Getting Inside The Mind of the Shopper

What’s driving the shopper Unemployment still a problem Housing prices remain weak Foreclosures, foreclosures… Consumer lack-of-confidence The impact on shopping patterns

Where we are The new age of frugality The new age of simplicity The importance of differentiation

The questions we face How are lifestyle and other pressures affecting store selection and shopping How do today’s consumers describe their needs and how do those needs influence behavior How do supermarkets meet today’s shoppers’ needs How can understanding need states translate into competitive advantage

Who is the shopper? Time Money Personal Family

State of mind I am the KEEPER: Care for Family “I consider grocery shopping to be a very important job and take it seriously. I want to do a good job for my family. I buy what people ask for and what I think will please them, but I always make a decision that ensures it’s good for them.”

I am the QUARTERMASTER: Efficient Stock-Up “I don’t like to grocery shop, so on my major trips I buy everything I can. I like to have a lot of things on hand, so I can avoid making an additional trip to the store.” State of mind

I am the BANKER: Smart Budget Shopper “I have a planned grocery budget that I don’t want to exceed. I’ll stock-up on bargains and I want the store to make it easy for me to find for savings.”

State of mind I am the SEEKER: Discovery “I like to browse during my grocery shopping trips. Every trip is a little different. I look for new ideas, new recipes, new foods–and even some non- grocery products, like clothes.”

State of mind I am DESPERATE: Specific Item “I need something right away: a specific food, ingredient, prescription medicine, or alcoholic beverage. If it’s not on the shelf, I’m likely to go to the next store.”

I am RELUCTANT: Reluctance “If I could, I’d rather have somebody else do my shopping or do it online – anything to avoid going to the store. Right now, I put little time or effort into my shopping trips.” State of mind

I am the HUNTER: Bargain-Hunting Among Stores “On my grocery trips, I am looking for bargains on a limited number of specific products that I want to buy. I go to the store that is offering the best deals on these products.” State of mind

I am the COURIER: Small-Basket Grab & Go “Bread, milk, bananas, and beer. In and out in a few minutes. That’s what I’m here for.” State of mind

I am HUNGRY: Immediate Consumption “I’m thirsty, I’m hungry, or I am out of cigarettes.”

36% get real accomplishment from shopping 25% say shopping is an unpleasant necessity 30% say “I cook because my family needs to eat” 55% find cooking a source of satisfaction Polarized views rule

36% get real accomplishment from shopping 25% say shopping is an unpleasant necessity 30% say “I cook because my family needs to eat” 55% find cooking a source of satisfaction Polarized views rule

Supermarkets are facing strong competition Consumer Commitment Across Competition (TRI*M Index, by Channel) Convenience Stores Drug Stores Total Supermarkets Supercenter Mass Merchandiser Dollar Warehouse Club Limited Assortment TRI*M Index 70 – 100 = Strong Relationship | Over 100 = Very Strong Relationship

Clear positioning produces stronger commitment Consumer Commitment Within Supermarkets (TRI*M Index by Type of Supermarket) Supermarket Main Tier Price Oriented Upscale Supermarkets Natural/Organic TRI*M Index 70 – 100 = Strong Relationship | Over 100 = Very Strong Relationship

Overview of the Tool Store Experience Need State Prioritization Need State Opportunity Need State Selection Need State Overview Step 1 Step 2 Step 3 Step 4 Step 5

Step 1 Overview of the nine shopping-occasion-based need states

Step 2 How do you compare to your competition?

Your store experience vs. (insert competitor here) Atmosphere Product Price/Promotion Store Service Convenience

Step 3 How well are you satisfying the needs of shoppers?

Assessing your overall ability to serve Competition is Dominant (33) Equal to Competition (100) Dominant vs. Competition (166) Care for Family Smart Budget - Shopping Efficient Stock-up Bargain- Hunting Among Stores Specific Item Reluctance Discovery Small Basket Grab & Go Immediate Consumption

Step 4 Which need states fit you best?

Care for family Need States Average Transaction Size Care for Family What is the size of the need state? % of Supermarket Trips % of Total Supermarket Spending $110 20%28%

Step 5 Which need state do you want to own?

Beginning to position and brand your store(s) Select your primary need state Review the details in this tool to be sure you have a comprehensive understanding of all the information related to this need state

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