Author: Lilly Wieber
Source: Progressive Grocer
To compete with Amazon, food retailers must provide a compelling online grocery experience
Industry-wide changes are making growth in the grocery sector more difficult. From price wars and aggressive new competition to increasingly demanding omnichannel consumers, grocers have many new challenges to master. For many, this means adjusting the way they engage with consumers to ensure that they’re attracting new customers while making sure their best customers keep coming back for more.
A CHANGING LANDSCAPE FOR GROCERS
One of the biggest trends changing the landscape for grocers is the shift to digital. While the vast majority of food shopping still takes place in brick-and-mortar stores, the industry is feeling the impact from the widespread adoption of online ordering. Consumers are spending more time and money on their phones and are enticed by the convenience of mobile shopping, the speed of shipping and newer options such as curbside pickup. Many are turning to apps like Instacart, online delivery services like Peapod, and grocers like Walmart that now offer same-day grocery delivery services.
In fact, online grocery shopping sales are expected to rise from $17.5 billion in 2018 to $29.7 billion by 2021. According to a Nielsen study, 70 percent of consumers will buy groceries online by 2024. Yet only 2 percent of food retailers consider themselves to be very sophisticated when it comes to their online sales.
AMAZON EFFECT ON CONSUMERS, GROCERY SHOPPING
Consumers are already turning to Amazon in droves for their clothing, shoes, jewelry, tools, personal care, home and kitchen item purchases. Now they’re turning to Amazon for their groceries as well. The company captured 30 percent of U.S. online grocery spending last year, likely helped by its acquisition of Whole Foods Market and offerings such as Prime Pantry and AmazonFresh. The ease of its online “one-click” navigation, vast inventory and competitive pricing have also helped drive this growth.
To compete with Amazon, grocers not only need to offer better prices, an expanded product selection and convenient locations, but they also need to provide a compelling online grocery experience. More consumers than ever are choosing private label products over national brands. The demand for fresher, healthier foods continues, along with a decline in packaged food sales. Younger consumers do not have the same loyalty to incumbent brands of the previous generation and are demanding convenience at every stage of shopping. As shopping habits shift with the generations and younger consumers gain more buying power, grocers will need to ramp up tools, resources and skills to remain relevant.
NEW TIMES CALL FOR NEW MEASURES
As these trends make clear, it’s becoming more important for grocers to consider how they engage consumers in the digital space. Whether you’re primarily selling to consumers through online or brick-and-mortar, it’s important to communicate to them online to meet them where they are and make sure that they keep your store top of mind. As they increase their online presence, grocers need to make sure their digital and mobile experiences are personalized and complement the brick-and-mortar experience. Upgrading their marketing measurement approach will go hand-in-hand.
To understand what’s contributing to shopper traffic and purchases, both online and in-store, grocery retailers need to account for all of the marketing touchpoints that influence the way consumers shop and what they buy. It also means having tools that will enable them to tweak and adjust ad frequency, messaging, creative and placement to boost high-performing media and shift spend away from those that aren’t converting.
More and more grocery marketers are turning to advanced marketing measurement technology, such as multitouch attribution, to get these kinds of powerful performance insights. Multitouch attribution takes advantage of the unique set of person-level data produced by digital channels to uncover the relationship between the marketing tactics people are exposed to and the actions they take. These insights are produced faster and at more granular levels, so grocers can see which creative messages, offers, audience targets and other tactics are converting customers most efficiently, to spend marketing dollars in a way that optimizes the impact and reduces wasted efforts. With a better understanding of what marketing activities are motivating consumers to buy, grocers can create more relevant experiences that drive sales, both online and in-store.
The digital era will only continue to change the way grocers reach, engage and convert new and existing customers. These new factors will require grocers to bolster their people, processes and technology if they want to survive and thrive in the face of industry disruption. By adopting advanced measurement approaches like multitouch attribution, grocers can make smarter investment decisions that not only drive their business forward, but also create the relevant omnichannel experiences that consumers demand.