Last updated on December 1st, 2017 at 01:20 pm
How does an independent grocer leverage e-commerce in this “new era” of grocery retailing? That is the question Steve Bishop, managing partner, Brick Meets Click, attempted to answer at the ROFDA Fall Conference.
While e-commerce is a small percentage of sales today, it is a disproportionately important part of the business. Bishop said Amazon’s acquisition of Whole Foods in 2017 “poured gas on the flames.”
He defines the new era as integrated retail. E-commerce supports the physical store where the bulk of sales occur. Inside the store, the focus must be customer-centric.
“There are a number of retailers out there that are trying to figure out ‘what is the workable model,’” Bishop said. “I would say ‘Bold Moves’ (the theme of ROFDA’s fall conference) is really focusing on your own strategy.”
Digital influence
Historically, grocers and suppliers worked together to lead the consumer through the path of purchase in brick-and-mortar stores. That script flipped thanks to what Bishop calls the “disruption of digital.” Today’s consumers search online for information about products, including pricing, and 60 percent of them start with Amazon.com. Bishop said Amazon has become a “marketing brand impression platform.” That is digital influence.
Deloitte Consulting reported in 2017 that roughly 50 cents out of every dollar is digitally influenced.
“Digitally influenced sales are any in the store that have been touched by a digital device at any point through the path to influence the purchase,” Bishop said. “When we think about e-commerce, we have to think about the effect that digital influence has now.”
Its impact will only grow, as it is predicted that by 2020, seven out of 10 people who are online will be on a social network.
“That is a tremendous opportunity for engagement,” Bishop said. “The challenge for all businesses is to think about how to prioritize against these digital touchpoints and then identify where your shoppers are and then what type of content your shoppers are looking for to engage with you.”
Big tech likes food
Bishop said big tech really wants to get into grocery. These companies see food as an avenue to become an integral part of everyday life.
“This gives them a plank into the household to be able to more effectively understand and cross-sell/upsell other areas of the business,” Bishop said. “And the front line of this is the voice-activated speaker system.”
The two most popular are Google Home, which recently teamed up with Walmart, and Amazon Echo. Only one device will win in each household.
Bishop said Walmart has been a “sleeping giant” online until the last year or so. Its acquisition of Jet “supercharged” the retail giant. Now it is focusing on innovations with shopper appeal, such as its reorder button, self-service lockers and free grocery pickup.
“Walmart and Jet started working very aggressively to integrate the online/offline synergies that most likely accelerated Amazon’s efforts to want to figure out how do they go out and get a physical presence—and triggering the Whole Foods acquisition,” Bishop said.
Amazon began making grocery fulfillment a priority in the last two years. It initially was price-oriented but now has moved into being more about where and when the shopper needs the product.
“We understand that they don’t play by the same rules that we all have,” Bishop said. “They are able to take losses in their business by offsetting from the profitability in other areas of the business. We’ve seen them be very ruthless competitors with what they did with diapers.com and soap.com a number of years ago, undercutting them by 30 percent. So they are a force that we have to recognize.
“This is just the beginning of what big tech is looking to do in grocery,” he said.
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Information explosion
Having the breadth and depth of human knowledge at one’s fingertips has changed how people think about food, how they shop and how they eat, Bishop said. It has created opportunity, but non-traditional online and brick-and-mortar competitors are horning in on the grocer’s space.
Bishop had three major points to make about this. First, the prioritization of health and wellness has led to a shift away from processed products to fresh foods and clean eating.
“If we don’t have the products that today’s consumers and the Millennials seek in our store, where are we pushing them to go buy those products? That’s the question to keep top of mind,” he said.
The second is meal solutions, which Bishop said has been a discussion in the grocery industry for 20 years. What is different now is that the consumer has even less time to devote to meal planning, finding ingredients and pulling together meals. Bishop suggests that grocers help shoppers expand their collection of routine meals to add more fresh and exciting recipes they can cook at home.
“Ultimately recipe programs need to be effectively integrated into baskets,” Bishop said. “How do we help those folks easily fill out the recipes, expand their repertoire and buy more products out of our stores?”
The next level up in solutions is meal kits, which Bishop referred to as “that halfway house between buying ingredients and prepared meals.” This is the solution for people who want to cook at home, but don’t have the knowledge, comfort level or the time and ability to plan.
“Cooking is a dying art/skill in the United States,” Bishop said. “We have to figure out how do we capture those households as they change how they engage with food.”
The third leg of the information age of food is on-demand. Many shoppers today have no idea what they will serve for dinner. Any “planning” is done about 30 minutes prior to the meal. Sitting down to map out meals for the week has become a quaint notion.
“That is a serious challenge, and the question is how do we as a business effectively go out there and pull those dollars into our store and not have them pulled out into restaurants and so on?” Bishop said.
Online shopping concerns
Brick Meets Click surveyed consumers to understand what makes them return to a retailer’s website to shop. Their responses were summarized into three areas of concern:
- Is the website itself intuitively laid out? Are the products easy to find? Is the content easily labeled? Are the product described correctly? Do you have adequate up-to-date images? Do you have enough content? These all make a big difference because if they don’t find it, they’re not going to buy it, Bishop said.
- Out-of-stocks will happen, but it is the way the retailer responds that makes all the difference. How do you handle substitutions and how do you exceed the expectation of the shopper? Are you giving them the same brand with the package size larger if what they ordered is out? How are you dealing with them in that process so they are getting the convenience they want?
- Did they receive their order on time? Did you fulfill the promise? Was it ready when they came in to pick it up? Did it get delivered in the window of time that you promised? Are you giving an experience that makes online better or in line with the expectations that they have with Amazon today?
“Make no mistake about it, Amazon today is creating the expectation set that we all must match and serve,” Bishop said. “They are a customer-first organization. We all need to be customer first. They do a fabulous job with their online and follow-up customer service. We, as retailers, need to do the same.”
Bishop said that if a retailer doesn’t get any of these three right, it is “pretty much dead in the water.” If it gets all three right, there is an 80 percent likelihood that a shopper will return to the site.
“There’s a lot of change happening in the market and change is accelerating,” Bishop said. “It’s challenging for us as a trade because we don’t control the messaging and the path to purchase the way that we used to. We’ve got to accept the fact that the world has changed. It doesn’t mean it’s doom and gloom. The world has changed before. Walmart came. We survived. Amazon and online is here. Now we need to adapt to survive and respond.”
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