This week’s blog post is the third in a series taken from our webinar and eBook, Reinventing Grocery | The Timeline to the New Normal. To read the first and second parts of the series in Reinventing Grocery: The Timeline to the New Normal, please click here and look for the posts titled “Reinventing Grocery.”
Taking a closer look at shopper behavior, before coronavirus, shoppers were happily splitting their total grocery budget up over several stores. It isn’t rare to see shoppers buying produce and vegetables at one store, going into a warehouse or discount grocery to buy center store products, and capping off their grocery shopping trip with a department store for general merchandise. Now, however, we’re seeing a drastic rise in desire for one-stop-shopability in an attempt to limit exposure to the virus.
Not only are shoppers getting it all at one store, but they’re getting things for working and teaching at home that they wouldn’t typically be shopping for. This may be temporary, but if it sticks, what decisions will grocers make to merchandise mix? Big box grocers are better suited for this.
When you look at one-stop-shopability, it’s important to look at both the data and the real human elements. Many shoppers are familiar with the struggle of not being able to find something you want – or in some cases need, like dietary restriction items – in a single store and having to make multiple trips to multiple stores to find all of the right products.
As we look at the challenges that coronavirus has had on one-stop-shopability, what are some new ways that technology can ease the customer experience? Can we integrate our perpetual inventory systems ino our online shopping experience so that I as a consumer know if something was in stock before I placed an order? Or what about when shoppers are already spending 30 minutes to an hour filling up their online baskets only to find out in the end that there aren’t any delivery times available for the next week? Finding a solution to these problems is what will make a normal grocer become a powerhouse in the grocery industry for years after the coronavirus’s impact.
Referencing the Dunnhumby Retailer Preference Index Report, we expect that Operations and Convenience will become much more competitive with Digital for the #3 spot in terms of shopper importance.
Let’s take a look at the two grocers represented in the charts here. Both companies are using third-party delivery services, so they don’t own the entire customer experience from the digital infrastructure where the customer orders to the fulfilment when the customer receives the order. However, Company #1 invested in their technology capabilities while Company #2 did not.
Company #1 on the left is clearly benefiting from what’s going on today with the rise in digital deliveries, while Company #2 on the right experienced a little bit of a rise but wasn’t able to keep those numbers consistent like Company #1. Once the third-party started to experience labor issues and threats of striking, Company #2’s online orders went down.
Some grocers are building these capabilities internally and being less dependent on third parties in order to control the customer experience. The ability to control the whole stack as technology companies call it has serious benefits – just look at Apple. By owning the digital front end that interacts with the customer, the back end that interacts with the store associate and owning the delivery provides control of the experience so that you don’t end up like Company #2.
We can look to the restaurant industry for businesses that have been ahead of the unique technology investment trend.
While Dominos is a pizza company, they’ve invested most of their time and energy in the order fulfillment experience by showing their customers exactly what’s going on with their pizza from the moment they start the order to the second it’s dropped off on their doorstep. Similarly, Jimmy Johns has entirely branded themselves on their “freaky fast” delivery technique that has become a pillar of the store experience. The two companies’ high standards of technology are what has kept their customers loyal and reputation strong.
Grocers need to make the decision: do they want to hand off a crucial portion of the customer experience to a third-party, or do they want to champion the further investments and own the entire experience from beginning to end?
Aside from technological innovation, restaurants are also creeping into the grocery category by now offering shoppers an opportunity to purchase produce and other goods directly from their retail locations. As we move into the second half of 2020, grocers should keep an eye on these practices before they turn out to bite them.