking into Sam’s Club, engaging with Tyson products in the store, and purchasing the promoted products.
Convert them. Over the course of Tyson’s two-month campaign with Shopkick:
- Over 4.5 million impressions were made.
- Over 57,000 engagements with Tyson products took place in Sam’s Club stores.
- 85% of users who started watching Tyson’s promo video completed it.
- 62% of the shoppers were new or infrequent Tyson customers.
- 25% of shoppers who interacted with the product in-aisle made the desired purchase.
- Over 14,000 units sold, yielding more than $193,000 in sales and 4:1 ROI.
The results of a Shopkick partnership speaks for itself.
The results of a Shopkick partnership speaks for itself. When understanding how to increase sales in the grocery store, brands and retailers must also understand that today’s shoppers are aware of how competitive the market is and they want to be rewarded for their consideration and loyalty.
Image courtesy of Maria Savenko