This blog post was written in a response to Anne Palmer's post, The Complicated Connection Between Supermarkets and Obesity.

Public health efforts are increasingly focused on the food environment, including the ways in which grocery stores can help nudge shoppers toward healthier foods. Interventions including shelf tagging efforts to improve signage for healthier items, couponing produce or other better-for-you foods in order to stimulate new purchasing habits, and healthy checkout aisles are just a few examples of in-store marketing efforts that have shown promise. These and related efforts, however, hinge on strong partnerships with retailers, and understanding priorities and values are critical for trust. Below, we provide 10 of our most important lessons learned through our work with the food retail community.

10. Most retailers care about their community and want to help.

It is rare to find a retailer, although there certainly are some, that do not understand that food is a key driver of health. This spirit of collaboration often serves as an important common foundation between public health and food retail. A 2017 Grocery Retail trends report for example recognized that consumers and retailers alike saw grocery stores as important community organizations and allies in supporting health and wellness1.

9. Retailers negotiate product deals (sales) offered by manufacturers in order to ensure customers get good value at their store.

Supermarkets see their job as providing products that consumers want at the best prices they can. In this quest, substantial time is spent negotiating deals with manufacturers. When they can get a great price on a popular product, it is viewed as a desirable win-win for the store and the consumer. The problem is that often these deals are on salty, sugary, or high-fat foods, and fundamentally compete with the goals of public health2.

8. Product placement drives customer choice.

Stores and public health practitioners alike recognize that product placement effectively drives customer choice. For example, a randomized control trial showed that purchases of healthier milk products and healthier frozen meals were significantly and positively influenced by product placement and product availability in grocery stores situated in low-income, high-minority neighborhoods3. Specifically, products displayed at the ends of aisles, on end-caps, for example, result in substantially more sales of product than those given ordinary on-aisle visibility4. A study in southwestern US showed that sales of targeted produce items sales to grocery store customers and to Supplemental Nutrition Assistance Program participants significantly increased with cashier suggestion to purchase these produce items situated at the check-out end-cap5.

7. Each product category in the store operates differently, and marketing strategies that work for one category may not work the same for another.

The grocery store is not a continuous landscape of product, as it may seem. Instead, it is better understood as a mosaic of categories; milk, yogurt, cheese, bread, snacks, prepared foods, frozen, deli, cereal, and soda. Each represents its own mini-market in each store. Retailers have autonomy over some categories (milk) and are more constrained when it comes to others (soda). At the same time, some categories evoke greater brand loyalty (soda), while others more driven by sales (cereal). For interventions, this means that retailers know that the same approach (say, taste testing) will not work to the same degree across all store categories. Each category of the store operates differently; underlying drivers and potential effectiveness of the strategy may vary.

6. Stores greatest profit is in prepared food, produce, and store brand products, as long as there is not waste.

It is no surprise that profit matters to retailers, but it may be a surprise to know that one of the most profitable sections of the store is produce (assuming it's selling and not rotting), along with dry groceries and meats. Between 2011 and 2016, produce sales at grocery stores increased by a little over 1%, from 10.84% to 12.02% of total sales, noticeably larger than meat’s increase of 0.27% and dry goods’ decrease of 1.09% over the same time period6. At the same time, stores can improve profitability from sales of healthier store-brand products.

5.  Learn retailer-marketing vocabulary.The food-marketing world is laden with terms that most public health practitioners have not had occasion to learn, terms like merchandizing, facings, secondary placement, planogram, market segmentation (Millenials etc). Related are words connected to in-store marketing materials; clings, hang-tags, shelf talkers. A food industry glossary is available from the Food Marketing Institute’s website

4. Most retailers are confident more marketing means more sales.

When it comes to in-store marketing approaches, a public health researcher might be inclined to tease apart the relative sales improvements from one marketing approach versus another, or understand how much sales improve with a layered approach versus a non-layered approach. Retailers, on the other hand, simply believe (and take as fact) that the more layers to the approach, the better it is for sales; further, the retailers’ marketing approach typically follows the four “Ps”: pricing, placement, promotion, and product7. An integrated literature review revealed that, as an overall approach to obesity reduction, healthy food marketing made healthful foods more affordable, available, and prominent, while being promoted in-store8. According to the results of a web-based health attitudes and behaviors survey, specific marketing techniques consistent with the four Ps (e.g., coupons, healthy product availability, product labeling – either on-shelf or on-package) motivated shoppers to purchase healthier products9.

3. Loyalty cards work very differently from store to store, and many do not have them at all.

Measuring the impact of interventions ideally includes an examination of customer level data, data which, when available, comes from loyalty cards. Stores like Hannaford, H-E-B, Kroger and Safeway have strong loyalty programs, while retailers like Walmart and Trader Joe's do not.

2. Not all stores have branded products and related in-store marketing.

Stores including dollar stores and limited assortment retailers like Aldi or Trader Joe's engage in many fewer in-store marketing efforts than mainstream retailers, mostly due to the preponderance of store-branded rather than manufacturer-branded products. Shelf talkers, special coupon deals, and the array of on-self tags, coupon dispensers, posters, and in-aisle displays are usually limited in these venues.

1. Profit margins are slim, and retailers are always looking for a way to differentiate.

Perhaps one of the most important things to remember when working with retailers is to recognize that the industry typically operates with very slim profit margins (average net profit is 2.2%)5, and as the online grocery industry continues to emerge alongside other major competitors like Walmart, competition and the need to differentiate (and create customer loyalty) is of critical import. Wellbeing is a value that many retailers recognize customers want, along with convenience and the millennial customer is an important market grocers want to capture.

 

Citations:

  1. Food Marketing Institute. U.S. Grocery Shopper Trends 2017. The Hartman Group, Inc. 2017; 3190, 126. https://www.fmi.org/forms/store/ProductFormPublic/u-s-grocery-shopper-trends-2017.
  2. Ayala G, D’Angelo H, Gittelsohn J, et al. Who is behind the stocking of energy-dense foods and beverages in small stores? The importance of food and beverage distributors. Public Health Nutrition. 2017;20(18):3333–42.
  3. Foster GD, Karpyn A, Wojtanowski AC, Davis E, Weiss S, Brensinger C, Tierney A, Guo W, Brown J, Spross C, Leuchten D, Burns PJ, Glanz K. Placement and promotion strategies to increase sales of healthier products in supermarkets in low-income, ethnically diverse neighborhoods: a randomized controlled trial. The American Journal of Clinical Nutrition. June 2014; Volume 99, Issue 6, Pages 1359–1368, https://doi.org/10.3945/ajcn.113.075572.
  4. Thorndike AN, Obesity Prevention in the Supermarket – Choice Architecture and the Supplemental Nutrition Assistance Program. The American Journal of Public Health Perspectives. October 2017; Volume 107, Issue 10, Pages 1582-1583, https://doi.org/10.2105/AJPH.2017.303991.
  5. Payne C, Niculescu M, Can healthy checkout end-caps improve targeted fruit and vegetable purchases? Evidence from grocery and SNAP participant purchases. Food Policy, Volume 79, August 2018; Pages 318-323, https://doi.org/10.1016/j.foodpol.2018.03.002
  6. Bean-Mellinger B. What Is the Profit Margin for a Supermarket? Chron. November 14, 2018. http://smallbusiness.chron.com/profit-margin-supermarket-22467.html
  7. Martinez O, Rodriguez N, Mercurio A, Bragg M, Elbel B. Supermarket retailers’ perspectives on healthy food retail strategies: in-depth interviews. BMC Public Health. 2018; 1019.
  8. Glanz K, Bader M, Iyer S. Retail Grocery Store Marketing Strategies and Obesity: An Integrative Review. American Journal of Preventive Medicine. May 2012; Volume 42, Issue 5, Pages 503-512, https://doi.org/10.1016/j.amepre.2012.01.013
  9. Moore L, Pinard C, Yaroch A, Features in Grocery Stores that Motivate Shoppers to Buy Healthier Foods, Consumer Styles. Journal of Community Health, August 2017; Volume 41, Issue 4, Pages 812–817, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4930406/