Just like other retail verticals, the grocery industry, more than ever, is feeling the pressure of the Amazon Effect; fierce competition from traditional grocers, mass merchants and other channel disruptors; advanced technologies; and changing consumer food preferences and the need for convenience.
In conjunction, Grocers have always been faced with margin pressure, traditionally managing a thin net margin of 1-2 percent. So what must a grocer do to remain relevant to today’s diversified omnichannel shoppers and survive?
Generally speaking, the grocery industry has been a laggard in embracing innovation and adopting new digital technology solutions. However, when Grocers are faced with consistent negative comparable sales, lower earnings than forecast, and high customer attrition rates, they shift into a “reaction mode” and typically the results fall short of expectations.
To address digital commerce disruptors and succeed, here are some operational best practices to keep in mind:
Avoid organization structure duplication and silos (digital commerce vs. brick and mortar business units). Collaboration and clear communication of responsibilities and accountability are required to succeed.
Accessibility to a “single version of the truth” with a Master Data Repository, where multiple sources of data converge and everyone views the data in alignment.
Accessibility to a “360° view of the customer” as she interacts and transacts with the Brand, with the goal of “knowing, reaching, and engaging the customer, and consistently delivering the omnichannel experience that she expects.”
Evolve to “hyper-personalized” marketing vs. strictly mass marketing. Not all customers are created alike, and should not be treated as one of the same. Know your customer differences, preferences, and behavior; and shift the ratio of traditional product trade promotion spending to shopper specific trade promotions.
Replicate the virtual store to the physical in-store shopping experience. Avoid fragmented shopping experiences. Deliver a consistent and complete view of the Brand and the products and services it offer, no matter how a customer interacts and transacts online or in a physical store.
Ensure product freshness and quality when fulfilling customer’s online grocery orders. Shoppers are picky about their produce, and other fresh products, as they prefer to see, touch and/or smell before purchasing. Your ecommerce solution must allow for notes per fresh item to the order selector; and order selectors must be properly trained to ensure consistent quality control in order gain shopper’s trust and confidence.
Explore options to fulfill the “last mile.” Grocers can leverage their physical store locations to fulfill customer orders, and fulfill the “last mile” with delivery and pick up (click & collect) services. These services are also provided by 3rd party companies, which allow Grocers to quickly test the waters, and with minimum upfront investment.
Besides operational challenges, advanced technologies are also challenging traditional grocers; forward-thinking Grocers are gaining competitive advantages with shoppers seeking convenience and a better in-store shopping experience.
Voice-assisted ordering devices with built-in capabilities that sync with an online grocer to order items for direct delivery to doorstep Internet of Things (IoT) such as a smart refrigerator, that tracks food usage and then auto-reorder items when running low or add items to a shopping list Grab & Go, Checkout-Free Shopping Mobile App
Visit a store, scan items with a smart phone app, tap the phone to pay with credit/debit card on file, and walk out the store. Mobile Loyalty Apps
Grocers should offer a Mobile Loyalty App to deliver more value, convenience, and enriching experiences to their loyal customers. Next-generation Loyalty Programs are not about points, discounts, coupons, and rewards. Grocers need to shift their thinking about loyalty from transactional to emotional experiences with the customer in real-time. In-store Location Marketing
Utilization of beacons installed within the store, to engage the shopper, via a mobile loyalty app, with hyper-personalized content based on historical purchase transactions, behavior, lifestyle and preferences as she shops up and down the aisles. Artificial Intelligence
The practice of employing complex models and algorithms that learn from data over time and make predictions and decisions based on it. The goal is to achieve constant improvement in learning and performance over time, such as, customer segmentation, hyper-personalization, optimization of product assortment, price and promotions to improve customer engagement and profitable sales.
Grocers who have not yet addressed these and other digital commerce disruptors risk lacking behind their competitors and may even be next in line to file for bankruptcy protection or forced to close store doors.
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