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Have supermarkets signed their own death warrant ?

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The latest stats show that prepared shopping carts tend to help supermarkets sustain their growth. Whereas in France supermarkets (-0.2%), hard discount (-0.4%) and small urban stores (-0.2%) all lost market shares, “drives” gained 1% on the same period. It’s therefore logical that all players propose it.

This service remained however of little importance during years. In Belgium for instance Colruyt’s Collect&Go has existed for years and was only recently copied by Delhaize. Cora, also present in Belgium, launched its own service only this year. It’s called Corapido and offers to prepare your shopping cart within 2 hours after request. And this is free-of-charge. In the UK Tesco has proposed it also for years; in France super- and so-called “hypermarkets”, located outside of cities, have implemented since ca. 2 years a solution inspired from fast food’s drive-ins where consumers drive with their cars to dedicated spaces and load their prepared shopping carts.

The purpose of this article is however not to discuss what this new service will bring to the industry. It’s being adopted and rolled out and it’s now already too late to go back. It’s rather to question the impact of this innovation’s adoption on consumers’ behaviors and how the latter will re-shape the industry.

Prepared shopping carts seem to be a win-win solution for everybody: supermarkets can kepp their employees busy when there are less customers in the store; consumers can save time by avoiding  spending time in the store. Except that re-shaping consumers’ habits may well become a disaster for supermarkets’ bottom lines. A profitability analysis may well have been useful. Here’s why.

 

Will changing consumers’ habits destroy supermarkets’ profitability’s even further?

When we give a presentation on consumers’ habits, we like to repeat that 80% of purchases made by any individual are always the same. In other words 8 out of 10 articles put in your cart are always the same : you shop for your regular pasta, for your kilo of apples, for your bread, etc … only 20% of the items purchased vary from one week to the other. What are those items? The unexpected bargain, the chocolate bar that you suddenly want to eat when you see it on the shelves, … those are most of the time emotional purchases.

Prepared shopping carts will rationalize the act of shopping. This was once a key success factor of Aldi and Lidl: there was little choice and few references and the customers could therefore resist the temptation of unwanted emotional purchases.

You can now better see what may happen if more and more consumers switch to prepared shopping carts and stay away from the stores. There will be no chance left for unwanted purchases. It will all be about conscious decisions or habitudinal purchases. Benefits from emotional on-the-spot purchases will disappear. Is it really what supermarkets want to achieve? The market is already competitive enough. Some other, more technical issues, will also appear. How should discounted products be promoted for consumers who don’t get IN the store? What will the consequences be for brands? Will a new sample-based type of promotion emerge (like with perfumes) that will automatically be put in your shopping cart when you’ll leave?

 

Advice for your marketing strategy

Before following (or even launching) an innovation, you should think how it might affect your customers’ behaviors. Changes of behaviors are long-lasting and trends are difficult to reverse. Ask yourself what it would look like if all your customer base would all of a sudden adopt your innovation. How would your company as a whole be affected? What would the impact on your top line and on your bottom line be? What changes would it require for your cost structure?

It seems to us that supermarkets have insufficiently assessed the consequences of prepared shopping carts and that massive adoption of this new service (especially when it’s free-of-charge) will durably affect the cost and overheads structures.

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Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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