MARKETING OF MINIMARKETS, GROCERY OR CONVENIENCE STORES
FEATURES OF THE INDUSTRY
Owners of mini-markets or neighborhood grocery stores, as well as entrepreneurs considering opening such a store, first ask themselves whether there is any sense in such a business. The issue is that neighborhood stores are often seen through the lens of competition with chain supermarkets, which is challenging to withstand in terms of assortment and prices. Many entrepreneurs believe that opening another grocery store or mini-market where several chain supermarkets are already within walking distance will not be a successful venture, and they should look for locations without strong competition. However, there is no guarantee that in an ideal location without competitors, chain supermarkets will not open over time, completely overshadowing the advantages of such a location. So, the question remains: are there prospects for mini-markets and neighborhood grocery stores?
Jumping ahead, let's provide an answer right away – yes, there are prospects, and the format of a small neighborhood store will not disappear. However, the basis for a positive answer involves factors different from those emphasized by most experts. While many experts point to proximity to home, personalized service, and adaptability to the needs of the local community as competitive advantages and success factors for small stores compared to supermarkets, we have a slightly different perspective. In our opinion, the key to the success of mini-markets lies in a systematic approach to building an integrated marketing mix that ensures long-term systematic advantages across all marketing programs.
A small note - if a mini-market chooses the discount route, with minimal investment in store design and marketing, with the lowest prices and a standard assortment, such a store will certainly find its customers. However, in this article, we will not consider this scenario a success story. Instead, we are looking at more complex cases where the owner wants to build something unique with distinctive features, attract customers from the middle and premium segments, sell at a significant markup, and remain competitive in the long run.
Before delving into the purely marketing aspects of the successful operation of neighborhood store format in our country, let's turn to international experience and show that even in countries with a high density of supermarkets per square kilometer, neighborhood stores can and do occupy a significant share of the retail market. A very illustrative example for demonstrating our logic is Japan, a country with a relatively small area but a very high population density and a large supermarket density per square kilometer. In fact, there are practically several supermarkets within walking distance in any part of the country. Moreover, since bicycles are extremely popular in the country and are owned by almost everyone, even elderly people, reaching a supermarket takes only a few minutes, wherever you are. Nevertheless, in Japan, there are currently 56 000 convenience stores, i.e., small convenient stores everywhere, compared to 5 800 supermarkets, which is almost a 10-fold difference in favor of convenience stores. Japanese convenience stores clearly understand their consumer, offer exactly what they need, and successfully compete with supermarkets, maintaining prices higher than those in supermarkets.
SOME GENERAL STRATEGIES AND APPROACHESS
So, how do you make a mini-market or neighborhood grocery store near your home successful and competitive through marketing?
- Branding and Store Concept. Unfortunately, only a limited number of market participants understand that a powerful concept that distinguishes the store or chain from others is a key factor in success. Currently, if you visit most individual and chain stores of the neighborhood format, you can see a fairly standard set of brand elements - logo, window stickers with product photos, branded uniforms for employees, and some designer solutions inside the stores. However, it's challenging to say that stores conceptually differentiate themselves from each other and from chain supermarkets. The overall impression is that the main task is "to do as everyone else does," rather than developing a unique concept, which is a big mistake. On the other hand, looking at related industries, such as specialized stores (wine and liquor, beer, cheese, sausage, meat, confectionery, etc.), you can immediately see a large number of powerful and creative concepts that effectively distinguish the stores with concepts. In our opinion, moving towards developing a powerful concept and corresponding brand is the foundation for the commercial success of neighborhood grocery stores.
- Cooked Food. The assortment of neighborhood stores should be considered based on two criteria. Firstly, the essence of the format dictates the need to have a significantly higher portion of ready-to-eat products. The neighborhood store should have more products to tired people returning home from work, who would gladly buy cooked products that closely resemble home-cooked meals in appearance and quality. Unfortunately, in our country, stores significantly underperform in this direction. For comparison, in Japan, ready-to-eat products make up to 50% of the assortment of convenience stores and are the main driver of sales. Food is placed on central refrigerated shelves, in individual portioned plastic packages of various sizes from 100 to 400 grams, which means it maintains its appearance for a long time, does not require the involvement of store personnel, looks very tasty, neat, and hygienic. Also, in separate sets in individual packages with compartments called "bento," stores combine side dishes with the main course and vegetables, allowing customers to enjoy tasty breakfasts, lunches, and dinners.
- Unique Propositions. Secondly, the assortment of a neighborhood store must necessarily include unique propositions. Again, ready-to-eat products provide a great opportunity to create a proposition that would attract consumers with its taste and originality, endearing buyers for years to come. For example, one of the stores we know created a simple but incredibly popular proposition - a signature croissant with herring and greens, which tastes so good that people visit the store specifically to buy and taste this croissant. Of course, along with the croissant, regular items are also purchased. A few tasty unique propositions, whether it's a croissant, pizza, signature salad, baked ribs, pastries, anything - along with a developed culinary department in general, will give the store such advantages that supermarkets nearby won't be able to hinder the success of the business. Unfortunately, most mini-markets and grocery stores don't even try to create such a competitive advantage and trade exclusively in products of well-known brands that can be found anywhere, while unique propositions determine the success of the business for years.
- Standard Assortment. Strangely enough, you can effectively compete with standard packaged assortments as well. Chain supermarkets usually operate on long-term contracts with regular suppliers of basic products. However, supermarket shelves are limited, and there are a lot of manufacturers. Therefore, a mini-market or neighborhood grocery store needs to choose suppliers that are not sold by competitors around. In such categories as sausage products, cheeses, dairy products, and others, it is quite possible to find brands that offer tasty and high-quality products that are not available in supermarkets. Some residents around will definitely notice and appreciate such a selection of goods in favor of a small store.
- Local Marketing. Most stores limit themselves to active marketing only at the initial stage immediately after opening, something like balloons at the entrance or distributing welcome leaflets to passersby. In the long run, this is not enough. For example, it should be understood that if there is no promotional offer on the billboard next to your store, there will be an offer from a chain supermarket. If this situation continues for years, then in the end, the marketing of a large chain will succeed, not in favor of a small store. Local marketing should include outdoor advertising near the store, online advertising with a targeting radius of 1-2 kilometers, options for cooperation with the local community, children's marketing, and more.
It should be noted that within one article, we cannot show all the pitfalls or demonstrate all the marketing methods and tools specific to minimarket or grocery store marketing. In other words, these are just a few examples of quite general marketing approaches that can be applied to small retail business. From a practical point of view, everything is much more complicated - the choice of a specific marketing strategy and tools depends on the target audience, competitive environment, and unique advantages of the company, etc. At the same time, it is desirable to understand that minimarket or grocery store marketing may encounter a number of specific problems that are unique to each individual case and require an individual approach to their solution.
Achieving the commercial objectives of a company through effective marketing requires a deep understanding of the market situation, consumer needs, the ability to analyze and explore alternatives, and a creative approach to problem-solving. Our company has extensive experience in defining optimal marketing strategies for our clients' businesses, creating a strong brand and market positioning, as well as developing a marketing mix and implementing the chosen strategy. You can familiarize yourself with the services and solutions our company offers on the "Services
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