Q&A: Placer.ai's Ethan Chernofsky Talks Grocery Growth, Consumer Behavior
At the National Grocers Association's recent NGA Show, grocery retailers, solutions providers and manufacturers gathered in Las Vegas to collaborate on growing the independent grocery sector.
Grocery as a whole has benefitted greatly from the pandemic as consumers became better acquainted with their local stores. Store Brands sat down with Ethan Chernofsky, SVP of Marketing at Placer.ai, to discuss how the landscape has changed over the past three years, and what the future holds for specific grocery channels.
Store Brands: First, could you describe Placer.ai's methodology.
Ethan Chernofsky: There are 30 million devices in our panel. We then use machine learning and AI algorithms on top of that to make estimations of visits to retail locations across the country. It is estimates, so there is always a margin for error with what we’re looking at, and we’re looking at visits… the amount of peak time a location, the amount of visitors to [a location]. It’s not like sales data or something like that.
SB: Based on Placer.ai's foot traffic data, which retailers were among the most popular in 2022?
EC: Overall, grocery was a bigger winner than we give it credit for as a category. The context here really matters, because if you think of where we were in 2019, there was this feeling that restaurants were grabbing more and more share, grocers were kind of losing some of their value or not innovating enough. I think what we actually saw was that grocers innovated incredibly quickly, there’s huge demand there, and some of these shifts are likely to have long-lasting value.
We can look at visits for example compared to a year ago or compared to three years ago. Compared to a year ago they’re down slightly, largely because of group size. When we compare to pre-pandemic, it [grocery store visits] went way up. I think that speaks to a segment that filled a real void during the unique nature of the pandemic and the year that followed, and that now is benefitting from that extended boost that it’s gotten during that period.
SB: Several discount retailers like Aldi and Lidl, as well as dollar stores, have benefited during the current inflationary period. Does preference between discount retailers change over time?
EC: I think a lot of it is location and proximity, and a lot of it is people finding brands that they love. Grocery Outlet is amazing and they’re doing very, very well. The same is true for Aldi or Lidl or others. What makes that process really interesting is that they’re very national in how they do things, so they can kind of scale out to where there is demand. I think they’ve proven that they’re able to grow total visits but also unique, per store location visits, which is really important.
One of the important things to remember with grocery is that in general, there’s room for a lot of different players. Most people aren’t going to one grocer… they’re going to Aldi, and then they’re also going to Whole Foods, and then they’re also going to a butcher and Costco once a month. The interesting opportunity for the value chains is that if during inflationary environments they’re able to grab even a piece of visit share, how much of that continues into the coming years.
SB: What role does a strong private label assortment play in driving visits?
EC: It allows them to have something unique. Private label is a chance to say “you have to come to me because I’m the only one who has it.” I also think in the current environment, having something that’s more value-oriented is a big boost, even if it’s a short-term opportunity, it’s still an opportunity.
SB: In addition to discount grocery chains, club channels saw large growth in 2022. Do you expect this to continue moving forward?
EC: I don’t know if the growth will continue because it’s so hard to grow that much, but the club channel is a brilliant business model. You sign up, and then you get involved. There is an incentive to go, and they really do provide an amazing experience. I’ve never gone to a Costco without a shopping list, and I’ve also never left Costco without double the amount of items on my shopping list, and it’s because there is this treasure hunt-ish kind of experience. They’re a uniquely powerful engine and they’re model gives them a lot of stickiness. I think there’s a lot of strength in grocery, and club is certainly part of that conversation.
SB: What other consumer behaviors will you be keeping an eye on?
EC: The one big thing that’s going to be very interesting is what this shift to the suburbs means. There was a migration pattern change where people moved to the suburbs, and plenty of people took their place in the cities. The question is who and what are the patterns.
An interesting data point that we found was we looked at grocery chains, and one of the ones that saw the biggest decrease in average age was Costco. It was because people were moving from the city to suburbs, and all of a sudden they had the space and the proximity to Costco, and they could go wild. Understanding who else that might impact, and who might benefit from that rising wave from within urban areas, I think that’s a very important thing to track.