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Canadian Grocer: The untapped potential of ethnic shoppersTuesday, March 24, 2015 > 09:54:45
There’s no denying that today’s retailers need to be tech savvy to maintain and grow customer traffic. Technology-based tools, such as personalized deals based on a statistical understanding of past purchases and mobile apps that offer shopping lists and quick scan payment systems, are among the most effective tools at a retailer’s disposal.
However, retailers today also need to be demographic-savvy. To get there, you need to be proactively focused on which ethnic communities live near individual stores, what products those communities are looking for, and presenting new offerings in creative ways in-store. Done right, ethnic product lines can drive significant foot traffic into stores while also growing basket size.
Retailers already focus on customer lifestyle and stage of life, but in many Canadian towns and cities that is simply not enough. There are countless studies pointing to the changing ethnic landscape in the Canadian marketplace.
One such study, the Canadian Food Trends 20/20 Report, highlights “The New Face of Canada.” The impact is especially true for urban centres where visible minorities will make up 50% of shoppers. Statistics Canada predicts that by 2031, the South Asian population alone will reach up to 4.1 million. To understand and anticipate the best opportunities for assortment optimization, grocers need to embrace these ethnicities in their areas.
For many big chain grocers, shortchanging ethnic product mix is a missed opportunity. Nearly nine out of 10 ethnic Canadian grocery shoppers in The Modern Grocery Shopper: Attitudes and Opinions Survey*, conducted by LoyaltyOne in August 2014, said the selection of ethnic food and ingredients is an important feature in choosing which grocery stores to shop at. But two-thirds say that they have to visit three or more stores — including independent retailers, specialty food stores, and online retailers — to buy everything they need. Nearly the same number (63%) say they’re not finding enough ethnic food and ingredients at their main grocery store.
The opportunity also includes non-ethnic shoppers. Significantly, 45% of non-ethnic Canadian consumers also say that they also can’t find the assortment of ethnic foods and ingredients they’d like at their primary grocery store. The majority of both segments — 81% of ethnic consumers and 66% of non-ethnic consumers — report that they would cook ethnic cuisine more often if the ingredients were more readily available at their local store.
There’s a practical issue to consider in approaching this cross-category assortment opportunity. How do you introduce more ethnic products into stores that already are stocking upwards of 40,000 products?
The solution: Identify — then trial and repeat. Grocers who are exploring new product assortments should take a two-pronged, data-based approach. First, they should identify low-performing shelf items. When selecting these items, it’s critical to complement traditional item volume/sales metrics with a data-driven understanding “item importance.” In other words, items that are most valued by your best customers. Grocers should cross-check low-performing items against what their most valuable customers buy, to ensure that they can be removed from the assortment with low risk.
The second step would be to use a rigorous trial and repeat approach for each new item introduced into the assortment.
Grocers can use data to help clarify the transferability of sales between similar items and how important specific products are to a store’s most loyal customers to mitigate any risks. Data can also identify who will embrace new ethnic products. Grocers can identify customers who are already purchasing products that may be similar or complimentary to new ethnic offerings. New products can be added to the store creatively, into areas other than the ethnic foods aisle. Overlaying customer data with area demographics can help grocers recognize the full potential of their assortment opportunity. New ethnic products can be introduced in the highest potential stores on a Test & Learn basis.
Bottom line: Catering to richly diverse audiences provides an opportunity to better satisfy the needs of today’s shoppers. Ethnic product mix may not get as much as attention as a marketer’s technological tools, but it should. Retailers that take note and offer a product assortment to meet these needs will develop a loyal following of valuable customers that will only continue to grow in importance and profitability.