Predictions for Grocery Retail in 2020
The grocery industry is undergoing momentous change. With online consumer packaged goods sales promising to reach over $70 billion in 2019, and that number set to double by 2025, these purchases will directly cannibalize brick-and-mortar supermarkets’ in-store sales if grocers don’t take action.
The pressure on brick-and-mortar retailers has reached an inflection point with Amazon.com purchasing Whole Foods, launching a branded grocery chain, expanding cashierless Amazon Go stores, making items as cheap as $1 eligible for Prime one-day shipping, and bundling free grocery delivery with Amazon Prime. These aggressive pushes threaten much of grocers’ price and convenience advantage.
The future of grocery depends on grocers simultaneously leaning into the strengths of their brick-and-mortar locations and customer relationships, while seamlessly delivering e-commerce excellence. Even against giants like Amazon, brick-and-mortar grocers that nail the full customer experience will win the customer.
Digitally Engaging Shoppers Will Become a Top Priority for Grocers
In order to own the consumer outside of the store, grocers must engage their customers digitally. While grocers to date have been content with merely having an app and servicing online orders via services like Instacart, in 2020 grocers will start to measure themselves on what percentage of customers are reachable through digital channels.
Driving digital engagement must start with extending grocers’ existing benefits like loyalty cards, manufacturer coupons and the circular to their digital platforms. Whether it’s a personalized offer, coupon or reward made available through the loyalty program, shoppers today expect that all the benefits they could take advantage of at the register will be clearly offered and explained in a mobile experience. Those programs must also extend to shoppers at home putting together click-and-collect or delivery orders. By extending the traditional moats that stores have built around shoppers to the digital world, grocers will be able to shield their customer base from the onslaught of online retailers.
Stores Must Leverage Technology to Retain Their Convenience Advantage
While Amazon may be able to deliver millions of items the next day, when a customer needs that one last ingredient to make dinner, nothing is going to beat the speed and convenience of the grocery store down the street. Grocers must invest in the in-store technology to ensure that shoppers can get in and out of the store quickly and without having to wait in line. Otherwise, shoppers will increasingly take advantage of alternatives like Uber Eats to solve a last-minute dinner dilemma instead of making the trip to the store. Grocers will look to technologies like improved self-checkout kiosks, camera-based checkout, and SwiftLane Checkout to speed customers through their trip.
Stores Must Get the E-Commerce Basics Right
As customer adoption of services like click-and-collect grows, stores must ensure they're executing perfectly on the fundamentals of their e-commerce business. Grocers today struggle with integrating their point-of-sale and online ordering systems. If these integrations aren’t executed seamlessly, customers can easily be charged incorrect prices.
Nothing contributes to price shrink like refunds associated with e-commerce missteps. Retailers lose margin dollars when the coupon a customer clipped doesn’t correctly apply, when a customer rejects a substitution on a delivery order, or when a customer complains that a total quoted for an online order didn’t reflect surcharges like CRV, sugar tax and delivery fees. Grocers must ensure that their e-commerce system is able to handle all these edge cases before they will be able to compete with online giants.
Once grocers nail these basics, they’ll be able to build on that platform to deliver even greater value to shoppers with investments like subscriptions, endless aisle and artificial intelligence-powered recommendation engines.
For grocers, 2020 is no longer the time for experimentation. It’s the time for refining in-store and omnichannel experiences, which means big changes on the horizon to make shopping feel effortless to their customers.
Sean Turner is chief technology officer and co-founder of Swiftly, a technology platform for supermarkets that takes the friction out of grocery shopping and brings the advantages of e-commerce to brick-and-mortar stores, enabling supermarkets to beat online retailers on price, convenience and selection.
Sean Turner is CTO and Co-Founder of Swiftly, a technology platform for supermarkets that takes the friction out of grocery shopping and brings the advantages of e-commerce to brick and mortar stores, enabling supermarkets to beat online retailers on price, convenience and selection.