As budget-conscious consumers tighten their purse strings, supermarkets are being pushed to offer more than discounted prices, according to Queensland University of Technology (QUT) business researcher Dr Gary Mortimer.
In fact Dr Mortimer, from QUT's Business School, predicts supermarkets will return to the "old days" with retailers offering traditional old world service.
"The latest statistics are showing that retail sales dropped by more than one per cent during October 2010 and retailers have reported tough times in the lead up to Christmas," Dr Mortimer said.
"The days of simply competing on price are over. Such a strategy only erodes margins and deep discounting, like we have witnessed in the lead up to Christmas, is not a sustainable tactic."
He said supermarkets were now searching for that point of difference between them and their competitors to win back that share of the household spend.
"Customers want more than just low prices - they want theatre and excitement when they shop for groceries," he said.
"Grocery shopping is a pretty routine, mundane task and supermarkets know this, and hence this becomes an opportunity for differentiation."
Dr Mortimer said prior to the introduction of self-serve supermarkets in the 1950s, suburbs and towns were dotted with traditional grocers.
"These shops offered local product, traditional old world service, where meats and hams were prepared and cut in front of you, and where customers truly engaged with store personnel.
"Then throughout the 1960s supermarket formats changed, the focus became customer self-selection and traditional service was lost.
"Butcheries and bakeries were hidden behind walls. Fresh product was displayed behind glass cases. Turnstiles were placed at the entry points. The focus was on efficiencies, food safety and hygiene. The supermarket became a sterile ground, and they all looked the same."
Dr Mortimer said one chain was already making this happen.
"Supermarkets are becoming more open. The turnstile is going and shoppers are able to come and go as they please, without having to line up like sheep to get into the store," he said.
"Excitement and theatre is returning."
Dr Mortimer said shoppers would be able to talk to butchers about cuts of meat and cooking suggestions.
"Fresh fish on ice will be offered. Taken out from behind the glass barriers and presented, just as you might find at a local fish market.
"Fresh fruit and vegetables on ice will be used to create drama. Spruiking to inform customers of fresh baked products coming out of the oven or a new delivery of fresh prawns coming off the truck, will create excitement. There will be free sampling of cheese, hams, salamis, seasonal fruit.
"Arguably, a return, to some extent, to the past, may be the direction forward."
Dr Mortimer said in addition supermarkets would need to align their efforts to meet the changing consumer - the green shopper, the tech-savvy shopper or the belt-tightening shopper.
"For the environmentally friendly, health focused shopper, a greater range of organic products will be offered throughout fresh food departments," he said.
"We have already seen one supermarket come out promoting 'hormone free beef'.
"Gen Y's and tech-savvy shoppers will love the self-scanning registers.
"To meet the needs of the belt-tightening shopper, supermarkets will rationalise their price promotion offers in catalogues."
But Dr Mortimer said consumer behaviour was still a numbers game and promotions would drive store traffic.
"What happens instore when customers arrive will be where the battles are fought and won," he said.
Media contact - Sandra Hutchinson, QUT media officer, 07 3138 2999 or s3.hutchinson@qut.edu.au
- Dr Gary Mortimer on 0448 048 433
A high resolution photo of Dr Mortimer is available for media use
