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To sharpen the focus of your grocery eCommerce efforts, you need to understand the true economics of customer acquisition and align your business to key metrics such as Customer Lifetime Value. These are two pieces of advice from Barry Clogan , who led successful online grocery initiatives in several different countries for Tesco.

In his recent conversation with Bill Bishop, Barry offers US retailers a range of important guidance as the Chief Product Officer at ThryveAI. (Video runs 11:24; edited transcript below).

Video transcript, edited for clarity

BILL BISHOP: Welcome to today's program. US Grocery is going through some really big changes these days. I am here today to talk about that and other subjects with Barry Clogan who is Chief Product Officer with ThryveAI. As CPO, he oversees the product strategy of all Mi9 Retail solutions as well as the newly launched ThryveAI digital commerce platform. Barry, welcome.

BARRY CLOGAN: Good afternoon, Bill. It’s a pleasure to see you again, and I’m looking forward to our conversation.

BILL BISHOP: We are going to have some fun today talking about several questions. I know from prior conversations that you are going to have not only complete, butvery creative, answers that add value for our audience. So, turning to the first question:

COVID-19 has really changed the business. How do you see it changing the way grocers need to think about e-commerce and online shopping?

BARRY CLOGAN: It has dramatically changed the landscape. Even prior to COVID, we knew the trend was obvious. The way consumers shop was continually moving and continually increasing the participation online. However, COVID is an absolute shot in the arm. It has pushed forward and accelerated the business five years.

This has to be a major wake-up call for grocers. If they want to remain relevant, if they want to drive growth in their business, they absolutely have to get on the journey to online and start to build that capability.

It starts with a simple basket around a weekly habitual shop. You need to be able to solve for that weekly habitual shop, to build that capability in your business, and from there you can branch out into other shopping missions and other propositions. The consumer has changed utterly, and that is only going to accelerate.

BILL BISHOP: So, does this have to do with keeping up with the consumer who is probably pulling us along?

BARRY CLOGAN: Absolutely. If you look at millennial shoppers, if you look at the impact of COVID on our expectations, if you think about how we engage with general merchandise products online and how that has driven and changed our expectations – consumers absolutely have the highest expectation of grocers. These shoppers expect to be able to engage with a grocer in any channel they choose.They expect a seamless experience, across all the different channels, whether it be in-store, online, loyalty, or promotions. So, consumers are absolutely driving a change in terms of how they engage with food in the first instance –and then, ultimately, how their brand, or their local store, solves for those needs on their behalf.

BILL BISHOP: If you had to pick one area of capability that you encourage retailers to develop to be successful in the future. What would that be?

BARRY CLOGAN: It is around understanding the true economics of acquisition in an online grocery business and online e-commerce business. It is identifying customers. It is finding them online. It is attracting them, and then it is retaining them. It is nursing those consumers through their first shop, their second, and their third shop.

We know that if consumers get through three shopping trips, they are 70% more likely to become loyal. The fundamental basis for profitability of our online grocery business is to make sure that we are growing our loyal base. That is key.

So, for me, it is not about the scatter-gun approach of $20 coupons to every single customer. It is about really being maniacally focused on who are the customers that have the propensity for online grocery shopping. Who are the customers, and how do you nurse them through those initial three shops. That is the skill set that we absolutely need to continue to harness.

BILL BISHOP: Great, that gives us a good job one to concentrate on. How do we get the focus in the organization to make all that happen?

BARRY CLOGAN: I think fundamentally it is about making sure the business is aligned behind the key metrics. In a multi-channel world, we are measuring consumer lifetime value, and it is about understanding the value of those consumers as they engage with us across different touch points and different channels. If the leadership team have the right culture in place and the right metrics in place,I think ultimately that helps the overall goal for the organization.

BILL BISHOP: That is extremely helpful, and the metric of lifetime value is an important one that all grocers are going to have to start concentrating on.

We are seeing an increase in demand for fast delivery - two-hour, and one-hour in some cases and most retailers have kind of delegated that work almost completely to third parties. Is that the way this is going to play out over time or will things change?

BARRY CLOGAN: It has been really interesting to see the different options that have been provided to retailers and the new variety (or variability) that the third parties are offering.

So, it definitely plays a part, but I think first and foremost you have to ask what the strategy is around owning the consumer experience? How does the business feel? Do they need to feel that they own it end-to-end? Do they need to impact and own the doorstep experience as well as the curbside experience?

I think once we have answered that,then you break it down and get to the next level. For me, it gets down to what are the different shopping missions. In different scenarios, there is value in having a combination of different solutions.

Once you go beyond the shopping mission, it fundamentally comes down to the physical store location, household density, household penetration, the catchment area or trading area that you are serving and the size of that.

So, there are a number of different factors, but it starts with:

• What is your strategy around how we own the consumer experience?
• What are the different shopping missions?
• What are the customer's expectations against those shopping missions?
• What is the tiered-pricing architecture against them?

Then the physical location of those stores -in the geography that those stores operate in - also has an impact on the fulfillment type (or solution) that we might put in place.

BILL BISHOP: The old saying “retail is detail” obviously applies here. That wasa lot of detail think about and an extremely helpful way to lay it out.

In the early days of COVID, we experienced some real limits of capacity in terms of being able to fulfill online orders. What are your thoughts on how we can overcome that problem?

BARRY CLOGAN: The key capability that is needed in each of our individual stores is the ability to pick multiple orders. The ability to be able to offer capacity in any of those stores and the ability to pivot to offer that capacity is very important.

The efficiency that we drive around picking multiple orders across the same store is imperative if we want to be able to scale our business.  And we have seen during COVID, when we have had to be able to scale that quite quickly, that this capability is incredibly important.

BILL BISHOP: That gives us a very practical point of leverage to expand capacity by the way we run our business. Great catch.

We are seeing some real aggressive activity from the retail giants ; how should grocers respond to be successful in the future?

BARRY CLOGAN: If we can make sure that we put a strong focus on ensuring that we are offering online grocery from all our stores, whether it is curbside or delivery, and then make sure that that core proposition is as efficient as possible – whether this is the ability to pick across multiple orders, to monetize that site, to  monetize the traffic, or the ability to manage different delivery partners to control the profitability of the delivery business . . . I think if we can establish a foundation of profitability against that proposition, then retailers have got a really good chance of being successful.

From there we can explore other opportunities and other ways to innovate other new shopping missions  that I would regard as sitting on the perimeter of the online grocery basket.

BILL BISHOP: So speaking about profitability and growth, almost every retailer is moving deeper into e-Commerce.

As they do that, given yourexperience, are there opportunities for them to create new revenue streams or new businesses that had not been anticipated before but could be used to round outtheir profitability and growth?

BARRY CLOGAN: Absolutely. This is something that I value your input and your opinion on as well. I see that grocers have always struggled – maybe outside of ourcurrent predicament or current pandemic – but it is always hard yards to get one,two or three percentage points in terms of growth. It is a difficult business,and yet we are creating for online businesses. We are creating online propositions around food with multi billion-dollar valuations.

That is the entrepreneurship that we need to have in the industry. To be able to build these new propositions and see what works – to identify customers, mine that data and identify customers who we think would be willing to sign up to a beer subscription business, a meal-kit business or buy a fresh produce box and on a weekly or monthly basis.

There are lots of different shopping missions that we need to be conscious of. The way consumers are engaging with food is changing dramatically and retailers need to make sure that they are in those spaces rather than being disintermediated.

BILL BISHOP: I very much agree with you from where we sit. There are lots of opportunities being created today. Many of them not by grocery retailers, and there is no reason why given all the assets that grocery retailers have, that they should not be in that mix and taking advantage of some of that growth. So that is a wonderful note to end on.

Thank you very much for taking the time to talk with us today, and I wish you the best of luck as things go forward.

BARRY CLOGAN: Appreciated, Bill, thank you very much. That was a pleasure.

BILL BISHOP: Same here. Goodbye, everyone.

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