Discount chains have built their businesses on efficiency and limited inventory, allowing them to execute highly aggressive pricing strategies while still turning a profit. For full-service grocery stores, this provides a major challenge: How do you compete when you can’t necessarily beat (or match) their prices?
Traditionally, the supermarket has been a community hub in countless towns and cities across the country. While discount chains focus almost exclusively on offering specific products at cut-rate prices, traditional grocery stores can defend their market share by providing a better customer experience with diversified revenue streams.
By diversifying your revenue, leveraging technology to improve the in-store experience, adding high-impact retail services, and building connections within the community, your grocery store can rise above the sea of discount chain competitors.
How Do Discount Chains Offer Such Low Prices?
First, it’s important to understand why discount chains are winning over some customers. Discount chains offer limited product selection from minimal vendors to reduce merchandising complexity, with a heavy focus on in-house, private-label products. The store layouts are simple and streamlined, and many don’t offer perishables like produce, further minimizing costs and staffing needs.
Traditional grocers can’t always compete with these economics on certain product types, but they can set themselves apart in other ways.
6 Ways Grocers Can Compete with Discount Chains
1. Diversify Revenue Streams
A grocery store’s core business model will likely always revolve around selling as many higher-margin items as possible. However, to compete with discount chains, it’s also a good idea to diversify a supermarket’s revenue streams beyond just selling groceries.
Let’s discuss some examples, starting with grab-and-go meals and hot food bars. Today’s consumer is often on the run, needing quick solutions for meals throughout the workday. Give them alternatives to having a fast-food burger by stocking plenty of efficient, healthy meals that only take a few minutes to prepare and purchase. Very few discount chains can compete with this type of product offering.
In addition, focusing on seasonal merchandise gives grocery stores another leg up compared to discount chains, which typically don’t make many changes to their inventory throughout the year. Seasonal items like Christmas trees and Halloween pumpkins can add high-margin items to a customer’s basket, and they’re unlikely to find those products at a discount chain.
Finally, getting passive revenue from in-store services like an ecoATM in the lobby is another great way to add income from non-grocery purchases. When customers use the kiosk to sell used phones and tablets, they receive instant cash that they’re highly likely to spend in your store (more on this in a bit!).
2. Streamline the Store Experience with Technology
Hosting an ecoATM device recycling kiosk isn’t the only way grocers can improve the in-store experience and increase efficiency by leveraging technology. After all, many modern shoppers are looking for convenience as much as they’re seeking low prices and great values.
If you don’t already offer these features, it’s probably time to consider providing online ordering and curbside pickup. This makes the shopping process more convenient and accessible for people who aren’t able to browse your store shelves in person. In addition, it gives you multiple opportunities for upsells and tie-ins with loyalty programs, providing even more value.
Also consider partnering with local delivery and courier companies if you don’t have your own in-house delivery services. Self-checkout stands can help streamline operations as well: Customers like being able to choose whether to purchase their products themselves or get assistance from a knowledgeable staff member.
Leveraging technology is another area where discount chains don’t exactly excel, and therefore, another area where traditional grocers can stake a claim to market share.
3. Elevate the In-Store Experience
As part of their overarching business model, discount chains intentionally minimize the in-store shopping experience to keep costs as low as possible. This creates an opportunity for full-service grocery stores to stand out by doing the opposite.
Grocers can enhance the shopping experience with engaging product displays, in-store samples and product demos, and retail services. Combining these elements creates a well-rounded, comprehensive experience that drives customer loyalty.
4. Add Low-Maintenance, High-Impact Services
Adding in-store services can generate passive revenue and increase foot traffic, contributing to that well-rounded experience. For instance, hosting an ecoATM kiosk gives customers a place to responsibly recycle and resell old phones, receiving instant cash in return.
70% of all cash dispensed at ecoATM kiosks gets spent in the same store where the kiosk is located. That’s a clear economic benefit for grocers, who gain a new passive income stream and an additional reason for shoppers to stop by.
5. If You Can’t Compete on Pricing, Compete on Value
It’s probably not sustainable for traditional grocery stores to compete directly with discount chains on price for specific items. That said, supermarkets can still compete on overall value, especially by leveraging their loyalty programs.
When grocery stores offer bundled deals for family packs and meal kits, or personalized offers for repeat customers, they can drive customer loyalty without competing directly on pure prices. Loyalty programs may provide discounts for certain items, but they generally drive higher overall customer spend through larger basket sizes, upsell opportunities, and more frequent visits.
6. Build Community Ties
Discount chains often lack individual identity on a store-to-store basis. After all, local flair costs money, and discount chains spend as little as possible to maintain their super-low prices.
Grocery stores have an advantage in this area, as they can partner with local farmers and vendors to offer regional goods that are proven money-makers. You can also consider hosting community events or special tastings for new locally produced inventory items. Highlighting products produced in your area is an opportunity to set your store apart from the generic feel of a discount chain.
Furthermore, supporting local charities and events can make a big impact on your store’s reputation as a community member. It’s not always easy to build emotional loyalty, but full-service grocery stores often have a more direct path to this elusive goal than discount chains.
How ecoATM Helps Make Grocery Stores More Profitable and Competitive
ecoATM’s device recycling kiosks pay instant cash in exchange for used smartphones, tablets, and other consumer electronic devices. We currently have over 7,000 locations nationwide, so no matter where you are in the country, it’s quite likely that there’s an ecoATM kiosk near you.
Our kiosks help grocery stores become more profitable and competitive with discount chains in several key ways.
Passive Revenue Generation
There are several ways a grocer can make money from ecoATM kiosks, starting with the simplest: We pay you rent in exchange for hosting a kiosk. In addition, ecoATM customers typically spend roughly 70% of cash payouts in the same store where the kiosk is located. Finally, we have revenue-sharing opportunities that make sure everyone benefits from each transaction.
Increased Foot Traffic
While some people who use the ecoATM in your supermarket will be existing, returning customers, our kiosks also draw in plenty of new customers who have not yet visited your store. Driving new visits from potential customers is one of the most important metrics for a grocer, and it’s an area where ecoATM excels.
Social and Environmental Responsibility
With 78% of today’s consumers saying that they value leading a sustainable lifestyle, it’s important for grocers to display these values. While discount chains may be less likely to fully commit themselves to corporate environmental, social, and governance (ESG) performance, grocery chains can set themselves apart with sustainable initiatives like hosting an ecoATM. With over 50 million devices recycled to date, we’re a true leader in corporate sustainability.
No Operational Burden
What makes ecoATM hosting even more beneficial for grocers? The fact that there’s a near-zero operational burden for store employees. They don’t need to install the kiosk, provide maintenance, collect devices, troubleshoot problems, or provide customer support. Our team handles every possible step, leaving your staff free to focus on their core tasks.
Get Started with ecoATM Today
The process of hosting an ecoATM begins with reaching out to our team to schedule an initial consultation. We’ll visit your store and determine whether it’s a good fit for a partnership with ecoATM. Once we reach an agreement, we’ll draw up a contract, determine the ideal location for the kiosk, and complete all installation requirements.
From there, the ecoATM team handles every possible ongoing maintenance requirement. We provide remote security monitoring, and we have our own call center where we handle around 50,000 customer service calls each month. We will also collect devices from the machine and restock it with cash. If anything goes wrong, we’ll send our in-house experts to your grocery store to perform repairs.
With major brands like Walmart, Kroger, Albertsons, and more already partnered with ecoATM, it might be time for your grocery chain to join this exclusive club. If you own grocery stores or other high-volume, high-traffic brick-and-mortar retail businesses, we’d love to discuss the details of a partnership. Reach out today to get started with ecoATM!
