Achieving High Performance in the Grocery Industry: How Top Grocery Retail Companies Achieve Success

All have managed to balance growth with profitability through the challenges of the Great Recession, keeping opportunistic new entrants at bay by adapting their core products, services and channels to meet the needs of both value-conscious consumers and increasingly fragmented shopping patterns.

In order to take full account of the impact of recent market turbulence, Accenture analyzed these 30 companies across the five key metrics of our High performance Business methodology—profitability, growth, positioning for the future, longevity and consistency—over one and three, as well as five years.

In this article, Accenture outlines how these five grocery retail companies positioned themselves to achieve high performance in the grocery industry—as well as how to stay ahead of the curve.

Accenture’s ongoing High Performance Business research has revealed that top companies in all industries share a “competitive essence” made up of three building blocks of high performance: market focus and position, distinctive capabilities, and performance anatomy. These building blocks describe the organizational mindset that dictates how—and how well—an organization fulfills its strategic objectives.

Our recent analysis of 30 global grocery companies focused on understanding the six elements that make up the building blocks of high performance in this industry segment.

Market Focus and Position:

1. Effective use of local market scale
2. Brand dominance
   
   

Distinctive Capabilities

3. Customer Relevance
4. Speed of innovation across products, services, formats and channels
5. Efficient, scalable and adaptable infrastructure
   
   

Performance Anatomy

6. Great place to work

Market Focus & Position: Effective Use of Local Market Scale & Brand Dominance
In the grocery industry, market focus and position is characterized by strategic market domination—a combination of effective use of local market scale and brand dominance.

Scale matters. High performers and average performers are No. 1 or 2 in their home market, and they usually rank in the Top 3 in their foreign markets. Scale confers buying power and the high performers are able to use their scale to set the pace of development in a market in terms of new initiatives. They can also leverage scale to invest more in absolute terms and thus strengthen their presence. Potentially, moreover, scale enables them to set the tone of pricing in a market.

Scale alone, however, does not convey high performance. The key differentiator is how well a company uses its scale in its home market to create a brand that is more relevant to consumers over an extended period of time than the brands of its competitors.

Distinctive Capabilities: Customer Relevance, Speed of Innovation, Infrastructure

• Customer relevance
  High performers have much better insights than their competitors into what matters to consumers—a distinctive capability founded on relentless data gathering and analytical rigor. As a result, they are distinguished by product and service offerings and routes to market that are more relevant to the customer than those of their competitors.
  
  The high performers listen to their customers more effectively than the rest of the peer set, use the channels with which their customers are comfortable and evolve their approach as the customer evolves. This gives them insight into the constantly changing needs of customers—a capability that helps maintain brand credibility as well as improve customer service and boost employee productivity.
  
  
• Speed of innovation across products, services, formats and channels
  Armed with customer insight the high performers make changes to their products, services, formats and channels to keep their offering relevant to evolving customer needs at great speed, leaving the competition struggling to keep up.
  
  
• Efficient, scalable and adaptable infrastructure
  The high performers have responded rapidly to the challenges of new channels, formats, competitors and technologies—challenges that have necessitated radical change in the physical set-up of stores and even their ownership. All are able to support multiple formats as well as multiple touch-points: handhelds, mobile devices and the like. As well, all have managed to integrate the customer experience across formats and touch-points to ensure continuous service excellence at the local market level. This is only possible by having an infrastructure that is efficient, scalable and adaptable.
  
  

Performance Anatomy: Great Place to Work
In the grocery industry performance anatomy is all about having a cohesive customer—and performance-focused orientation. The high performers have made customer-centricity a state of mind. The high performers are committed to continuous improvement—maintaining very high growth rates but at the same time running effective cost control programs that enhance their operational excellence.

Finally, all the high performers are viewed as “great places to work”. In addition to a broad range of training and continuing professional development programs that target young managers with the potential to become the leaders of tomorrow, they seek to develop individuals at all levels of the organization, linking up with business schools, for example, to broaden thinking and expose employees with future management potential to contemporary business thinking.

Our five high performers are well positioned to sustain their brand dominance. They appear better able to learn from experience than their competitors—and they apply what they have learned to adapt successfully to local conditions. These winners, indeed, are distinguished by their smart, swift and flexible responses to specific market challenges and threats—regardless of their very different market focus, formats and business models.

Customer-centric and customer-connected, their operations display granularity, speed and efficiency, in both innovation and delivery. And they are constantly testing the boundaries of customer engagement with new tools, channels and technologies.

In an industry so vulnerable to the whims of consumers, most players are positioned to identify—and deal with—performance issues very quickly. But the global economy is becoming more and more volatile.  Moreover, as retail morphs into “metail” and consumers take control of retailing interactions, brand values in the retail grocery business will be increasingly important. And as customers grow even more demanding and barriers to entry crumble, admitting new and agile competitors, even the industry’s high performers will be challenged to sustain future value.