Now we’re face-to-face with the question, “How do shoppers
decide whether or not to buy food and groceries online and have them delivered
to home?” Eventually, the answer will be obscured by habit, but for now it
generates a lot of insight into who will win in this emerging market and why.
Sometimes you need to look into the distance to bring into
focus what’s going on around you. This is especially true today for retailers who must think about what
could happen if Amazon and Google succeed even modestly in their future retail ambitions.
The success of Sprouts and other farmer’s market type stores
is a great example of disruptive innovation – at the same time, it illustrates
the vulnerability of disruptive innovation in today’s fast moving retail
When enough people believe something, sometimes it doesn’t
matter if it’s true or not. Grocery customers now believe that their
supermarkets know enough about them to give them personal offers. Publix is
responding with a personalized offer program – and other food retailers
will need to think about following on. This is an increasingly common shopper expectation.
Aldi’s primary appeal to shoppers is low prices – 30% below the
supermarket – but that’s not the only reason they’re enjoying strong same store
sales growth in an otherwise flat market. Known originally as a limited
assortment store, Aldi has maintained most of those strengths while also
developing a more well-rounded shopper value proposition that’s proving hard to
beat, at least for now.
Putting the customer first is a winning strategy in today’s
intensely competitive market. Relay Foods and Whole Foods are ending a 5-year partnership in Virginia, and the positive and helpful way Relay has approached
helping its customers through the transition is worth learning from. Relay does six notable things in this email they sent to
customers in Charlottesville and Richmond.
Supermarkets need to find new ways to grow, but until now most of the
ideas haven't really taken off. First, it was Whole Health and meal
solutions - more recently in-store clinics looked like they had
potential. Kroger’s purchase of Vitacost.com shows where they are
placing their bets, i.e. in fast-growing categories such as healthy
living at a lower cost and new channels e.g. ecommerce.
The retail stats compiled in a recent Business Intelligence
report drive home the fact that “online retail is growing faster than offline
retail,” but closer interpretation is required if you want to really understand
what’s going on. For one thing, offline retailers probably have more
opportunity to capture business than the buzz suggests.
We know that it costs a lot more to acquire a customer than
to retain one and that customer turnover is a major expense for retailers. But are we putting enough resources and
thoughtfulness into customer retention? I was reminded of this challenge by a personal experience in
which a little more investment in customer retention could have resulted in a
big increase in the lifetime value of a customer.
“Is the human touch important in retail?” Of course it is. It can also be the key
driver for sustainable competitive advantage, as Susan O’Neill Gear suggests in her recent blog. To make the commitment (and reap the benefits), brick and
mortar retailers must answer two questions first.
An approach called “total retail” is overtaking
omnichannel as the high-water mark for successful retailers. Whereas the last big
upheaval required retailers to multiply the number of channels where they made
themselves available, the next one looks like it will require them to “rebalance
that store portfolio” with the customer at the center of the picture, and
include their physical stores in the innovation mix. One reason this is going to be so important is that the
average shopper now wants to limit the number of retail brands they interact with,
The Savings Catcher program that Walmart rolls out nationally this
summer gives the retailer a way to create a new digital CRM program without involving
a card and discounts. For us, the really big idea is that Walmart leveraged all
the new price transparency data into a value added service for their customer.
It’s time to reconcile high tech and
high touch in food retailing. The two can complement each other better than
ever today. Bob Wheatley’s blog "Supermarkets: Do you know me, love me?" made me thoughtful
about just how far we’ve come in terms of how technology can help us better
understand and serve our customers.
Walmart offered a vision of where food and grocery retailing
is headed at its annual meeting that includes smaller formats and increasing
ecommerce integration. Watching the largest retailer in the world test and try
out different strategies to address changing shopper needs and behaviors raises
some fascinating questions for the rest of us as we struggle to re-invent
NEW FEATURE!!! Audio insights from Bill Bishop. CLICK HEREto hear what Walmart's experiments mean for other grocery retailers.
Online grocery has to be economic to work, but real success depends
on delivering a superior shopping (user) experience. This is where the phrase “retail is detail” goes virtual, and
Relay Food’s new website is a great example. Their commitment to a unique
shopping experience is clear in a recent letter to users.
Tesco’s successful use of search engine optimization (SEO) has
the company dominating food and grocery search results in the UK, making them the
most visible grocery retailer in the digital space. Econsultancy took a look at
why in a report that contains some interesting insights.
New digital touchpoints like iBeacon dramatically increase
the opportunities for retailers and brands to communicate with and better serve
customers and consumers. But, they also raise a key the question: What are
shoppers really looking for –
promotions and savings or better customer service? There’s a good chance that some of the
connections will be wasted if they aren’t used to deliver customer services as well.
The Poncho app, now in pilot with Duane Reed, caught
our eye because it nails the requirements for effective shopper communication. Shoppers
want information that’s personalized and relevant – timely, interesting and
useful for the task at hand. Messages that don’t meet these criteria
won’t have much impact and risk being irritating.
Working with retailers, brands play an important role in
driving the sales of their products, so it’s a concern that only a handful have
taken the steps needed to extend that influence to mobile. This gap needs attention.
with mobile strategies is directly related to the level of digital engagement
by store associates, according to an Economist survey of 150 top
retailers from around the world. It’s one of the keys to capturing the full
benefits of mobile that's highlighted in this new report.
Taiwanese convenience stores use a success formula that retailers as diverse as Trader Joe’s and The Container Store have tapped into. It’s
about having a different value proposition than other stores selling the same
types of products, and about finding ways to “engrain” themselves into the communities serve. It's the same thinking that's laid out in the NACS/CCRRC Playbook for Success.
To shorten delivery times, Amazon
offers sellers the option to have their merchandise comingled (pooled). The theory sounds good – but the practice builds a subtle, but potentially important
vulnerability into the design and operation of Amazon’s supply chain.
Retailers who are looking hard at the ROI from loyalty
programs may want to give texting a second look, particularly if they’re
looking for a low-cost way to encourage more visits and deliver special offers.
Eighty percent of the customers who signed up for the text-reward program evaluated
in this Convenience Store Decision article also opted in to receive the
retailers’ exclusive offers.
It’s easy to come up with the idea of selling local food
online. It’s harder to get
farmers, retailers, and consumers all “singing from same sheet of music” in
order to create a cost-effective food distribution system. The beauty of Farm
Drop – a new, UK-based online market that connects farmers directly to consumers – is
that it simplifies the challenge with innovative approaches to compensation and
It’s clear that many new food stores will be built with significantly
smaller footprints than traditional supermarkets. Check out David Rogers’ presentation to the Supermarket
Location Research Conference for a great framework for understanding the
go-to-market strategies being used by this new generation of small food stores.
The big players in online grocery (like Amazon Fresh) may
get the most attention, but plenty of smaller scale innovation in the market is
worth a careful look – some of it will grow into viable competition. The new Zoomin
Market in Olathe, KA may be one such innovator and their customer interface is worth a look.
Digital coupons are popular, but there’s always the issue of
how smoothly they fit into the shopping experience. The new mobile app Checkout
51 seems to resolve many of these issues. It also makes coupon delivery more
efficient for manufacturers.
Spending on food is growing slowly and
new competition continues to enter the market, so retailers need to look for
new ways to sustain profits, but they also need to carefully consider how they
evaluate growth. Focusing more
attention on the main retail asset – the store itself – can be one of the keys.
A recent report prepared by Fluid and
Wells Fargo scores customer experience at online grocery sites on a wide range of criteria. What
surprised us was how much higher Fresh Direct scored than the rest of the
pack which included Safeway, Google Express, Amazon Fresh, Peapod and three other big players in the US.
Here’s a new concept that’s worth a look. Food
retailer Lunds and Byerly’s has turned the “grocery store with a prepared foods
department” on its head. They’ve opened a restaurant to promote their online
grocery shopping option and carry-out food offerings. The restaurant also
serves as a pickup point for online orders.
challenges facing today’s retailers, it’s worthwhile shining a light on Kroger’s
leadership role in developing a new Retail Site Intelligence (RSI) enterprise IT architecture.
It will serve as the foundation for a broad range of retail innovations that
give Kroger the ability to digitize the store and improve the shopping
Alibaba’s Tmall Supermarket is a good example of how much
creative flexibility is possible when a retail business model is built out on
the internet. Partly, this is
because it’s possible to reconfigure a virtual operation quicker and at a lower
cost than brick and mortar, but the real headroom is found in making changes
that deliver greater value to customers – and some of these possibilities aren’t
even imaginable until a retailer begins to think differently about the
is a challenge for retailers when it comes to personalization using
digital connections: How do you reach enough shoppers to have a measurable
impact on sales? We found some specific ideas about how retailers can personalize WITH shoppers vs To shoppers. These ideas can create better implementation and ultimately help realize a lot of the value missed by just staying with a transactional/product focus.
Google Glass has the potential to transform food and grocery
shopping. The device being hands-free
makes a big difference in terms of attention and focus. Check out this video to get an idea of just how much it will change the experience.
The key to success in retailing is aligning your
offer with the needs of your customers. What's needed is a proven process that
makes it easier to achieve that alignment. The new report from NACS/CCRRC
delivers a shopper research-based growth "formula" that easily
translates beyond convenience to other types of food retail as well.
decision to offer customer service through its iBeacon trial instead of
promotions is intriguing. Retailers can hurt themselves by delivering promotions and selling products because they
were paid to do so, not because their customers wanted them. Tesco's choice will benefit
shoppers while allowing them to warm up to the new technology slowly.
It’s never simple to maintain an effective retail pricing
strategy. Walmart’s newest pricing program, Savings Catcher, joins a
group of tactics that engages shoppers post-purchase, like Meijer’s digital
receipts and Checkout51 to deliver/show savings to individual shoppers.
Winning in today’s retail food marketplace turns on
delivering a better shopper experience, but exactly what that looks like isn’t
always clear. VineMarket.com's newly rebranded site goes
a long way in delivering a better shopping experience for people who have to manage
Sooner or later someone was going to make it easy for
grocery shoppers to take greater advantage of their new-found market power, and
the free price comparison app ShoppingScout may have cracked the code. Sara, the app's personal shopping assistant pictured to the left, automatically looks up the prices for all
the items on a customer’s grocery list, in all the stores they shop, and shows
them the lowest prices.
interaction with shoppers is the focus of several in-store beta tests this year. The question to be answered: Does
the technology create tangible value? Does it increase incremental sales and/or
produce information that the retailer can monetize to cover the costs?