The retail industry has undergone sweeping changes in the past decade, with brands revamping stores and providing new services and delivery options to meet customers’ rising expectations. Until recently, grocery had been largely untouched by these new forces roiling Main Street. However, grocery is now going through its own transformation as new competitors arrive and consumer buying habits evolve. This shift provides a great opportunity for grocers to differentiate themselves and win over a new generation of shoppers. But what does that shopper look like and what services do they expect?
We surveyed more than 1,500 grocery shoppers to understand how people’s preferences and expectations are changing. From our research, we identified an important new class of “omnichannel shopper” that provides a good indication of where the grocery industry is headed. These shoppers buy their groceries both online and in-store, and they also order meal kits. They represent a growing segment of the industry, so it’s worth digging in a bit to understand what they’re all about.
Who Are These Omnichannel Shoppers?
This cohort tends to skew younger — 58 percent are millennial (born 1980-1994) or Gen Z (born after 1994) — and 40 percent of them live in urban areas. Even though these consumers use digital services, 79 percent say they still enjoy shopping in a physical grocery store most of the time. They cite clean and orderly stores and the ability to select their own items as the most important factors in a good in-store experience, meaning things that were traditionally important still apply to this digitally savvy group.
How Do Omnichannel Shoppers Behave at the Grocery Store?
Our findings show that omnichannel consumers are much more likely to take a “one-stop” approach to shopping trips — i.e., they take advantage of other services at the same location to get more done. Besides shopping for groceries, more than 30 percent also regularly grab a coffee at an in-store cafe or fill a prescription at an in-store pharmacy. About a quarter eat at restaurants in stores, buy a smoothie at a juice bar, or do some banking if there’s an in-store branch available. Clearly, omnichannel shoppers don’t see grocery stores as just for groceries.
By comparison, 44 percent of “non-digital” shoppers — i.e., those who don’t shop online or buy meal kits — say they don’t do anything besides food shopping at the store. Only 11 percent buy quick-service food, and only 7 percent visit in-store restaurants. These non-digital shoppers tend to be from the baby boomer generation, or those who turned 55 this year. When we segment boomers in our survey, only 9 percent look for quick-service food at a grocery store, and only 16 percent buy a coffee while shopping. The younger digital generation approaches grocery shopping in a whole different way.
What's the Omnichannel Shopper Looking For in a Grocery Store?
About a quarter of omnichannel shoppers say they would visit their grocery store more often if it had a restaurant, quick-service food and dining areas, an espresso bar, an adult-beverage bar, or a service to pick up and drop off packages. Although omnichannel shoppers are comfortable ordering groceries online, they say these services could make them visit a store more often — countering the idea that all shopping is becoming digital. For non-digital shoppers, 45 percent said there were no additional services that would make them visit their grocery store more often, while only 7 percent of omnichannel shoppers said the same.
What Does This Tell Us About the Future of Grocery?
There’s a new pattern of grocery shopping for millennials and Gen Z. They frequently shop online and order meal kits, and they enjoy in-store shopping but look to accomplish more while they’re there. Compared to offline-only shoppers, they’re four times less likely to stay loyal to their grocery stores. That means grocers need to do more to win and keep their business, including providing a pristine experience with additional services to make their time well spent.
If these are the patterns that have taken hold in recent years, there’s good reason to believe they will continue and become more pronounced. After all, we’re not getting any less digital as a society, and Gen Zers are growing up and accounting for a bigger slice of the economy. They will soon be America’s most powerful buying cohort, and are already spending $143 billion a year (despite many still living with their parents). Millennial shoppers are spending $600 billion a year, and will spend the next decades raising (and feeding) their growing families. The omnichannel shopper is likely to become more common over time, so grocers would be wise to take note of their preferences.
Tom Buiocchi is the executive director, president and CEO of ServiceChannel, the leader in facility management software and contractor sourcing.
Related story: The 4 Reasons Shoppers Don’t Come Back to Stores