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How One Grocery Retailer’s Investment In E-Commerce Resulted In Double-Digit Sales Growth

Mercatus e-commerce

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While many regional grocers are cautiously dipping their toes into the e-commerce waters, a brave few have boldly plunged in. Mercatus was engaged to orchestrate a full-scale rollout, affording us a unique opportunity to gather pre- and post-implementation metrics at a regional grocer’s 75-plus locations. The dramatic results support implementation of a full-on e-commerce strategy to deliver the strongest ROI—and reveal important insights about shopper behavior.

In-depth research

The original e-commerce efforts of this regional grocer had been a lukewarm attempt to ward off losses from companies like Amazon or Walmart. They included putting up an online company storefront linked to some stores on a trial basis and waiting to see what would happen. A handful of customers adopted the technology, and some minimal financial benefits were uncovered.

By the time the grocer called Mercatus, the company was wrestling with a daunting dilemma: should they dial back their cautious entry into the e-commerce space or double down and go all in?

Our goal was to answer an important question—one that is ultimately uppermost in the mind of every grocery store executive facing the same dilemma: Is it worth the investment?

To ensure the grocer’s decision would be based on facts, Mercatus commissioned independent analysis from EKN Research, a third-party firm with a solid reputation for providing objective assessments of digitally complex solutions.

Tracking conversion

EKN conducted an exhaustive analysis of daily and weekly files of T-Log data from more than 75 stores over a four-year period. In total, more than 2 billion rows of data were collected, sorted and analyzed. EKN measured outcomes in a shortlist of 12 key metrics that included average monthly transactions, customer counts and transaction value. These results formed a baseline against which to compare post-implementation results.

We then established a suite of marketing metrics that would enable us to track and evaluate changes in traffic and sales down to the store level.

Once the study parameters had been established, Mercatus worked with the retailer to convert a few stores each month over a 10-month period.

Dramatic results

The results were dramatic, and made a clear case in support of full-scale e-commerce conversion.

Virtually every marketing metric saw a substantial increase, among them:

Number of online sessions: up 88 percent

Length of each session: up 44 percent

Page views: up 124 percent

Number of new online users: up 78 percent

Perhaps more importantly, the study revealed that the online initiative changed shopper behavior, and made a strong financial case in favor of conversion.

Behavior change

It turned out the online channel wasn’t simply another storefront. People used it to do their weekly research, organize their shopping lists and search for deals and promotions. Sometimes these activities culminated in online orders; other times people went into the store to purchase. Very few people abandoned their in-store activities entirely in favor of shopping solely online. Instead:

Customers who bought online shopped less often but ordered more—increasing the average basket size from ~$30 to ~$150.

In-store shopping spend declined by 5 percent per trip; however, frequency of trips was up 6 percent.

Overall, stores that transitioned from a minimal e-commerce solution to Mercatus’s full e-commerce platform enjoyed a net increase in sales of 12 percent.

From weak defense to strong offense

The retailer’s original entry into e-commerce had been a timid, defensive strategy with marginal success. With Mercatus on board to roll out a full-scale, omnichannel, end-to-end digital e-commerce strategy, the retailer experienced a proven, significant lift in margins and other KPIs, and attracted new customers. The result was a successful offensive strategy that paid dividends.

 

Learn more about the Mercatus case study and the evidence supporting an integrated e-commerce solution by downloading “eCommerce in Traditional Regional Grocery: From Digital Dust to the new Rainmaking.”

About the author

Lorrie Griffith

An observer of the grocery industry since 1988. Away from her editor job, she's a wife and mother of two grown sons and thinks cooking is (usually) relaxing.

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