Mass retail: nothing lasts as long as change

GDO cambiamento
Marco Pongan - Retex Senior Partner
21 Feb 2019

I worked in a “grocer’s” after school towards the end of the 1960s (many years before I got into mass retail). Nowadays most wouldn’t know what I mean, but back then everyone did. It was a small local grocer’s shop that sold tinned food, cold meats and cheese, small household goods, but no fruit and no vegetables. The shopkeeper Mr Luigi knew each customer by name and recorded their shopping, tabs and discounts in his notebook.

Fifty years later we have we have fewer Mr Luigis and many more mass retailers. The customer on the other side of the counter no longer has a name, the notebook is a distant memory of bygone times and supermarkets are filled with an infinite choice of products, self-scanning options, self-checkouts and an endless cycle of special offers.

Nothing is set in stone, nor can it ever be. Italian mass retail is stuck in a transitional phase with many unknowns, often reluctant to abandon well-established operational models, and still skittish about adopting new ones.

Online sales of foodstuffs inevitably grow, but not to the extent that will steer change (1.5% of all grocery sales in 2018). The supermarket is still the first choice for shoppers, but not to the extent that we can ignore what happens beyond the row of checkouts. Pushing a trolley is not the same as moving a mouse, but that is where we need to get to. Those who have already made this transition are thriving. Or, at least, doing better than others.

Change… but how?

It is worth thinking about different formats and services. For example, we could start with what works really well: private label products. I’m thinking of a mass retail industry that places greater emphasis on its profile as a “producer”, ditching the dead wood and anything that generates low margins. Welcoming change, intercepting new needs. Deliveries are still an important service and if anything will further differentiate the various retailers. And if it is not a family waiting at home for their shopping, it may well be a singleton in his or her office.

The game has been won definitively in some product categories by the online retailers, but there again they certainly cannot claim physical presence as one of their strengths. A solid network of affiliates, especially in the suburbs, could form the basis for a third-party delivery service. Everyone would benefit.

Another option is hybridisation of the retail store by converting redundant spaces into areas offering a variety of different services, such as dining.

Mass retailers need to provide a better local service, which translates into a closer relationship with the customer, and relaunch themselves with the right modern twist to step into the role typically filled by the “grocer’s” in that “once upon a time” Italy.