Strategies for Modern Trade Growth
Introduction
The grocery retail industry continues to evolve due to shifting consumer preferences, economic conditions, and competitive pressures. The rise of e-commerce, convenience-focused shopping behaviors, and increased competition from private-label brands have forced retailers and manufacturers to rethink their approach. Simply offering a wide range of products is no longer enough to win. Success today requires a deeper understanding of consumer motivations, shopping missions, and value perception.
Traditional retail strategies, which were largely supplier-driven, are becoming less effective in the face of changing consumer expectations. Consumers demand more than low prices; they expect retailers to provide convenience, relevance, and personalized offerings. Retailers and brands that adapt to this shift and adopt a customer-centric approach will have a better chance of sustaining growth and profitability in an increasingly competitive environment.
Winning in grocery retail requires a shift from broad, demographic-based segmentation to a CEP approach, which considers why, when, and where people make purchasing decisions. This article explores the importance of value spaces and outlines key strategies that can help brands and retailers stand out, drive sales, and build long-term loyalty.
Understanding Value Spaces: The Key to Winning in Retail
Value spaces provide a new way of thinking about consumer behavior by focusing on their purchasing motivations rather than just their demographic profile. Traditionally, brands and retailers have segmented customers based on age, gender, and income. However, this approach often overlooks the deeper motivations behind why people make purchases. On the other hand, a value space considers the context of the purchase, including the occasion, the emotional and functional needs, and the shopping mission.
The "Why" Behind Purchases
Understanding consumer behavior requires moving beyond what people buy and focusing on why they make confident choices. For example, buying a soft drink may be driven by different motivations: a consumer might buy it to accompany a meal at home, refresh themselves on a hot day, or as an impulse purchase while at a gas station. Each of these motivations represents a different value space, and retailers that recognize these differences can tailor their offerings more effectively.
Consumption Occasions
Consumers don’t buy products in isolation but for specific consumption occasions. These occasions can be broadly categorized into different groups:
On-the-go consumption: Products such as bottled drinks or snack bars are purchased for immediate consumption.
Home-based consumption: Larger pack sizes or multipacks for household use.
Impulse purchases: Items bought without planning are often positioned near checkout areas.
Social or entertainment occasions: Premium products or larger quantities for sharing with family or friends.
However, there are several shopping missions and several consumption occasions. One dimension that determines shopping behavior is also for whom: during my chat with Laura Trivulzio, it emerged that when shopping for a snack, a critical question is: “Am I buying the product for myself, my children, or a group of friends visiting?” The for whom clarifies also the role the brand might or might not play in the occasion.
Recognizing these consumption occasions allows brands and retailers to refine their product formats, pricing, and marketing messages to match consumer needs.
Beyond Demographics: Why Understanding Shopping Missions is More Effective
Shopping behavior is highly contextual. A single consumer may exhibit different purchasing behaviors depending on their shopping mission. Standard shopping missions include:
Top-up shopping: Frequent, smaller purchases to restock essential items.
Planned bulk shopping: Large shopping trips, often weekly or monthly.
Urgency-driven shopping: Last-minute purchases due to immediate need.
Discovery shopping: Browsing for new or exciting products.
By focusing on these missions, brands and retailers can fine-tune their merchandising and promotional strategies to capture different types of demand. Nowadays, the shopping mission also determines the budget, as explained in this example.
Implications for Retailers and Brands
Applying the concept of value spaces to retail strategy can deliver significant benefits, including:
Optimizing product assortments based on different shopping missions and consumption occasions.
Enhancing category management by ensuring that pack sizes and product formats align with consumer needs.
Driving incremental sales by offering relevant product variations for different use cases.
Improving penetration rates by reaching new customers who previously did not consider the brand.
Refining channel and format strategies to meet the expectations of different shopping environments.
Being Successful in Grocery Retail in 2025
Distinctiveness in a Crowded Market
With hundreds of brands competing for shelf space, standing out is critical. Brands need to develop a strong point of differentiation, whether through unique product formulations, innovative packaging, or marketing strategies that resonate with specific consumer groups. Successful brands go beyond traditional advertising and leverage digital platforms, influencers, and experiential marketing to create stronger consumer engagement.
Distinctiveness is not only about the product itself but also how the brand communicates its message. Packaging design, shelf placement, and brand storytelling all contribute to making a product memorable in shoppers' minds.
Customer-Centric Approach
The emergence of the discount model implies a shift for all full-service supermarkets. Shifting from a supplier-driven model to a shopper-driven approach will be better positioned for success. This means:
Prioritizing what consumers truly want rather than focusing on supplier-driven product listings.
Aligning with consumer price expectations while maintaining brand value.
Using data-driven insights to personalize promotions and product recommendations.
Mastering Demand Spaces
Different consumer needs require tailored product offerings. Brands that adapt to demand spaces effectively can create a stronger connection with their target audience. Examples include:
Offering convenient, single-serve packs for on-the-go consumers.
Creating family-size or value packs for at-home consumption.
Positioning premium selections for social and entertainment occasions.
Effective Category Management
Strong collaboration between brands and retailers is essential for optimizing category performance. Successful brands work with retailers to:
Ensure that product variations contribute to overall category growth.
Prevent over-saturation of similar SKUs that do not drive incrementality.
Utilize data insights to refine product placement and assortment decisions.
Effective category management begins with mastering category dynamics and in-category shifts between brands, packs-sizes, forms, etc.
Channel Strategy Optimization
Each retail channel has unique dynamics, and brands must tailor their approach accordingly:
E-commerce requires substantial digital assets, such as high-quality images and clear product descriptions.
Impulse channels, such as convenience stores and gas stations, benefit from high-recognition brands and easy-to-grab product formats.
Supermarkets require differentiation strategies to compete against private labels.
Driving Innovation
Continuous innovation is key to staying relevant in grocery retail. Brands should explore:
Innovations that align with emerging consumer trends, like functional food and beverages, plant-based or high-protein products. Innovations with a straightforward consumer insight.
NPDs that grow the category and build the ability to drive increasing trial and repeat for the brand and the category itself.
Using Decoy Packs to Drive Sales: Strategic packaging formats can encourage larger purchases by offering multiple-size options. Instead of presenting only a large pack, brands can introduce a mid-size pack, nudging consumers to trade up.
The below NPD strategies are not to be considered innovative and need to be carefully dealt with:
New product flavors and random formats (not decoy packs).
Limited-edition releases tied to seasonal occasions.
While they merit increasing in-store visibility, they often require too much focus on commercial development, trade support, and even R&D efforts. They subtract all resources from core references while contributing only in the single digits to revenue growth.
Strategic Pricing and Promotions
Price sensitivity varies across categories and shopping missions. Effective pricing strategies should:
Balance affordability with perceived value.
Use promotions to drive incremental sales rather than just volume.
Be tailored to different retail environments.
Leveraging Data and Analytics
Retailers and brands that leverage data effectively can make informed decisions about:
Consumer behavior and purchase patterns.
Post-launch product performance.
Promotional effectiveness and price elasticity.
Adaptability in a Dynamic Market
Market conditions are constantly changing, and brands must remain flexible. This includes:
Adjusting pack sizes to accommodate shifts in consumer spending power.
Responding to emerging trends, such as health-conscious consumption.
Being agile in pricing and promotional strategies.
Retailer Collaboration for Shelf Space and Growth
Brands that foster strong relationships with retailers can gain a competitive edge by:
Offering exclusive products or formats.
Providing category insights to support retailer decision-making.
Ensuring competitive pricing structures.
Conclusion
Winning in grocery retail in 2025 requires an approach beyond traditional strategies. By focusing on value spaces, brands, and retailers can align their offerings with consumer motivations, ensuring greater relevance in the marketplace. A strong emphasis on distinctiveness, category management, data-driven insights, and adaptability will drive long-term growth and profitability in an increasingly complex retail environment.