Download Report

Thank you! Your copy of the report opened in a new tab. If you have trouble viewing it,click here.

Your personal information is kept in accordance with our Privacy Notice.

Why shoppers today are different, and how retailers can weather the changes

Today's shopper is drastically different than even just a decade ago. Contrary to the 1980's and 90's, when incomes were on the rise and Customers were demanding high quality, premium items; the new millennium brought about stagnant incomes, the housing bubble and the Great Recession. As Americans faced the harshest and longest lasting recession since the Great Depression, Customers' attitudes, values, and preferences—particularly around money spend—had shifted greatly. The National Bureau of Economic Research (NBER) saw shoppers began saving by taking advantage of coupons, sales, private brands, and larger pack sizes, making more shopping trips, and shopping more at discount stores.

A key question coming out of the recession was, "When will shoppers return to their pre-recession behaviors?" In 2019, after five years of robust economic growth, does the data show consumers shifting back to pre-recession behaviors, or are the consumer changes more permanent?

To address that question, we will look at the three most interesting behavioral changes from the NBER report:

  1. Private brand sales
  2. Shifting to discount retailers
  3. Making more trips

Private Brand

According to Nielsen, private brand's share of the market grew from 16.2% in 2009 to 18.0% in 2017 (source: Nielsen). This is a sizable chunk of the $682 billion grocery market (source: Nielsen TDLinx and Progressive Grocer).

Private brands have also grown faster than branded products from 2013-2017, when the private brand CAGR was 2.0% versus 1.2% for branded products. And the YOY number (2016 vs 2017) was 3.0% for private brand and -0.5% for branded products.

Discount Retailers

Looking at the top 10 fastest growing banners for grocery sales* since the Great Recession, five are price focused or discount retailers: Walmart Neighborhood, Dollar Tree, Aldi, Dollar General, and Winco Foods. Sprouts and Trader Joe's are not discounters but are known for the best prices within the premium segment. The Fresh Market is the only true premium banner, while Albertson's made the list because of an acquisition.

*(source: Planet Retail grocery sales. Filtered by banners exceeding $1 billion in 2018 grocery revenue)

Moreover, since the Great Recession, fewer people define the traditional supermarket as their primary place to shop. FMI data shows a 12-percentage point decline since the Great Recession. And immediately following the 2009 recession, it dropped 5 percentage points as people explored lower cost channels.

More trips

More trips opened the door to visiting multiple retailers, allowing shoppers to find their preferred combination of price, quality, and store experience. In recent years, visits have fallen somewhat, but the number of channels and retailers visited continues to grow, according to the Food Marketing Institute (FMI). In fact, it's grown by almost 20% since 2015. Moreover, FMI, along with dunnhumby's RPI, finds that the average household visits about four different retailers in a month (source: FMI Grocery Trends 2018).

When will pre-recession behaviour return?

The evidence suggests that much of this price-conscious behaviour continues into 2019 and will likely persist for many more years. Private brand will likely continue to strengthen as Aldi, Lidl, Costco, and Trader Joe's continue growing. Many retailers are realizing that a strong private brand is key to their success, as it drives differentiation, improves value perceptions, and builds the overall retailer's brand.

Shoppers are also likely to continue shifting toward discounters, particularly for the commodity categories and items. Ecommerce will also make it easier by buying commodity items from low-cost providers. Lastly, Brick and Mortar visits could continue to fall as Ecommerce gains share and shopping multiple banners will likely continue as the market continues to fragment and specialize.

What does this mean for traditional supermarkets? 

The key takeaway? We think about value differently since the Great Recession. Perceived value is the combination of our perceptions of quality and price. Before the recession, value was driven more by quality, but since the recession, it's driven more by price. Quality is still important, but when deciding to take action, retailers must carefully consider how those changes will impact price perceptions.

For example, many regional retailers think they can differentiate themselves by moving more upmarket, either more premium and/or more natural/organic. Still others think that becoming more digital and multichannel is the answer. In both instances, retailers should understand how these changes will impact both quality and price perceptions. In today's post-recession market where shoppers' price anchors are increasingly influenced by Walmart, Costco, and Aldi, significant reductions in price perception must be countered by significant improvements in quality perceptions. Moreover, if a retailer's footprint covers lower, middle, and higher income markets, it is not likely that the quality improvements will exceed the lower price perceptions. If a retailer wants to move more upmarket, targeted real estate becomes essential for success.

This also holds for digital and eCommerce. Will the benefits exceed the costs? eCommerce often requires fees or increased prices to cover the incremental costs. Does the improvement in quality exceed the hit to price? Dozens of grocery retailers believe it does, while one of the most successful--Trader Joe's--recently cancelled their eCommerce pilot because they felt the added costs exceeded the benefits.

What can traditional supermarkets do to improve value perceptions? 

The good news is that several factors can shape value perceptions besides investing in price. dunnhumby research finds that about one-third to half of a banner's value perception is impacted by base price – meaning that there are other areas that contribute. The most effective method is to layer lower prices with changes in assortment, merchandising, and store experience, and then tell your customers about these changes with carefully crafted messages.

The first step is to build a highly efficient organization. Efficiency and keeping costs low are essential for any retailer to compete in today's market. This is seemingly quite obvious but getting there can be painful. Labor is a big cost. Do you really need someone behind that counter? Trader Joe's, Costco, and Walmart are almost exclusively self-serve. How about ready-to-eat foods? This department can also be very costly, so do the benefits exceed the costs? Trader Joe's has minimal fresh prepared foods but fills that vacuum with high-quality frozen prepared foods that are easy to prepare. This reduces shrink and maximizes profit.

Of course, the pricing blocking and tackling plays a role. The high-volume items play a bigger role in price perception than the lower volume items. Are these higher volume items priced competitively? Could you increase prices on lower volume items? What about entry level price points or the minimum and maximum gap across the category? Lower entry price points and smaller gaps have both been shown to improve price perceptions.

Assortment and merchandising can also affect value perceptions. How much variety is on the shelf? Are there opportunities to simplify the SKU? Research has shown that too many choices can negatively impact variety perceptions and reduce the likelihood of purchase. How is the store merchandised? What products occupy endcaps? High volume, competitively priced items or less relevant overstocked items? What's at eye-level on the shelf? Is this filled with your key value items or expensive premium and natural/organic items? What do customers see when they shop your store?

Private brand is also a key element within assortment and is unique in impacting both quality and price. On the quality side, it can uniquely help differentiate the overall brand by providing products that can only be found at your store. They have your logo on them and are the quickest way to build overall brand equity. There is also an opportunity to aggressively price these items, defending you against the more price-focused banners. And once you have a strong private brand, those items can occupy your end caps and prime space throughout the store.

The fact of the matter is, today's consumers are different. So how can you adjust your value proposition to better align with the fundamental shifts? Of course, there is no silver bullet, but a review of which banners are succeeding, and which ones aren't, is a clear indicator of what works and what doesn't. In the meantime -- recalling a fictional storm memorialized in film -- we are clearly not in Kansas anymore. Nor are we likely to ever return. There's a new normal in retail, and the smartest players are adjusting to the realities. For more on who is succeeding, see our most recent Retailer Preference Index report.

[This is the fourth in a series of articles advocating the voice of the Customer in the highly competitive food-retail industry. David Ciancio is Global Customer Strategist for dunnhumby, a pioneer in Customer data science, serving the world's most Customer-centric brands in a number of industries, including retail. David has 48 years experience in retail, 25 of which were in Store Management. He can be reached at].

Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.

Keep Reading... Show less

Memories of panic buying may be fading here in the UK but have resurfaced elsewhere1. The near constant threat of another wave of Covid-19 may yet prompt another round of hyper demand. Whilst there is little hard evidence to determine the underlying drivers of panic buying2, there are numerous theories that the retail industry may benefit from exploring.

Feroud Seeparsand, dunnhumby's Senior Consumer Psychologist, outlines some likely theories to explain the 'why' behind the 'panic buy' and some implications for retailers to prevent it reoccurring in future.

Keep Reading... Show less

The dunnhumby Consumer Pulse Survey is a multi-phased, worldwide study of the impact of COVID-19 on customer attitudes and behavior. We surveyed more than 27,000 respondents online in 22 countries, with interviews conducted for Wave one from March 29 – April 1, for Wave two from April 11 – 14, and for Wave three from May 27 – 31. Due to the rapidly unfolding crisis in North America, dunnhumby conducted Wave four from July 9 – 12 in the U.S., Canada and Mexico only. Here are highlights from the study:

Keep Reading... Show less

In a series of posts published earlier this year, we covered the results of the dunnhumby Customer Pulse – a global study designed to explore changing consumer mindsets during the COVID-19 pandemic. Over three waves, conducted between March and the end of May, we polled thousands of people from more than 20 countries on subjects including supermarkets' responses to the outbreak, the economic outlook, and how their shopping behaviour had changed due to COVID.

At the beginning of September – three months on from the previous wave and with supply chains stable and the changing nature of lockdowns – we wanted to revisit the Customer Pulse to see what, if anything, had changed. Below are some of the standout findings from this fourth tranche of research.

Keep Reading... Show less

assorted fruits at the market

Photo by ja ma on Unsplash

In the decade since Richard Thaler and Cass Sunstein's Nudge: Improving Decisions About Health, Wealth and Happiness was published, nudge theory has enjoyed unprecedented success.

Predicated on the idea that individuals respond better to indirect suggestion than outright commands, nudge theory is commonly used as a way of subtly influencing our behaviour towards positive choices. The idea has gained such traction, in fact, that many governments around the world have created "nudge units" in a bid to tackle thorny issues like obesity and the climate emergency.

Keep Reading... Show less

Are you looking to increase your contactable Customer base? How much money are you losing on incorrectly identified Customer communications? Throughout our 30 years of big data experience working with clients across industries around the globe, we have found that maintaining contact through relevant Customer engagement is a crucial component of putting the Customer First.

Essential to preserving contact data is ensuring that you have the most up-to-date information from your Customers; not an easy task. On average, people in the United States will move an average of 12 times in their lifetime. United States Postal Service data indicates 14% of the population change addresses annually. As email contact has grown, it's important to note that, on average, 30% of people change their email addresses each year. This is driven by ISP or job changes, or just to stop being spammed. As people move away from home phones to primarily mobile devices, phone numbers are stabilizing as consumers maintain the same numbers through physical moves.

Keep Reading... Show less

It's a well-worn phrase by now, but it's true that the COVID-19 crisis has drastically altered the global retail landscape. Here in the Asia-Pacific region, a majority of markets are now looking past the panic of the first wave and towards the future. In this series of articles, we'll explore how grocery retailers must adapt to a more omnichannel reality to thrive in a post-pandemic world.

The new wave of online grocery customers

Throughout the COVID-19 crisis we've seen the sharp rise and fall of many trends. As countries veered from one phase of the pandemic to the next, we've seen everything from panic-buying and stockpiling, to a booming demand for hygiene products. While some of these trends have stuck, the resumption of a more 'normal' life in many parts of the Asia-Pacific have seen others tail off.

One trend which is set to stay is in eCommerce, particularly within grocery. Lockdown drove a surge to online grocers the likes of which we have never seen – and it seems customers have been convinced by the online experience. According to multiple recent studies[1] China's grocery eCommerce market, already a booming sector with 29% growth last year, is now tipped to grow by 60% this year as the coronavirus has driven whole new segments of customers to the online grocery market. The trend is also sustaining; the main growth driver in's record-breaking '618' event this year was grocery, with sales almost doubling[2].

While general retail has been building momentum online for some years, grocery has been something of a laggard, rarely accounting for more than 15% of the overall grocery market. Historically the major barrier to entry to online grocery has been trust – over 50% of customers do not trust online grocery deliveries to pick the freshest and best items[3]. For years this has been a catch-22 scenario for retailers: customers don't trust the quality of online grocery because they haven't tried it, but they won't try online grocery because they don't trust the quality.

COVID-19 has caused a new wave of customers to finally take a leap of faith into digital grocery. Retailers can be happy that they've won new customers online, but now comes the hard work of retaining them.

The need for Customer Infrastructure

Much has been made of retailers' attempts to keep up with surging online demand during the early phases of the pandemic. Even in globally advanced eCommerce markets like the UK, the lead retailer has had to significantly expand delivery capacity to keep up with demand[4]. In order to meet the needs of new customers, retailers have rightly focused on having the right physical infrastructure in place.

However, if retailers want to keep meeting the needs of customers, they'll now need to focus on a different kind of infrastructure - the online customer experience.

The ease of shopping online is a double-edged sword for retailers. If customers can shop online with one retailer, they can shop online with any retailer. Your competitor store is no longer 1 kilometre away, it is one click away. Customers can literally browse competitor shop windows while they are in your store, and for countless retailers in the Asia-Pac region where online sales have historically been low, their digital stores may be looking rather outdated.

So while you may have won new customers, the fight to keep them is much more challenging.

Getting the digital experience right

The principles of great customer experience online are the same as instore. It's about helping customers easily find what they want. It's about helping customers feel they've got a good deal. It's about having a well-laid out store. Fundamentally, a great digital experience is about putting customers first and responding to their needs. Thankfully, the nature of eCommerce makes it possible to know these needs in detail through the wealth of data available to retailers. The data you're likely already collecting will tell you everything required to build a better overall and individual shopping experience for each customer who shops online.

Here are 3 ways retailers can act now to build a winning customer experience online:

  1. Bring the offline online
    Your customers may be new online, but many of them will be existing offline shoppers. Their loyalty card history enables you to show them items they already buy. Better still, predictive data science can detect which of those items are staple and regular purchases that each customer might need right now – helping them quickly and efficiently build a basket based on their own personal behaviour. This knowledge can also help act as an online virtual assistant, helping customers find substitutes for out of stock products and prompting them with items they may have forgotten to add at the checkout.
  2. Make it easy to find value
    In a world where customers can price compare at the flick of a tab, maintaining price perception is vital. This is easier said than done online, as customers won't spend time browsing the 500 products you have on special that week. Instead, use relevancy algorithms to curate your promotions list at the customer level using their previous behaviour, and show each customer the offers that actually matter to them.
  3. Optimise the navigation
    Newer online customers tend to use online search and taxonomy functions much more than experienced online shoppers. If your online category flow is unclear, difficult to interpret or poorly arranged, shoppers will have a harder and more frustrating experience. Equally, if their searches lead to incorrect or blank results, customers will quickly lose patience. Site analytics data in the hands of an expert is a goldmine for optimising the online navigation – from naming and arranging categories in a strong taxonomy to eliminating poor-performing searches.

Retailers in Asia have a limited window of time to win the continued business of new online customers. As these customers become more familiar with the experience, the greater will be their demands and their likelihood to look elsewhere when their experience is sub-optimal.

At dunnhumby, we've been advising grocery retailers on digital best practise for over 10 years, led by 30+ years of leading experience in data science and we have developed a range of products for retailers to deliver exactly these kinds of industry-leading customer experience online, powered by retail data.

In the next part of our series on the post-COVID landscape in Asia-Pacific, we'll explore the diverging needs of customers in the wake of the pandemic, and how omnichannel personalisation can help retailers meet those needs efficiently and effectively.

[1] E-commerce drives China's stay-at-home economy in coronavirus aftermath & China's online grocery sector set for explosive growth, says GlobalData

[2] Chinese shoppers are staying online. That's great news for

[3] Study cites barriers to online grocery shopping

[4] Tesco Delivers One Million Online Orders In A Week In The UK


Smarter operations and sustainable growth, powered by Customer Data Science.


Better understand and activate your Shoppers to grow sales.

Retail leaders must objectively understand how their business currently considers Customers before trying to set a more Customer-centric direction and focus. There are some formal assessment methodologies, like dunnhumby's Retail Preference Index (RPI) and Customer Centricity Assessment (CCA), which offer detailed evaluations of a business' capabilities, strengths and weaknesses based on Customer perceptions (RPI) or global best practices (CCA).

The approach outlined below is not intended to replace these formal tools; rather, these observations are intended as a kind of 'toe in the water' to help retail leaders form early hypotheses and points of views. These are rules of thumb, heuristics culled from global experience. Later, leaders might use these observations to informally check progress from time to time as a way of assessing whether the "program in the stores matches the program in our heads".

Keep Reading... Show less

In the first episode of Customer First Radio, Dave Clements, Global Head of Retail for dunnhumby and David Ciancio, Global Head of Grocery for dunnhumby kick off the series by discussing what it means to be a truly Customer First business, share which retailers and brands today embody a Customer First mindset, and examine how Customer First materialized during the pandemic with retailers.