E-commerce has redefined the retail shopping experience and shaped the fate of retailers in many sectors. Grocers have been the exception thus far, but that is about to change in a major way.
There are many challenges for grocery retailers, including heavy upfront investments, logistical challenges associated with delivery of perishable items and the inherently low margins associated with selling food. However, we are beginning to see some sustainable models in online grocery. As shoppers become more comfortable buying more categories online, traditional grocery items are being added to the list. Just recently, Amazon.com announced its expansion of AmazonFresh into new markets. Today online grocery is growing at nearly twice the rate of any other industry.
Now is the time for many grocery retailers to determine how they will position themselves in this new digital world. There is no one strategy that is right for every retailer, but there are five key principles to consider:
1. Understand the shopper
The shopper’s path to purchase for grocery has become more complex. In the grocery world, the number of influencers has increased dramatically. In addition to cookbooks and weekly circulars, there are now Facebook postings, online coupons, YouTube videos, Pinterest recipe sites and cooking blogs. Often a shopper’s moment of truth occurs long before they head out to the store — if they choose to go out at all — and product consideration, evaluation and even purchasing is increasingly happening outside of the physical store space.
It’s true you can’t go anywhere these days without hearing about a new digital technology or mobile app that will change the future of retail. However, retailers that focus on the technology alone will surely fail. Competing successfully in this new e-commerce world depends on one thing: understanding the shopper.
Grocery retailers that win in this digital world are those that understand their shoppers’ basic needs and deliver on their terms.
Many brands and retailers have devoted resources and effort to interrupting the shopper’s path to purchase with Facebook brand pages or banner ads, but these techniques have not necessarily driven sales to specific grocery retailers. After all, the pre-shop for grocery is not the same as it is for a new television, and cannot be treated in the same way. While the number of digital touch points and influences has grown exponentially, the basics haven’t changed. Shoppers fundamentally want convenience, ease of shopping and value. Retailers that can deliver on all three through the right digital and physical combination will win.
Shoppers’ “digital lives” are not separate from their physical lives. The time shoppers spend online and on mobile is closely linked with their physical world. Linking digital and physical shopping experiences offers more substantial opportunities for innovation and growth.
Understanding the shopper’s paths to purchase will enable retailers to see where digital strategies can support their needs. For example, banks have been using digital technologies, such as Web- and mobile-based apps and ATMs, in high-traffic areas to expand their brick-and-mortar networks for years. Retailers can do the same. Sainsbury, a U.K.-based retailer, piloted a Mobile Scan & Go service. With it, shoppers simply download an app to their smartphone, scan their own merchandise as they shop and then check out instantly without even unloading their carts.
2. Re-imagine the notion of service
E-commerce is more than just a delivery mechanism, but an opportunity to differentiate one’s service in new ways. Grocers should create services that better match up with shopper preferences and expectations. Another opportunity is to integrate a world without aisles and shelves where data can inform more value-added interactions and help grocers gain true advantage. Some service-oriented solutions that grocery retailers are delivering today via digital include:
- A “remember my list” feature, which Peapod rolled out, that allows shoppers to choose products from a list of prior purchases to make it easy to find the items they buy most.
- Three meals’ worth of groceries that include ingredients perfectly portioned for their corresponding recipes delivered in an insulated box, curated by BlueApron and designed to precisely match shopper purchases and needs.
3. Create a compelling in-store experience
Most brick-and-mortar retailing offers advantages that online retailing simply can’t match. Grocery stores can offer real-time conveniences, yet for many shoppers, a trip to the grocer is a chore. Consider how you can create a compelling in-store environment that complements a digital presence and adds more “wow” to the shoppers’ experience.
Take advantage of kiosks, QR codes and mobile apps to enrich the shopping experience with more options, more information and more purchasing power.
4. Expand your offering with a well-curated, endless aisle
Adding a digital shopping cart and fulfillment site can help grocery retailers expand their product selection, ensure availability and overcome shelf-space limitations, but there’s another way to approach the use of this technology. Many retailers have also added in-store kiosks or computer terminals to provide in-store shoppers with the ability to see and order additional products beyond those on the shelves. By creating this type of “endless aisle,” retailers can stock less inventory in-store (and even reduce store size) while delighting customers.
A well-curated endless aisle helps address shoppers’ needs to find specialty or hard-to-find items. And because the aisle is digital, it can easily be frequently altered to reflect seasons, specials and new additions. The endless aisle can also become a virtual treasure hunt, enabling customers to make new discoveries during their everyday shopping processes.
5. Think of your shopper as a partner
Today’s consumers have more power than ever before. They can access information, compare prices and share opinions with their own personal networks in a matter of seconds. Advances in communication, interactive technologies and data analytics make it easier to create two-way dialogues with shoppers. And shoppers are coming to expect shopping experiences where their opinions, their preferences and their reactions influence retailer decisions.
To help build relationships, look for ways to provide value-added content such as information on recipes, health and ingredients. Make it easier for shoppers to express their opinions on what they like and don’t like about their store experience.
Andres Siefken is recognized as a thought leader in marketing strategy and serves as chief marketing officer at Daymon Worldwide, a global leader in retail private brand building, experiential consumer marketing and innovative retail-driven services. Click here for more information.