Grocery stores inEuropecustomize their product and service offerings through market segmentation. The retailers tailor their offerings to the local environments, which makes customers more satisfied with their experience.
For example, Edeka is a grocery store inGermanythat has been revamped to cater to the 50 year and older market. The price tags use larger fonts to make them easier to read, the shelves are lower, the floors have non-slip surfaces, and the stores provide places to sit, shopping carts that attach to wheelchairs, and even blood pressure monitors. The product assortment also caters to this age group’s dietary needs. For most older people, shopping in traditional stores is difficult. In Edeka though, it is pleasant, and the format, with its larger aisles, also attracts families with children.
In theUnited Kingdom, Tesco has gotten to know its individual customers better by collecting data through its Clubcard. Its analysis of different market segments produced an identification of three income groups: upscale, middle income, and less affluent. Then Tesco created products for these groups according to their preferences and targeted promotions that are of use to each customer. Since 2000, Tesco’s market share has grown 25 percent.
Esselunga also stays on top of its customers’ buying habits. During weekly meetings with store managers, it obtains feedback about the effectiveness of product displays and notes products that are selling well. For example, it recognized the importance of health-conscious products and increased its fresh food offerings. Now fresh foods make up 30 percent of overall sales, and Esselunga has grown by 19 percent since 2007.
Europe’s top performing grocers have grown twice as fast as the industry overall during 2000–2006. By constantly staying informed and interested in what customers want, retailers can achieve better sales and higher customer satisfaction.
- What are some European retailers doing to segment their market better?
- Are these tactics limited to specific cultures?
Marc-Andre Kamel, Nick Greenspan, and Rudolf Pritzl, “Standardization is Efficient but Localization Helps Shops to Stand Out,” Wall Street Journal, January 21, 2009.