Get Stuck In The Middle At Your Peril

The challenge for retailers is identifying what customers actually want to buy as well as what they care about, rather than how to simply sell products.

If we look at any of the research reports that are regularly being produced we are told consumers are focused on price and the key to retail success is to provide the best price offer. But is that the strategy for your business?

The ground rules are now changing as consumers look for different experiences. The food industry is a good indicator of the changes taking place and the place where we can all learn the lessons for the future.

When it comes to food retailing, purchasing patterns are changing. Growth is coming from two distinct sections of the marketplace: low margin retailers and high margin retailers.

Although both sections are seeing growth in sales, the more traditional retailers who rely on discounted offers as a way to draw in customers are finding they are getting stuck in the middle and being perceived as “me too” retailers by many consumers. The result is that many of these retailers are seeing a reduction in sales.

As far as the consumer is concerned, they more often search for a price offer or an experience offer, except the experience offer is now coming from some more unusual places.

Farm to service station

Imagine travelling down the freeway or motorway and stopping at a service station for a break. Most of us expect a selection of fast food outlets.

If you travel on the M5 between Bristol and Birmingham in the UK these service offers still exist, except there is a new player in the market. Situated between two more traditional service station offers, between Junction 11a and 12, is Gloucester Services. And this is no ordinary service station offer.

The origin of this service station started 200 miles north in the Cumbrian Mountains where, in 1972, John and Barbara Dunning set up a service station in conjunction with a local baker on their farm next to the motorway. This was the first and only service station in the UK operated by a farmer. The key aim was to provide fresh local food as well as a served food offer.

The farm shop on the M5 motorway is a partnership between the Dunning family and the Gloucestershire Gateway Trust and is aimed at providing a sustainable income that will go back into the local community.

Consumers can buy local produce, often at a premium price, from local farmers. The majority of travellers are impulse buyers, who more than likely have dropped in for a coffee and rest stop and end up buying their fresh food from the service station.

On my visit I was surprised at the size of purchases being made as well as the average sale per customer.

Farm to airport terminal

Other venues not traditionally recognised as quality food retail venues are airport terminals. But, again, we are seeing a rapid change in the retailer mix at terminals. The majority of potential consumers are those waiting for their flight who are looking for entertainment and an experience to help kill the boredom.

Seeing another fashion retailer displaying a product that is often outside their price range is not what all travellers are looking for. So, what we are starting to see is local food being retailed in terminals. The farm shop has now appeared in terminals as far afield as Abu Dhabi and Copenhagen. These retailers are providing products at the right price point to appeal to a travelling consumer.

Stand back and look at what is happening

It is very difficult for the majority of retailers to play the price game, as only one player can be the cheapest. This leaves the best option as being the leader of experience retailing. Being in the discount sector is a dangerous place to be as there is only room for one player in catchment area.

An experience retail operation offers flexibility as the experience is easier to change than the price. At the same time we need to be aware the entrepreneurial retailers can come from unexpected places and can change the ground rules.

Now is the time to stand back and look at what is happening in your retail sector and develop a strategy that not only appeals to the consumer but will also see your business develop over the next few years.

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