#EdgeOfTomorrow: Navigating shifting preferences

The regional grocery retail market is evolving fast keeping pace with constantly shifting consumer preferences. Based on evolving customer demands, grocery retail entities are leveraging technology and data to predict customer needs, therein making their supply chain agile and inventory planning accurate. From browsing to buying to delivery, they are making the shopping journey as seamless as possible while ensuring faster fulfilment. Importantly, they are differentiating themselves based on products, services as well as through meaningful collaborations to stay ahead in a market that’s becoming increasingly competitive.

The growth of the grocery retail space aligned with shifting customer preferences is crucial to keep an eye on to effectively understand how organisations adapt and align their business operations to these changing preferences. In a rapidly changing consumer environment, identifying shifts in preferences is imperative and critical to stay competitive in the market, observed Cynthia Makhoul, Director, PwC Middle East setting the pace for the panel discussion at the recently concluded Food Business Forum 2024.

So, what are the key trends shaping consumer behaviour and shopping habits in the grocery retail space?

Decoding consumer habits is a very complex subject when it comes to this market, responded Ashutosh Chakradeo, Chief Retail Officer, Choithrams. “We already have two types of consumers – residents and the short stay customers or tourists. And these customers can be divided into 200 different nationalities. When multiplied, there are 400 different consumer preferences to look at. We put these preferences into three major buckets, classifying them as conscious consumers, the creators’ economy driven by consumers and those looking for value.”

Shedding light on how Choithrams predicts future trends, he added, “We leverage external tools like social media to spot trends that are futuristic, while relying on our supplier partners – who invest a lot in the research and development of products and category management programmes – to gauge what’s currently in demand. A lot of trends also come through our market visits, whether it’s a competitor store or even international stores.”

“We have distribution, manufacturing and retailing facilities and knowledge, which is invaluable,” stated Manish Israni, VP Operations – Everyday Goods – Retail, GMG. “We’ve got tools which have existed within the business for a long time across different verticals. Historical data has helped us to build a strong foundation. To forecast how analytics will help, we must understand inventory and demand planning to buy and sell in a manner that’s profitable.”

At this point, Makhoul asked if there are there any differences in consumer trends and shopping habits between the online and offline channels.

The online customer needs speed, the offline customer needs an experience. The online customer also looks for value, which means the cost of acquiring a customer in an online channel may be quicker, but the basket spending will be lower and to retain that customer businesses need to get cheaper and more efficient to deliver the product right offering a seamless consumer journey. Whereas on the offline platform, the basket spend is higher because the customer isn’t as much price sensitive, appreciates the experience and reacts to promotions, Israni shared.

At this point, Manu Mahdi, Chief Executive Officer & Founder, Organic & Real pointed out that it is possible to offer a wide range online versus offline. The customer might see a particular product online, then go to the store to check it, but choose to compare prices online and offline and only then make the purchase decision. If the price difference isn’t too much, the customer will purchase in-store. In another scenario, if a certain product is not easily available, a customer is often willing to pay a premium to have it delivered to the doorstep.

Staying with limited shelf space, Makhoul asked how a diverse enough range can be presented in a smaller shelf space offline.

In response, Mohamed Hyder, Group Chief Executive Officer & Founder, FMART Group International said, “Trying to be present in premium communities and luxury towers, shelf space is a very big challenge for us. Unlike traditional grocery retailers who relied on relationship with the customer and therein gained knowledge about their needs and preferences, we’re reliant on technology. Leveraging technology helps us to ensure stocking the right set of products and rotating these products based on changing consumer behaviour. We also conduct regular consumer feedback sessions to tailor our offerings for them. In addition, we plan categorisation of our stores based on catchment areas, customer profiles and their buying habits.”

Reliance on technology is one thing, but transforming insights into actions and effectively understanding how businesses can adapt their supply chains, operations and other functions to these new trends is quite another, Makhoul pointed out.

In this context, Rashid Aramam, Buying Head, Nesto said, “Demand mapping is always based on customer preferences. We always prioritise checking availability of products with our local partners. Then we throw market research into the mix. If we see an opportunity in a certain product range, we could even choose direct sourcing from 61 countries to get the product at a better price. In addition, we also have 25-30% of the products under our private label which are also based on demand mapping.”

At a time when consumers want fresher, healthier, locally and sustainably sourced products, which may not be always available, how important is it to maintain an agile supply chain.

“In 2018 when we started the business, the annual growth of organic food produced globally was almost like 23% CAGR. But then COVID hit, and revenues declined. It was confusing for us because consumers wanted to increase their immunity level by consuming healthy food, but they didn’t want to pay higher prices for organic products. So, we managed our supply chain by bringing products in bulk and managing the purchase sales inventory in a proper way, bringing high-quality products to consumers at an affordable price. At the same time, we are trying to create awareness about the benefits of consuming organic foods and make these products at affordable prices by reducing the supply chain and value chain inefficiencies,” Mahdi elaborated.

As consumer preferences evolve, so does the need to create engaging space spaces. In this context, Mohammad Alawi, Chairman of the Board, Azad Properties said, “If we look at the evolution of shopping as such from souks to malls, change has been brought about due to shifting consumer preferences, coupled with urban planning. For example, at Azad we look at functionality, demographics and trends before building a property. Along with customers, retailers have also evolved leading to a change in size and design of stores. Add to that, technology which is a huge enabler. At the same time, the human touch is pivotal.”