Experience Radar 2013: Lessons from the US Grocery industry

volume 2

Locating the sources of value behind exceptional customer experiences

December 2012

Experience Radar 2013Lessons from the US Grocery industry

2 Experience Radar 2013 | US Grocery industry

Title of the pageSubtitle hereTitle of the pageSubtitle here Few experiences happen as often or grab

share of wallet and stimulate the senses more than grocery shopping. Expectations are set and reset at an unprecedented pace. Incredibly dynamic, Grocery is a testing ground and also a great learning place for other industries.

Grocery today is increasingly less infl uenced by supply chain and more by design prin-ciples. Think about how many experiential concepts have been borne from the Grocery environment—packaging evolution, impulse buying, immersive interactions and trial enticement, to name a few.

So much of what is important to a customer’s experience (e.g., convenience, presenta-tion and quality) can be found in Grocery. Grocery is the pinnacle of where products, services and environments intertwine. To-day’s shopper is equipped with mobile apps and virtual offers, depends on just the right blend of self-service and helpful staff, and is increasingly immersed in an environment that behaves more like a restaurant than the old corner market.

Given increasing competition, fi ckle custom-ers and slim margins, grocers feel an im-

Experience mattersCustomer expectations are set and reset everywhere today. Business leaders must learn wherever they can.

mense pressure to connect with and earn the loyalty of their customers every day. Having faced commoditization earlier than most industries, Grocery has turned to experience to grow the top line and maintain margins. Other industries would do well to heed the hard lessons learned in Grocery.

Experience Radar helps companies locate two elements critical to pleasing their cus-tomers and growing their business: experi-ence segments and experience enhancers.

• Experience segments are those natu-ral groupings of customers that appear once survey respondents are categorized by the features they value, their demo-graphics and behavioral profi les. They’re who you can build a business around.

• Experience enhancers are those market insights that, when translated into practical actions, can create value for your customers. They’re what you might do to grow your revenue.

Experience Radar points the way to value and profi ts by identifying ways to serve your customers—particularly those seeking an experience that’s second to none.

Best,

Lisa Feigen Dugal PwC US Retail & Consumer Advisory Leader

Paul D’AlessandroPwC US Customer Impact Leader


04 Grocery challenges and opportunities

05 The 5 core attributes of the Grocery customer experience

07 Putting the Grocery customer fi rst—the experience segments

12 Building experiences that customers value—the experience

enhancers

30 About moments of truth

31 More about our methodology

32 Appendix—more on the experience segments

Table of contentsCustomer insights for the US Grocery industry

volume 2

PwC’s Experience Radar helps businesses find the often hidden sources of value that drive exceptional, differentiated customer experience.

By helping grocers rank their product and service features, Experience Radar locates opportunities to create value and thereby bolster top-line growth and bottom-line results.

This year’s series of studies measures the experiences of about 6,000 US consumers across multiple industries.1 The Experience Radar assigns value to a broad set of customer experience attributes broken down into industry-specific elements and then ranked by what target segments value most.

Our methodology employs a conjoint survey technique to reveal insights that can be honed to improve precision. Other, more traditional customer experience studies typically do not tie to “hard economics” like value measures, price elasticity and churn metrics. Experience Radar does.

While the results outlined in this report are at the industry level, PwC can use this same methodology to develop an Experience Radar that is customized to your business.

1 Retail Banking, B2B Software, Media & Communications, Grocery, Airlines, Pharmaceuticals and Home Services.


Grocery challenges and opportunities

Like all retailers, grocers are focused on their brick-and-mortar footprint, store remodels/renovations and how best to operate in an omnichannel world. And, because everyone

To delight customers through experiences they value, grocers must call on everything —from the newest technologies such as geo-tagged mobile coupons to the cashier’s smile

shops for groceries, these retailers must be ready to cater to a wide range of consumer preferences and demands, all the while balancing the threats identifi ed here.

as he checks out a particularly demanding customer. They should not only accept but relish their role as the retail testing ground for best-in-class customer experiences.

Threats

• Fierce competition from supercenters, dol-lar stores, traditional grocers, local stores, primarily competing on price

• Fluctuation in commodity prices and margin pressure

• Meeting the changing expectations of customers, particularly given rapidly changing demographics

• Determining how to achieve an omnichan-nel customer experience (e.g., how much investment, if any, to make in going online)

Opportunities

• Satisfying customers through value-added service, amenities and offerings

• Broadening acceptance of private label products

• Expansion of loyalty programs to offer special discounts targeted at individual consumers as well as rewards for loyalty

• Being in the right location with the right product mix at the right time


Experience Radar measures the experiences of thousands of consumers

We use our primary conjoint survey technique1 to assign values to these attributes at an industry level

The 5 core attributes of the Grocerycustomer experience

Community 5Customer’s personal brand and connections with others

Friendliness and ease of obtaining help

Anytime, anywhere access

Convenience 3Performance and value received

Presentation 4Aesthetics, arrangement of offer

1 Adaptive Choice-Based Conjoint.

Quality 1 Support 2


Title of the pageSubtitle herePutting the Grocery customer fi rst

Customer experience is an essential differentiator for grocers—and given how often people shop for groceries, grocers have many opportunities to experiment and fi ne tune.

Peel back the onion. Get to the core of what your customer is and values.

Experience Radar can help you: • Build experiences that matter to your customers using

a variety of levers such as presentation, community and human service

• Figure out whom to target and how to market experience-based offerings

• Set yourself apart in an increasingly commoditized industry of low margins

• Connect the dots between consumer experience, customer value and sustainable fi nancial performance

• Increase basket size and frequency

While the insights in this report focus on

the Grocery industry, many of the lessons

are applicable to customer experience

management across industries.


What is it?This schema uncovers which customers value grocery experiences and what they want.

How’s it different?Traditional market segmentation is usually based purely on demographics. In contrast, we categorize grocery customers by the features they value, their social demographics and their behavioral profi les.

2013 experience segmentsExperience Radar’s Grocery customer segmentation

What is its value?This segmentation provides direction on whom to target and how to market experience-based offerings. Use it to complement the work you are already doing with customer segmentation and voice of the customer.

The 4 experience

segmentsExperientialErica

TraditionalTerri

MindfulMaria

FrugalFred1 2 3 4


ExperientialErica

TraditionalTerri

MindfulMaria

FrugalFred

Who is this segment?Most affl uent and educated segment, nearing or in retirement

Oldest segment with many retired and living with their spouses in small suburbs

Youngest segment with many single urbanites

Middle-aged and middle-income segment, many living with a family in the suburbs

What does this segment value?She wants a premium experience across the spectrum—from knowledgeable employees to wide product selections. She is happy to switch to grocers that go the extra mile.

A traditionalist, he doesn’t care for digital or specialty frills. He enjoys simple, conventional ways of shopping as well as conventional brands.

On the go, she wants grocery shopping to fi t easily into her busy schedule. She is eager to save time—she values ordering online, preplanned meals and mobile applications for checkout and coupons.

Juggling a family and demands on his time, he typically shops once a week. He views grocery shopping as a chore, and he lets price trump everything else.

How important for this segment is sharing feedback on experiences?• Most likely to spread

the word among family and friends when she fi nds a great grocer

• Most likely to share good experiences for years to come

• 4 out of 5 share good experiences with friends and family

• Close to 70% stop sharing memorable experiences after a month

• Most likely to broadcast bad experience across her networks

• Uses both online and offl ine channels

• Vocal about his good experiences

• Even more vocal about bad experiences and most likely to share for years to come

Snapshot of Grocery segments

ExperientialErica

TraditionalTerri

MindfulMaria

FrugalFred

1 2 3 4


Comparing the experience segments

FrugalFred4Traditional

Terri2 MindfulMaria3Experiential

Erica1

Which segment has the greatest lifetime value?

How to serve them • Offer a wide range of specialty products.

• Train staff to be extra courteous and leverage her good word-of-mouth to attract new customers with similar preferences and behaviors.

• Invest in staff to help him while he checks out.

• Retain traditional products or switch out gradually when new options are introduced.

• Help him feel that his store time is effi ciently spent.

• Clearly mark sale items and direct him to them.

• Keep checkout kiosks open and quickly moving.

• Provide conve-niences to make her life easier and healthier.

• Ensure your range of products includes organic produce as well as meal planning and delivery services.

Most

Least


Overall, what do customers value in grocery shopping?

High-quality customer experience is a defi ning feature for shoppers at grocery stores. When they can afford it, customers are willing to pay a premium for well-trained and attentive staff who know the store well. Great staff can make shopping trips far more effi cient.

In addition to good service, customers seek a strong emotional reward from their shopping experience. Buying organic food and products with environmentally friendly packaging makes shoppers feel more positive about their choices.

Customer value for top features

This chart ranks features1 based on customer demand and willingness to pay for each feature. The percentages indicate the premium size customers are willing to pay for each feature.

Lower Willingness to pay

Dem

and

Low

er

Higher

Hig

her

2%Shopping options

In-store and online markets

4%

Farm-sourced productsOrganic and locally sourced

10%Loyalty points

Storewide discounts

11% Staff knowledgeStocking personnel throughout the store

14%

CheckoutAttendant checkout

9%Eco-friendly packaging

Recyclable materials

1 Features tested, however not included above, include store type, weekly coupons, product labels, and meal planning.


Comparatively, how do segments value features?

Identify a segment’s demand and willingness to pay for a feature com-pared to the overall population.

Comparative willingness to pay a premium for the feature

This chart compares segments’ demand for individual features1 as well as their willingness to pay for the feature. The percentages indicate the size of the premium that the segment is willing to pay for an enhanced experience with that feature. The size of the bubble indicates the demand for the feature.

Overall populationLess willing More willing

CheckoutAttendant checkout

Loyalty pointsStorewide discounts

Farm-sourced productsOrganic and locally sourced

Shopping optionsIn-store and online markets

Ecofriendly packagingRecyclable materials

Experiential Erica Circle size proportionate to feature demandFrugal FredTraditional Terri

3%

4%

3%

9%

9%

11%

Staff knowledgeStocking personnel throughout store 9% 14%13%

27%24%

20% 28%

23% 30%

Mindful Maria

Compared to the other segments, Experiential Erica1 and Mindful Maria1 are the most willing to pay across key features. Both segments are willing to pay a premium for better-quality farm-sourced products and environmental packaging. And both segments see staff knowledge and support as critical to a good grocery experience.

Traditional Terri1 values customer support along with Experiential Erica and Mindful Maria. As an older customer, however, he wants a more conventional shopping experience from products to packaging.

1 Links to 2013 Grocery Experience Radar segments of Experiential Erica (high-income and health-conscious parent), Mindful Maria (young, urban, eco-conscious conve-nience seeker), Traditional Terri (retiree, conservative and consistent shopper) and Frugal Fred (middle-aged, low to mid income, and deal seeker).

1 Features tested, however not included above, include store type, weekly coupons, product labels, and meal planning.


Title of the pageSubtitle here

5Empower customers to makesatisfying choices

2Emotionalize shopping

1Make it fast

Balance high-techwith high-touch

4Avoid spoil

2013 experience enhancersBuilding (and growing) your business by designing and delivering exceptional customer service

3

The fi ve behaviors that grocers can adopt to enhance customer experience and create value are:


Top infl uencers of purchase

ExperienceEnhancer1

Convenience matters in grocery. And convenience

in grocery means—fi rst and foremost—short

checkout lines. Be sure to remember other factors,

too, such as good location and mobile applications.

Make it fast

We live by the clock. We want to get in and out of grocery stores as quickly as possible so we can get on with our day. This impatience makes convenience

a top infl uencer of purchase when customers are deciding where to shop—and also a top driver of great experiences.

Page one

37% 28% 20% 5% 4%

Price Convenience Product breadth Reward card Reputation

Fast lines matter more than other aspects of convenience

such as location and self-checkouts. Fast checkouts

account for 30% of memorable great experiences.

of customers purchase based on convenience

of customers purchase basedon convenience

28%

ExperienceEnhancer1


1 Stone, Alex. "Why Waiting is Torture," The New York Times. August 2012.

2 Links to 2013 Grocery Experience Radar segments of Experiential Erica (high-income and health-conscious parent), Mindful Maria (young, urban, eco-conscious convenience seeker), Traditional Terri (retiree, conservative and consistent shopper) and Frugal Fred (middle-aged, low to mid income, and deal seeker).

1 in 5 shoppers do not repurchase after a bad experience. And 2 in 5 smartphone users do not return.

Post-visit

Customers want service on-demand and will walk out if they do not get it.

Waiting at a grocer is more frustrating than waiting at doctors’ offi ces and the Department of Motor Vehicles combined.1 Our internal clocks exaggerate how long we wait for service—a 4-minute wait may feel like 20 minutes. And with every tick of our internal clock, the experience degrades.

7x





Make it fastPage two

Mindful Maria,2 a member of the digitally plugged-in generation, relies on mobile convenience not only to check out but also to plan what to purchase and eat. Mobile curates her experience.

Pre-visit During

digital meal planningand delivery

7xmobile

couponssmartphone

checkout

1.8x 1.6xmore than others

Mindful Maria wants delivery and meal planning services more than others

7xMindful Maria seeks:

KIOSK KIOSK“Not enough cashiers...I just wanted to be done and go home.”

“Only 2 cashiers open and lines so long that I never went back again to that store.”

1


ExperienceEnhancer

Recommendations

You need to:





Make it fast

Be transparent with waiting

Empower customers with information about checkout lines and wait times. Use segment-specifi c channels to inform customers about wait times and best times to shop. Once their

expectations are set, customers are less likely to become irritated or leave with a negative impression of the entire shopping trip.

In a wired-in world, customers value technology-savvy solutions for store checkout. Prioritize and pilot mobile and tablet options—consider, for example,

mobile checkouts and coupons that let shoppers check out on their own via smartphone apps or staff handheld devices.

Boost digital convenience

Make meal planning easyCustomers want options that are kind to their waistlines and to their wallets. Figure out alternatives to restaurant fare that will lure in customers seeking convenience, variety and well-being. One option is to

expand your culinary horizon and invest in a “grocerant”—a mix of grocery and restau-rant ready-to-eat options far more inviting than the traditional deli counter.

Page three


Some hidden truths surfaced in this year’s Experience Radar

The big question: What might this mean for the future of your business?

In-store

Local and organic

Rude

98% of shoppers shop in a physical store.

46% want organic products and will pay a 4% premium for them.

28% of bad memorable experiences resulted from discourteous staff.

is still the preferred way to shop for groceries.

products are valued by 1 in 2 customers.

employees account for almost a third ofbad experiences.


Price is important. But sensory experiences—the thrill of fi nding a good deal and the drama of the presentation—are also key.

Customers often choose what to buy based on how they feel as they shop. Evoking emotions that customers value will keep them coming back.

ExperienceEnhancer2

Emotions are generated by products, services,

and the spaces in which they exist. Create

relationships with customers by evoking positive

emotions based on what they care about.

Emotionalize shoppingPage one

For 2 in 5 customers, price is the top factor in determining where to shop.

Validate these customers’ choice of store. Help them feel good about saving money.


Lives for the bargain rush.Price sways his purchase decisions more than those of any other segment.

10% Premium customers are willing to pay fora storewide discount loyalty program.

“Helped me stay on budget by pointing out coupons and planning my meals.”

Importance of price

20%OFF

IN-STORESAVINGS!

Mindful Maria1

Experiential Erica1

Traditional Terri1

FrugalFred1

11%0%-3%-6%

“They honor other stores’ prices.”

“Saving a ton of money with coupons for things I love.”10%

premium customers are willing to pay for a storewide discount loyalty program


Brands that refl ect customers’ natural and sustainable values reinforce their sense of self.

30% premium Mindful Maria1 will pay for recyclable packaging

“I want the gold standard of food; health is my focus.”





Emotionalize shopping

Experiential Erica1 and Mindful Maria1 receive a strong emotional reward from buying good-for-you products untarnished by artifi cial additives, sweeteners, colorings and preservatives. It is even better when the packaging or sourcing of products support these customers’ values of sustainability and reuse.

The 150% growth rate of farmers’ markets in the past decade2

means that sustainable and healthy practices are here to stay.


2 US Department of Agriculture, August 2012.

Mindful Maria

16% for organic and local

30% for recyclable packaging

Experiential Erica

19% for organic and local

23% for recyclable packaging

Rec

ycla

ble

pac

kag

ing

Organic and local products

Value for natural

Traditional Terri1

Frugal Fred1

ExperienceEnhancer2Page two


Go the extra mile 1 Links to 2013 Grocery Experience Radar segments of Experiential Erica (high-

income and health-conscious parent), Mindful Maria (young, urban, eco-conscious convenience seeker), Traditional Terri (retiree, conservative and consistent shopper) and Frugal Fred (middle-aged, low to mid income, and deal seeker).

2 PwC, Retailing 2020: Winning in a Polarized World. PwC Report, 2012.





Emotionalize shopping

Recommendations

You need to:

Personalize loyalty programs

Shoppers will return to stores that offer them consistent deals on products they love. Invest in robust loyalty programs that reward regular customers with discounts and special deals. Analyze customer behavior

and use predictive business intelligence to offer targeted and personalized deals. These programs not only excite customers but also help them develop an emotional attachment to your store.

Organic lifestyles are not a passing trend. Expect this trend to grow exponentially in the coming years. Expand your organic and local offerings to lure the fast-growing number of grocery shoppers who care about where

their groceries come from and how they are transported. Customers like Experiential Erica1 and Mindful Maria1 are willing to pay a premium for the peace of mind that comes from buying organic and local.

Offer organic and local

Go greenCustomers embrace brands that reinforce their lifestyles. With growing awareness of global warming and recycling, customers like Mindful Maria are willing to pay a premium for reusable and sustainable packaging. Invest in sustainable solutions

to bring customers in the door—also keep your bottom line in check. Sustainability reporting and practices have skyrocketed 150% in the last two years and are expected to continue to rise.2

ExperienceEnhancer2Page three


Staff can make or break a shopping experience.

Customers still mostly shop for groceries in person.

They value help from staff—and not just behind the

register anymore.

Balance high-tech with high-touch

1/3 of memorable bad experiences due to staff attitude

Promotions and high-tech gadgets draw customers in, but…

“There was a very long line and only one rude cashier.”

“I hate it when cashier ignores the customer to gossip with friends.”

“I hate having to wander forever to fi nd someone.”

Good experience drivers Bad experience drivers

21% of customers do not repurchase after a bad experience. Rude employees have a permanent impact on business.

48% 32%

Despite the rise of e-commerce, 98% of grocery shopping is done in

store. As the #1 infl uencer, staff quality impacts where

customers shop one-third of the time.

Staff

KIOSK

KIOSK…good experiences with staff all over the store are what keep customers coming back.

ExperienceEnhancer3Page one





register anymore.


28% premium Traditional Terri1 is willing to pay for attendant checkout

Different customers value different staff services in the store.

Checkout via phone

At checkout

Checkout via kiosk

Acrossstore

Checkout via attendant

Very specializedknowledge

Feature enhancement

Feature enhancement

Cu

sto

mer

val

ue

Cu

sto

mer

val

ue

Intimidated by new technology, he wants employee help when he checks out.

She wants a boutique experience. She expects staff throughout the store to offer personalized recom-mendations at a moment’s notice.

Want staff help at checkout and are willing to pay a

28% premium

Want staff across store to help select products and are willing to pay a

13% premium

3 out of 4

3 out of 5Experiential Erica1

Traditional Terri1







register anymore.


As the number one driver of good and bad experiences, employees must be hired and managed with care. Poorly trained and motivated staff leave customers feeling frustrated and exasperated. Reevaluate your

Although high-tech self-checkouts are essential, ensure they’re not the only option. Customers like Traditional Terri1 feel more at ease with conventional methods and will pay a premium for

Have a clear understanding of your shoppers’ preferences. Customers like Experiential Erica1 want a boutique experience tailored to her needs. Invest in a few on-call specialists who have deep

Invest in employees

Balance automation

Know your customers’ preferences

Recommendations

You need to:


training and benefi ts program to create a front-line staff who create engaging experiences that motivate shoppers to return and employees to stay.

attendant checkout to avoid the technology diffi culties. Many customers also enjoy the friendly banter with and sense of community from engaging attendees on their way out.

product knowledge and can assist these shoppers. Others—like Traditional Terri1—are looking for a neighborhood feel, and would rather have a friendly checkout agent than one with specialized knowledge.



Shoppers are easily frustrated and quick to

switch grocers. But instead of telling their

grocers about bad experiences, they warn their

networks instead.

Avoid spoil

Customer relationships spoil as easily as produce.

Almost three-fourths of customers shop at more than one grocery store. They are not loyal and may even be antagonistic—even before they have bad experiences.1 And bad experi-ences at grocers are all too common.

2/3rds of customers have had bad experiences at a grocer

1 “Grocery Industry Falls Short in Building Customer Loyalty.” MarketingCharts. IBM, 07 Nov. 2011.

“Lines were absurd...never went back.”

“My apples were rotten, didn’t shop there again.”

“They refused to let me return anything.”

“It was so dirty, I left immediately.”

Of those who had a bad experience, half look for better options.

Reported a bad experience

more than

2/3rds 2 in 5 customers looking for better options never return after a bad experience.



Customers do not report bad experiences to their grocers—but they are quick to do so with their networks. And they don’t stop talking for a long time.

2.1x grocery shoppers more likely to never report issues

92%

82%

1 in 3

Percentage who do not report issues




networks instead.

Avoid spoil

46% of customers do not report issues to their grocer

Grocery

willing to share bad experiences with others

of the online population use social media

share their bad experiences six months or longer

Retail Banking

Media & Communications

46%

24%

21%

With their grocers, customers are quiet. They share less than in any other industry.

With their friends, customers are very talkative.






networks instead.

Avoid spoil

Recommendations

You need to:

Seek feedback

Make returns easy

Customers often do not provide feedback to grocers because they do not know how to do so and they do not know if they will be heard. Create a vigorous social media strategy and listen hard to what customers

are saying. Apply what you learn to fi x issues in the store. In addition, create incentives for customers to provide feedback—you will get more information and the interaction boosts customer stickiness and brand loyalty.

Customers who have had a service failure resolved quickly and properly are more loyal to a company than customers who have never had a service failure. Develop a comprehensive, well-advertised service

recovery strategy that includes a catch-all return policy and an open culture. By fostering an ongoing relationship with your customers, you will create many customer advocates.



Mapping attributes to segmentsWhat does this mean for how you build customer experiences? Experiential Erica Traditional Terri

Mindful Maria Frugal Fred

People value different attributes of the consumer experience. One striking similarity we found across three of the segments is the appreciation for convenience. Connection with the community is also notable for Experiential Erica1 and Mindful Maria1, who both want eco-friendly and local products.

Community 5Customer’s personal brand and connections with others

Support 2Friendliness and ease of obtaining help

Convenience 3Anytime, anywhere access

Quality 1Performance and value received

Presentation 4Aesthetics, arrangement of offer


Community14

Support13

Quality13

Presentation11

Convenience/Accessibility

22

Community10

Support8


12

Quality21

Presentation17

Community16

Support13

Quality15


19

Presentation11

Presentation9

Community9

Support10

Quality9


15


Customers are inundated with product information

and ways to learn about the best products for them.

They are looking for ways to make their shopping

decisions easier.

Empower customers to make satisfying choices

20% rank product selection as a top purchase driver

Knowledge may be power, but it can also paralyze.

Customers have innumerable ways to learn about new products.

Customers want a lot of choices, but choice can also immobilize.

70%

• labels

• online posts

• websites

• blogs

Research grocery products on own instead of asking employees or other customers

A new blog launches every half a second.1 That’s one reason why shoppers are coming into stores better prepared than ever before—but also fl oundering in a fl ood of data about products that may be right for them.

Vast product selection = Top 3 purchase driver

“I always choose the grocery store with the largest selection of products.”

Customers need help navigating the choices provided

Conduct product research

1 CNET News. Uprise of Blogging. 2010.



Product claims, such as gluten free or 100% natural, can alleviate choice paralysis.

Overall, 1 in 3 customers want labels that clearly call out healthy products. Specifi c segments crave healthy product labels even more:




decisions easier.


1 in 3 customers want product labels

1 in 2

2 in 5

Want healthy product labels

Mindful Maria1

Experiential Erica1

The unfamiliar feels risky—so shoppers tend to stick with the products they know. In-store food tastings encourage customers to try new products and add emotional interest to grocery trips.

Free in-store food tastings drive 44% of impulse purchases.

“Let me open any product in the store to sample.”

“I tried a free sample and had to buy for my family.”

“Offers free samples of new products that infl uence my

purchases.”


Emotional interest

Trial of new products

eartealthy






decisions easier.


Limitless options overwhelm customers, causing purchase paralysis. Invest in a labeling strategy to help customers cut through the clutter of product information to make informed decisions about food

quickly, easily and with confi dence. Labels that clearly identify the best selections for a customer speed up decision making and make shopping more enjoyable.

Shoppers turn to third parties—like blogs, magazines and articles—to learn about new products rather than to their grocer. Establish yourself as a trusted advisor by offering recipes, nutrition tips, new product

samples and general advice. Create both physical and digital “hubs” of information. By giving needed information, you will create stronger relationships with your customers.

Customers are risk averse, and they are weary of trying new things. Mitigate the risk by offering free samples to encourage experimentation. You will fi nd that customers are more likely to purchase

after sampling. Just as important, enjoying free samples adds to the positive emotions customers feel in the store. Let customers try out new products and return them if they aren’t satisfi ed.

Direct, not overwhelm

Become the go-to source

Offer a little, gain a lot.

Recommendations

You need to:



Percentage of respondents who attribute positive

MOTs to friendly, helpful staff

32%

Create a positive moment of truth and you will have loyal customers.

On the fl ip slide, create a negative moment of truth and you have a brand detractor.

The words used most often by those describing a positive moment of truth

The words used most often by those describing a negative moment of truth

Percentage of respondents who attribute negative MOTs to unhelpful staff1

38%

1 Word clouds derived from 2013 Grocery Experience Radar survey data.

Moments of truthPowerful events in the lives of consumers that often defi ne their opinion of a grocer


This year’s Experience Radar study measures the experiences of about 6,000 US consumers across multiple industries.1 PwC conducted on-line fi eld work from May through July 2012. The study was designed to uncover experience “recipes,” pricing options and linkages to customer loyalty.

We probe into the consumer responses through the lens of “experience attributes.” These attributes include:

• Quality—Performance and value received

• Support—Friendliness and ease of obtaining help

• Convenience—Anytime, anywhere access

• Presentation—Aesthetics, arrangement of offer

• Community—Customers’ personal brand and connection with others.

By using adaptive choice-based conjoint analysis, Experience Radar reveals customer trade-offs between different sets

More about our methodology

of experiential features and the value and willingness to pay consumers place on each feature. It also probes into other areas such as purchase behavior, moments of truth (MOT), and word-of-mouth marketing within each industry. The study combines and assesses these data elements to create a set of experience-based insights and a segmentation schema for each industry.

Our methodology employs a conjoint survey technique to pinpoint insights. Other, more traditional customer experience studies typically do not tie to “hard economics” like value measures, price elasticity and churn metrics. Experience Radar does.

While the results outlined in this report are at the industry level, PwC can use the same methodology to develop an Experience Radar study that is customized to your business and identifi es business accelerators.

1 Retail Banking, B2B Software, Media & Communications, Grocery, Airlines, Pharmaceuticals and Home Services.


AppendixThe different segments


Seeker name here ExperienceEnhancer1

33

Seeker name hereExperiential Erica

How does this segment grocery shop?

• Wants a premium experience across the spectrum—from knowledgeable employ-ees to wide product selections

• Happy to switch to grocers that go the extra mile

• Enjoys interacting with staff as she moves around the store

• Selects specialized products 2x more than other segments

• Considers product depth when deciding where to shop

How much do they share feedback on experiences?

• Most likely to spread the word among family and friends when she fi nds a great grocer

• Most likely to share good experiences for years to come

How to serve them?• Offer a wide range of specialty products

• Train staff to be extra courteous and le-verage her good word-of-mouth to attract new customers with similar preferences and behaviors

Who is this segment?

• Most affl uent and educated segment

• Nearing or in retirement

• Places a high value on experience


ExperienceEnhancer1

1 Color coding based on index percent of specifi c segment compared to other segments.

Demographics

Grocery usage

Top grocery preference

Top grocery experiencethemes

Channel usage

Age 45-64 yrs

Annual household income

$150K+

Employment status

Not employed

Residence Owns house

Urbanicity Small town or rural area

Marital status Married

Minority presence

19%

Attendant checkout 64%

Organic and locally sourced products

71%

Recyclable materials packaging

76%

Helpful and courte-ous staff

32%

Staff product knowl-edge

12%

Attractive pricing 11%

Average spend $5oo+ Interaction with grocer Every day

Learn about products

Do it myself 69%

Help from company 13%

Buy products

Do it myself 34%


Resolve issues

Do it myself 9%


Experiential Erica

Key1: Very high High Moderate Low Very low


Traditional Terri


• Enjoys simple, convenient ways of shopping as well as traditional brands

• Is twice as likely as other segments to want traditional products over local and organic and regular packaging over compostable and recyclable

• Is in no rush for self-checkouts and prefers attendants


• 4 out of 5 share good experiences with friends and family

• Close to 70% stop sharing memorable experiences after a month

How to serve them?• Invest in staff to help him while he

checks out

• Retain traditional products or switch out gradually when new options are introduced


• Oldest segment, with many retired and living with their spouses in the suburbs

• A traditionalist who does not care for digital or specialty frills

ExperienceEnhancer2


Traditional Terri

Demographics

Grocery usage

Top grocery preferences

Top grocery experiencethemes

Channel usage

Age 65+ yrs


$75-100K

Employment status

Retired


Urbanicity Small town or rural area

Marital status Separated

Minority presence

23%


Conventional products

95%

Standard materials packaging

78%


30%



13%

Average spend $500+ Interaction with grocer At least every week


Do it myself 63%


Buy products

Do it myself 29%


Resolve issues

Do it myself 10%




ExperienceEnhancer2


Mindful Maria


• Values ordering online, preplanned meals and mobile applications for checkout and coupons

• Prefers self-checkout

• Values recyclable packaging

• Wants locally sourced, organic products that are clearly labeled


• Most likely to broadcast bad experience across her networks

• Uses both online and offl ine channels

How to serve them?• Provide conveniences to make her life

easier and healthier

• Ensure your range of products includes organic produce as well as meal planning and delivery services


• Youngest segment with many single urbanites

• On the go

• Wants grocery shopping to fi t easily into her busy schedule

• Values friendliness

ExperienceEnhancer3


3 ExperienceEnhancerMindful Maria

Demographics

Grocery usage


Top grocery preferencethemes

Channel usage

Age 18-24 yrs


≤$25K

Employment status

Student full-time

Residence Rents apartment or condo

Urbanicity Major metropolitan area

Marital status Engaged

Minority presence

44%

Self checkout via kiosk

53%

Organic and locally sourced products

66%

Recyclable materials packaging

81%


37%


16%


Average spend $100-150 Interaction with grocer

1 to 3 times a month


Do it myself 70%


Buy products

Do it myself 41%


Resolve issues

Do it myself 9%





Frugal Fred


• 40% more likely than other segments to trade down to store brands

• 3 out of 5 value rewards programs that offer storewide discounts

• Frequents big-box grocers that offer bulk at a discount

• 40% use self-checkouts

• Lets price trump everything else


• Vocal about his good experiences

• Even more vocal about bad experiences and most likely to share for years to come

How to serve them?• Help him feel that his store time is

effi ciently spent

• Clearly mark sale items and direct him to them

• Keep checkout kiosks open and quickly moving


• Middle-aged and middle-income

• Many living with a family in the suburbs

• Juggles demands of a full house

• Perceives grocery shopping as a chore

ExperienceEnhancer4


4 ExperienceEnhancerFrugal Fred

Demographics

Grocery usage


Top grocery preferencethemes

Channel usage

Age 45-64 yrs


$25-35K

Employment status

Employed full-time


Urbanicity Small city

Marital status Divorced

Minority presence

25%


No meal planning 92%

Conventionally-sourced products

54%


32%



13%

Average spend $100-150 Interaction with grocer

6 to 11 times a year


Do it myself 73%


Buy products

Do it myself 48%


Resolve issues

Do it myself 10%





While the results outlined in this report are at the industry level, PwC can use the same methodology we’ve used here to develop a customized Experience Radar study and uncover opportunities to accelerate your business.

If you’d like to discuss these fi ndings or how PwC can help you apply them to your business, contact:

Paul D’Alessandro312 298 [email protected]

Lisa Feigen Dugal646 471 [email protected]

We hope these insights prove useful to your business

© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member fi rm, and may sometimes refer to the PwC network. Each member fi rm is a separate legal entity. Please see www.pwc.com/structure for further details.

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. PwC US helps organizations and individuals create the value they’re looking for. We’re a member of the PwC network of fi rms with 180,000 people in more than 150 countries. We’re committed to deliver quality in assurance, tax and advisory services. Tell us what matters to you and fi nd out more by visiting us at www.pwc.com/us. LA-13-0064