How can grocers hold onto their new most valuable customers?




It’s long been argued by Target, Walmart and other retailers that their most valuable customers shop in both their stores and on their websites. If that’s true for other retailers that sell groceries, then recent research shows that the ranks of the most valuable customers is growing significantly.
Half of all in-store supermarket shoppers have also ordered groceries online in the last 30 days, according to the “2020 U.S. Online & In-Store Grocery Shopping Study” from the Retail Feedback Group (RFG). Younger consumers trend higher in this regard: Gen Z (66 percent), Millennials (61 percent) and Gen X (52 percent). Fewer Baby Boomers (37 percent) and members of the Silent Generation (38 percent) ordered groceries online while also having shopped in stores.
The “U.S. Grocery Shopping Trends” report released by FMI last month confirmed that a higher percentage of grocery sales have shifted online since the novel coronavirus pandemic hit the country.
Last year, consumers reported that 10.5 percent of their grocery spending was done online. In February of this year that figure had risen to 14.5 percent before jumping to 27.9 percent of all purchases in March and April.
A larger percentage of those shopping for groceries online also decided to take a leap of faith and order categories such as produce and fresh meat that they had previously only purchased in stores.
FMI found that fresh produce ranked fifteenth and meat nineteenth on the list of 26 categories purchased online in February. By mid-April, each category had moved into the top 10.
The pandemic has proven to be a sales bonanza for many grocers who have seen revenues increase as more consumers eat their meals at home. New research from Acosta finds that concerns among consumers about going out in public remains high and is likely to drive further in-home consumption.
Thirty-five percent are more concerned than they were at the start of the pandemic, and half of Millennials express those sentiments. The biggest concerns that people have include contracting the virus (72 percent), a new wave of cases and a shutdown (65 percent), the impact on the economy (56 percent) and household finances (48 percent).
- Retail Feedback Group Study Finds Surge in Dual Channel Grocery Shopping – Retail Feedback Group/PRWeb
- Grocery’s Ecommerce Evolution During COVID-19 – FMI
- Acosta Finds Pandemic Concern Levels Remain High, with Increased Worry Among Millennial Shoppers – Acosta/PRNewswire
DISCUSSION QUESTIONS: How good a job are grocers doing at establishing a unified view of their customers’ behavior? What will be the keys to satisfying grocery customers who shop both online and in-store from this point forward?
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20 Comments on "How can grocers hold onto their new most valuable customers?"
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Managing Director, GlobalData
I don’t think creating a unified view of customers has been on many short-term agendas. The priority has been managing unprecedented demand shifts during the pandemic. That said, it has to be a medium-term necessity as retailers need to understand how consumers behave across channels.
Getting online data is easy as consumers have to identify themselves for delivery or collection. Getting the same information for in-store visits is more challenging, which makes putting the pieces together extremely difficult.
Target has done a great job of joining the two sides via its Target Circle loyalty scheme. Members now scan a barcode on their phone when shopping in-store which lets them collect money-off points for future trips. This also helps Target identify who is shopping and what they’re buying. The information is used to help target marketing and to analyze how shoppers are behaving across channels.
Amazon has done a similar, though less comprehensive, job with Whole Foods and Prime members. Other retailers will follow.
Principal, SSR Retail LLC
Grocers have consistently struggled with a unified shopper view. Online is seen as an add-on to the “real” business of bringing shoppers in-store. COVID-19 has created a true cross-channel shopper who can no longer be ignored.
Global Retail & CPG Sales Strategist, IBM
This actually leads to the decades-old challenge of loyalty. Are your “loyalty” programs simply mass, untargeted discounts? There are tools available today to precisely determine who your most profitable customers are and how to incentivize them to remain loyal.
Director, Main Street Markets
A lot of retailers are re-evaluating their loyalty programs for their customers. For example, Target has really upped their game using their Cartwheel program. I am offered deals weekly on things that I buy on a consistent based and on affinity categories on items I have purchased in the past (either online or in-store). All relevant deals that are tailored to me. Normally it is a big production to use electronic coupons, but the process here is pretty easy. It needs to be this easy for all retailers that decide to retain their customers using offers tailored to those customers.
Principal, Cassarco Strategy & Analytic Consultants
Large grocery store chains do a uniquely good job of tracking customer behavior across channels, tethered by loyalty programs with high participation rates. This manifests itself far more effectively in the online environment than in stores because stores struggle to deliver the tailored experiences that websites and apps can offer. The biggest opportunity for grocers is to more effectively use digital tools to influence the store shopping experience.
Consulting Partner, TCS
From a data perspective – there has to be a holistic view of the household. Multiple people shop from same household, people use different credit cards or check out as guests, so constructing a household-level holistic view is a prerequisite.
Once the stage is set, then comes understanding of share of wallet, personalized offers, and what it takes to maximize the share of wallet. If a family of four spends $400 on groceries, knowing which categories are underrepresented in the spend is the start of knowing the customer better and target accordingly.
This is not an easy task with different point-of-sale systems, multiple channels and all the bureaucracy that one can find even in a mid-sized business.
Founder, CEO, Black Monk Consulting
Most retailers, not just grocers, struggle with this issue. “Born digital” retailers struggle to make physical stores work and vice versa. The key is to quit thinking in terms of online and in-store and start thinking like a consumer whose primary goal is to source products in the most friction-free way possible. Once you orient yourself to the idea that you are in one business — getting consumers what they want — rather than two, physical and online; three, physical, online, mobile; four, physical, online, mobile, voice-activated; etc., it gets much easier to see customers as real people and work out real world solutions. Junk the “omnichannel” strategies and realize the only “channel” you have to figure out starts in the mind of your shopper. The rest will sort itself out.
Managing Partner, Retail Consulting Partners (RCP)
Grocers have been lagging behind the rest of the retail community with regards to the journey towards unified commerce. However the pandemic has accelerated that quest and it will be imperative for grocers to take to heart the same priorities that general retail has been focused on the past few years: creating a personalized experience; establishing a real-time, unified view of product data; leveraging a single view of their customers across all channels; and providing customers the ability to buy anywhere/receive product anywhere.
Chief Amazement Officer, Shepard Presentations, LLC
Online shopping accelerated during the pandemic. It taught consumers who would normally only shop in a store that online was a viable option. The key to keeping those online shoppers will be to deliver an easy and flawless experience. The first is easier than the second. However if there are problems in the delivery, how the retailer handles them will be the difference between a consumer abandoning online or returning to try again.
Content Marketing Strategist
Overall, grocers have room to improve at unifying consumer data. Knowing shoppers on an individual level boosts sales and loyalty by making consumers feel special and more willing to buy.
Years ago, when Metro sent me coupons for products I frequently buy, I felt valued, delighted and more willing to shop with them soon because they were paying careful attention. (Notably, I immediately wondered, “What have you done for me lately, Loblaws?”) Deep familiarity with consumers creates a distinct competitive advantage.
To effectively unify omnichannel data and boost consumer intimacy, grocers need to:
Chairman Emeritus, Relex Solutions
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Chief Data Officer, CaringBridge
Traditionally, grocers have been able to track customer behavior using their loyalty programs. It is critical that the loyalty program information be used even when a third-party is doing the shopping (such as Instacart). Otherwise the grocery store will lose track of customer behavior and be unable to calculate value and take activities to increased cross-sell and retention.
It is very clear that consumers have gotten much of their trepidation about shopping for groceries online during the pandemic. It is unclear whether or not this behavior will continue as the pandemic abates in 2021. Grocers must be proactive in engaging their customers in order to sustain that behavior.
CEO, Currency Alliance
Strategy & Operations Delivery Leader
It’s all about providing outstanding customer experience and an outstanding customer journey to help retain and attract new customers. Every single grocery and wholesale distributor go-forward strategy should start with the customer in mind, and what specific services and experiences they could provide to differentiate them from the sea of competition in the grocery space. It will take a far more collaborative model between the wholesale distributors and grocers to drive this transformative change.
It’s imperative for grocers to leverage digital to not only offer more seamless shopping experiences but, more importantly, have a full perspective of the customer at every step of the shopping journey. A data- and analytics-first strategy will help grocers to drive their assortments via optimization strategies, de-invest in non-performing categories, and invest in value-added perimeter store experiences.
The competitive forces are out there, and COVID-19 has become the great accelerator of trends that were already in motion. Now is the time for grocery companies to re-imagine the shopping experience.
President, Protonik
Let’s challenge the idea that the “most valuable” customers are those who shop both in-store and online. That might be true in revenue numbers this week.
A store’s most valuable customers are those who return the best long term value. And the law of double jeopardy indicates the best long term value comes from having many more new, low spending customers today.
Part of the truth here is that high spending customers are also most aware of alternatives and least loyal to your store. So store health only comes from a constant stream of new, low spending customers — and that turns into the rich mix which makes store profits stable and strong.
Owner, Tony O's Supermarket and Catering
Retail Industry Thought Leader
Many retailers have long been aware of the omnichannel shopper but marketing and engagement strategies are still catching up to this most valuable segment. There is still too much segmentation between the online and in-store shopper; too much consideration to a linear purchaser journey (which doesn’t exist anymore).
What retailers are trying to balance is, while there is undeniable growth in both online and omnichannel shopping, the vast majority of revenue is still generated from the box. The arc of general retail practice is slow to bend, especially in traditional grocery. They must stay engaged with the omnichannel shopper, meeting them when/where they need on increasingly personalized journeys but at the same time, protect the box; this is likely not as easy as it sounds.
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
In The Incredible Dissolving Store, walls disappear and data matters more. Supermarkets have a potential leg up in this regard because of the high penetration of frequent shopper programs, which can enable them to tie in-store and online behaviors to a unified household picture.
I say “potential” because the unified picture is still more aspiration than reality. Most chains were unprepared to calculate the impact of the COVID-19 surge in online shopping. The unprecedented disruption in on-shelf availability further muddied the waters, distorting the demand signal beyond recognition.
Supermarkets need to confront this moment on two fronts: The first is operational. Get store inventories back in hand with more accurate ordering processes and link real-time store inventory data to the online shopping system.
Second — and this is only going to work well if the operational part is nominal — track emerging shopper behavior patterns in all modes and channels and begin to formulate a new, more accurate, picture of reality.
Vice President, Research at IDC