“In 2017 we will not suddenly see completely different retail trends than in 2016. A trend is something that happens over a longer period of time. I expect that certain trends will just continue occurring this year. The penchant for authenticity and the search for the special will continue for now,” says Prof. Gino van Ossel from Vlerick Business School. “Additionally, there will be more space for fresh in supermarkets in coming years.”
In this article he talks about trends already happening and remarkable matters he sees as regards the consumer and retail.
Food halls still going strong
Another expert talked about people being tired of food halls. Is that actually about to happen?
“At first, consumers are curious, and they visit the food hall in droves. Visitors consist of both locals and tourists. Once the novelty wears off, they will visit less often. That does not mean it is an ending story. People are still looking for authenticity and specialities. As regards the hype, we have had the high point by now, people talk less about them. But there definitely still is room for successful food halls, people are not tired of them yet. What I have noticed is that stallholders in food halls are starting to be more focused on food service. It is less a shopping experience. You will go there for a bite to eat, but you will not do your daily shopping there. The call of the food hall is more about consuming on the spot. A food hall that truly has something special to offer, will remain in business. However, the concept does need natural passengers who happen to be nearby, so stallholders need to take into account that fewer people will visit after a while. And lastly, variation is very important. The classics, for which people return, have to be held on to, naturally. But in addition to that, I believe in changeable menus. Regular visitors will see something new every time that way.”
Customer loyalty and variation
How loyal are consumers nowadays, with the amount of online suppliers available?
“Customer loyalty and variation are directly opposed. Consumers are loyal to certain businesses, within their evoked set and buying moment. Compare it to a restaurant. Certain customers think a certain restaurant is the absolute best, and return to it regularly. Another group thinks the restaurant is ‘super,’ but ‘only’ visit twice a year. They might think about it in their evoked set, but they will not eat there every week. In that manner, a divide is created, which allows the customer loyalty to be different for everyone.” With online purchases, he sees habit formation and convenience appear as soon as people are used to a certain supplier. “That can be seen, for example, with bol.com, a consumer orders from this website more often if they have done so before and everything went well. And that can also be seen with supermarkets.” Once a consumer shops online with a certain supermarket, they will not soon switch to another one, according to Gino. “You become loyal to a supermarket: just because it is convenient to stay there. They know things about you, remember lists, and so on. And that is how habituation happens.” A good combination of variation and customer loyalty can be found with HelloFresh, according to him. “Of course it is convenient, people do not have to think about that they want to eat. Besides, there is also variation in the supply, and people stay loyal to HelloFresh, because it is a subscription.”
Buying online
How will online shopping develop further as regards buying fresh produce?
“Part of the consumers still want to see fresh products in shops, and will therefore not quickly buy online. When looking at individual consumers, a pattern starts to form. When people start buying online, the purchase of fresh is limited to that which is fairly standard, such as a broccoli. Additionally, you can now say whether you want yellow or green bananas, so that can also become a standard purchase. Yet consumers want to see certain products in real life. With meat, certain products such as sausage and ham are fairly simply ordered online.” According to Gino, once consumers start buying online, they will go a bit further each time. “The more often you order online, the easier it is to buy more products, even when fresh products are concerned.”
Frequency
The frequency of doing your shopping online is lower than when visiting shops.
“On average, something is ordered once every two weeks. Fresh is bought multiple times per week. That means that the sales share of fresh online will always be much lower, as long as the order frequency does not increase. But on the other hand, you can see that the online share for toilet paper, kitchen roll and soda is increasing. People are looking for convenience, and those are products people do not want to carry around. Imagine: once every two weeks something that I need is preordered. When I then place my order, I also buy something fresh. The remainder of my shopping I can do by walking or cycling to the shop. The products then concerned are, for example, fruit and vegetables.”
People will continue going to shops?
“Undoubtedly, I am convinced of it. On the one hand, online will continue to grow considerably, groceries are home-delivered in more and more places. Therefore, supply increases. In addition, there is still a group that needs to be persuaded to try buying online. Developments are therefore still happening. Furthermore, young people are the most digital consumers, but they do not yet do the groceries. Once that generation becomes independent, the increase in online grocery shopping will continue.” On the other hand, he also sees people who will continue to go to the local shop. “Consumers who work less with shopping lists, and want to do their shopping more impulsively. They let their decision be dependent on what can be found on shop floors. Those customers, therefore, prefer going to supermarkets, online is less suitable to this group. Besides, ordering online is not free of charge. You pay extra for the home delivery, except with Picnic. There are people who are unwilling to pay these charges. It is still a threshold for many people.”
Rediscovering
Gino sees supermarkets rediscovering themselves in coming years. “That means that in future, boring DKW departments will become smaller and fresh departments will become larger. That is already the case in the Netherlands, although those supermarkets are fairly small compared to the rest of Europe. I expect more smaller shops with more space for fresh. This will be at the expense of DKW. Such things will continue to increasingly shift to online. There will therefore be too much space, meaning people will either make the supermarkets smaller, or they will clear space for other products. A good example of a supermarket that increasingly devotes itself to experience and fresh is the renewed AH XL in Eindhoven, the Netherlands. Those types of shops do well. With Jumbo you can see they are also integrating elements from food markets into the ‘regular’ shops. It is much harder to convey experience online. Seeing, smelling and experiencing can only happen in physical shops.”
Differences between the Belgians and the Dutch
Gino notices remarkable differences between the Belgians and the Dutch when it comes to purchasing behaviour. “The largest difference is in the manner in which we buy. A first factor is that more Dutch people work part-time, meaning they have more time to do their shopping. Besides, Dutch supermarkets are smaller than the Belgian ones. Dutch people also have smaller homes than Belgians. IN the Netherlands, 50 per cent of the shopping is done by car, in Belgium that is 75 per cent. Belgians go to the supermarket less often, and buy more during one visit. Purchasing behaviour is therefore very different. For example, Belgians will sooner buy large packaging. Dutch people prefer buying fresh, whereas Belgians prefer frozen products. As you can see, the differences are quite large.” For more information:
Prof. Gino Van Ossel
Retail & Consumer Goods Center
Vlerick Business School
Gino.VanOssel@Vlerick.com
Tel.: +32 9 210 98 67
Fax: +32 9 210 98 75
www.vlerick.com/retail