Grocery is Ripe for Disruption, But Harvesting the Rewards Will Be Tough
Online grocery spending will account for 20 percent of grocery purchases (upwards of $100 billion) by 2025, according to the latest Food Marketing Institute and Nielsen report on the Digitally Engaged Food Shopper.
The numbers are daunting, and even more so when you consider how much change and growth need to happen to make those predictions come true given the current state of online grocery shopping. Today, seventy-five percent of online shoppers report they never or only rarely buy groceries online, according to a Reuters/Ipsos national opinion poll.
That’s a big disconnect.
Grocery stores aren’t prepared to win in digital
As consumer expectations demand more immediate solutions, the grocery industry still employs many of the same strategies to support their business as it always has. The stores are the same size and configuration, the products and the checkout process haven’t changed and the marketing tags still hit the same punchlines. Add to that the complexities of low margins and perishables, and it becomes even more difficult to succeed at bringing grocery shopping to the digital era.
It’s no wonder businesses like Fresh Direct and Blue Apron have made such a huge splash. Grocers everywhere are slowly starting to wake up to these changes as the list of competitors continues to grow.
Online ordering alone won’t cut it
Even the biggest brands can have a difficult time staying relevant in the rapidly shifting landscape. How can you shift quickly enough to keep up with consumer demands? Amazon, one of the most prolific brands today, has noticed that there’s a major gap between how customers want to shop and the choices currently supported on the market. It’s up to grocers to recognize and effectively respond to these looming threats. It’s not enough to offer online order and delivery. Grocers need to think like e-commerce retailers and even restauranteurs (the new direct competition).
The players who will prevail are those who can capitalize on their technology and logistics infrastructure to build loyalty, save consumers money, and stop the cycle of food waste. No longer are adults relying on a grocery list and a stack of coupons to finish up their shopping; they’re looking for suggestions, delivery methods, and plans that work for their lifestyle and for their food preferences. Millennials especially will drive most of the changes, considering they’re used to receiving digital, customized recommendations. They’re also more willing to make a purchase – even perishable food – without seeing or touching items in person.
Compete through curbside pickup and click and collect
Back to those earlier stats. Online grocery shopping isn’t highly adopted today. One way to accelerate adoption and compete in an area where Amazon and other online retailers are lacking is through curbside pickup and last mile engagement. These approaches empower consumers with all the benefits of in-store shopping, but with none of the hassle. But you have to get it right, and that’s tough.
For example, one out of every five people avoid making online purchases altogether from retailers who use courier companies with whom they’ve had a prior bad experience. And all the charm of curbside pickup and click and collect is lost if the order isn’t ready. If a customer has to park their car, flag down an associate and wait awkwardly for that handoff, they may as well have done their shopping at the store.
With an industry primed for rapid growth in the next 5-7 years, grocers have a major opportunity to secure a significant portion of the exploding digital grocery market. The winners will be those that can guide consumers across the existing gap to deliver experiences that are tailor made for their on-the-go, on-demand lifestyles – simply making SKUs available for online order and inflexible delivery won’t cut it.
At Glympse, we’re working with grocers to give their customers better last mile visibility, flexibility and even support them with 2-way communication to ease the friction around grocery deliveries – and building curbside experiences that streamline customer pickups. Are you working on a solution of your own, or do you need help? Get in touch or share your story below!