Rising costs created unprecedented challenges for grocers as dollar stores made their moves into the grocery space. A recent lapsed/lost analysis from InMarket found that grocery was the most susceptible category for losing customers to dollar stores for a national mass merchant.
The “Value Wars” competition has forced both sides to adapt in order to attract and retain customers across all income levels, with dollar store chains launching higher ticket items and leaders like Walmart and Target debuting lower-cost lines.
Today, value alone is no longer enough. Walmart’s recent moves across its quality-driven value line and omnichannel offerings point to the direction we’re heading. While traditional grocers can’t undercut dollar store prices, they can amplify the benefits that dollar stores notoriously don’t have — quality and convenience, including expanded services and meal options.
Here’s how to establish that winning balance of value, quality and convenience to emerge as a Value Wars leader:
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Amplifying What Matters Most for Your Customers
Walmart’s bettergoods addresses consumers’ perceived value, which often mixes price and quality. Focused on making quality food accessible, most products will be under $5, matching dollar stores’ value.
Creating higher-quality products at a lower cost addresses key demographics, like high-income shoppers and trendy Gen Zers who might be looking to save on groceries but are eager for better quality, particularly across product categories like dairy, canned goods and condiments where we’re seeing many shoppers trade down.
In addition to aligning with recent moves from competitors like Target, it also nods to shifts in behavior across the dining category. A recent survey found 68% of diners are trading down from restaurants to cooking at home because of costs. The bettergoods “Restaurant Style” and “Made from a Family Recipe” products could easily pique the interest of shoppers looking for specialty items at a fraction of restaurants’ prices. Additional value grocers also are adapting by dedicating more space to meal options and promoting food services to capitalize on this trend.
Walmart’s bettergoods strategy emphasizes the importance of uncovering customers’ key motivations, with in-depth analyses both within the four walls of your store and beyond. A 360-degree look at performance in the competitive landscape and adjacent categories elevates customer-driven strategies, empowering retailers to more effectively reach their customers and drive awareness, sales and loyalty.
Driving Incremental and Repeat Purchases with Convenience
One of the biggest challenges for grocers is driving both incremental purchases and repeat visits as consumers’ shopping patterns are fragmented. An InMarket study found that loyal Dollar Tree shoppers also visited Walmart, Target, Sam’s Club and Aldi within the same month.
Leaning into convenience, like Walmart’s extended hours delivery, provides a great solution. Between bettergoods and extended delivery options, Walmart can create a winning promotion, combining value, quality and convenience, to drive consideration throughout the customer journey. In a cross-channel campaign with complementary mobile, social and CTV ads, for example, Walmart could build an interactive recipe experience, highlighting a 10-minute meal featuring bettergoods products, with a link or QR code call-to-action enabling shoppers to quickly add the items to their cart for same-day delivery.
There are countless ways to increase basket size and drive repeat visits by emphasizing the benefits that shoppers can’t get elsewhere.
Leveraging Learnings to Drive Success
Every ad dollar becomes more precious amid heightened competition, requiring marketers to re-evaluate their measurement approaches to ensure they don’t fall behind.
Real-time technologies including measurement solutions can help. Upleveling measurement infrastructure can be done in three strategic ways: 1. Adopt a holistic approach to KPIs combining brand, visit and sales lift; 2. Maintain a real-time pulse on performance to understand shifts in consumer behavior as they happen, be it visits or sales KPIs and; 3. Optimize inflight campaigns to get the most out of ad spend.
Looking at visitation and purchase behaviors can be enormously helpful in understanding who you may be losing customers to, and for what specific goods and services. Being agile and adjusting inflight based on existing campaigns also are critical to optimizing every dollar spent.
This holistic real-time measurement approach allows you to sense and respond to customers’ needs in real time while building a robust first-party data set to inform future marketing efforts.
The Value Wars aren’t going anywhere — the environment and shifting consumer behaviors are just making them more difficult to respond to. Luckily, technology and insights are advancing and becoming increasingly real-time, with AI mining critical data components like visits and purchases to improve every interaction.
For marketers, it’s become more important than ever for grocers to predict the future. Lean into data, focus on the customer and amplify differentiation and you’ll not only see success, but set the trends others will have to follow.
Michael Della Penna is InMarket’s Chief Strategy Officer, bringing 30+ years of digital marketing experience. Previously Della Penna served as Cuebiq’s Chief Revenue and Growth Officer, where he built and led the sales, customer success and supply partnerships teams. He also served as Group VP, Oracle Marketing Cloud and SVP, Emerging Channels at Responsys. Additionally, he founded Conversa Marketing, a social CRM company that was acquired by StrongView. Della Penna’s other notable senior positions include Epsilon’s CMO and CMO at Bigfoot Interactive. He has been recognized among B-to-B Magazine’s “100 Most Influential People in B2B and Interactive Marketing” five times.
