Keeping up with technology is a priority for grocers, with omnichannel initiatives leading the way.
According to Progressive Grocer’s 85th annual industry survey, nearly three-fourths of respondents plan to increase their tech spending in 2018.
Technology has jumped to the third most pressing concern for grocers, trailing only labor issues and competitive threats. Last year, grocers ranked technology ninth on Progressive Grocer’s annual survey.
Grocers Are Embracing Omnichannel Initiatives
More than half of the grocers queried — 56 percent — said they have already successfully connected in-store and digital channels. Only 12.1 percent reported no plans to execute omnichannel features.
Grocers are introducing a number of omnichannel features, with mobile shopping apps in the lead. They’re also offering more delivery-related conveniences, such as online ordering with pickup in-store, third-party delivery services, and curbside pickup.
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Progressive Grocer’s findings are based on a survey of 144 retail executives at supermarket chain and independent operators across the United States.
Grocers Are Offering Notable CX
The supermarket industry averaged a 79 percent rating overall in the 2018 Temkin Experience Ratings — the highest among 20 industries analyzed.
Temkin, a Waban, Massachusetts-based customer experience (CX) research, consulting, and training firm, rated Wegmans Food Markets, HEB Grocery Co., and Publix Super Markets as grocery industry customer experience leaders.
Rochester, New York-based Wegmans not only received the highest score among supermarkets. It received the highest score of 318 companies across 20 industries. San Antonio, Texas-based H-E-B and Lakeland, Florida based Publix tied for the second-highest scores for both the supermarket industry and the ratings overall.
Grocers Should Invest Now to Stay Competitive
Retail analysts at Boston-based Bain & Company, a global management consultancy, suggest grocers should embrace technology without losing sight of what customers love about them today.
Stephen Caine and Lisa Koetter, members of Bain’s Retail practice, made the point in a February report that strategic adoption of the right technologies will enable many traditional grocers to outpace the competition.
“The road ahead starts by investing to protect hard-earned loyalty and market-share advantages and build on those strengths, thoughtfully expanding digital capabilities while finding new ways to reimagine physical stores to serve evolving customer needs,” they wrote.
Grocers like H-E-B invested to emphasize localized store formats and product assortments, Publix made high-touch customer service a priority, and Wegmans built a reputation for retail theater and prepared foods, they said.
5 Hallmarks of Leading Grocers
Bain said leading grocers get five things right.
1. They understand what customers love about them.
Clearly define your value proposition and your market differentiators. “Understand what your customers want and why you have earned their loyalty, and do not abandon that as you define your e-commerce model,” they said.
2. They are extending what differentiates their business to the digital world.
“Omnichannel is an opportunity to recommit yourself to the value proposition that made you successful in the first place. If you put something out there that is too different, it will just confuse your customers,” they said. A grocer that differentiates itself on freshness, for example, could offer five degrees of ripeness for bananas ordered online.
3. They are investing in strategically important digital capabilities to improve operations.
“To succeed in omnichannel you will need to invest in a range of new capabilities, such as generating, collecting and analyzing customer data for personalized marketing and services. These investments should be designed to improve the efficiency of your overall operation in addition to boosting basket size and margins,” they said.
4. They are reimagining the role of physical stores.
Stores 10 years from now will have expansive pickup areas, a convenience section for topping up purchases made online, and other changes we have yet to imagine. “Ask yourself what you want the physical store to look like for your customers and begin moving in that direction now,” they said.
5. They are taking a broader look at the value of their investments.
“It is critical to understand customer profitability across channels. And remember that there is a cost of doing nothing in your analysis. The same applies to measuring performance. You no longer can segregate profitability within the four walls of a physical store from online profitability,” they said.
Why It’s Time to Reimagine Retail
Margaret Wise, VP of Strategy at Atlanta-based Arke said retailers across industries should adapt to new realities.
“Every time we have an amazing digital experience, it raises the bar on expectations. And it forces businesses to think carefully about customer experience and the customer journeys they offer,” she explained.
“Today, you have to think through every step of what customers expect. Consider this. Would you do your grocery shopping at a store that didn’t have shopping carts? Even if the store offered great products and great prices, few shoppers would go there without shopping carts.
“And you know, there is no return on investment (ROI) on shopping carts. They break. Some people take them out of the parking lot. They’re kind of a pain. You can’t draw an ROI.
“But think about it. They are a key part of the grocery shopping experience. So it just goes to show if you miss one step in your customer experience, you’re going to lose customers.”
Think Like Your Customers
Arke CMTO Chris Spears said companies that provide exceptional omnichannel experiences invert the typical questions about customer experience.
“They clearly ask, ‘What would I want as a customer of this brand?’ These companies don’t focus on what they want from their websites, apps, and other touchpoints,” he said.
Instead, they aim for seamless, frictionless experiences that convenience their customers. Frictionless experiences enable buyers and sellers to instantly find the products or services they need.
It’s a key factor in keeping customers happy because speed and convenience now rival price as points of brand differentiation — a fact more and more grocers are recognizing.
Think about the popularity of companies like Instacart, Seamless, Lyft and Uber that offer personalized, frictionless customer experiences. These services put the customer in control of the experience. They eliminate unnecessary steps that do not add value and negatively impacts the consumer experience — from digging out a credit or loyalty card to restating information the company already has on file.
“Give your customers the experiences you want to receive,” Spears said. “That’s the most basic objective for every business, and an essential element for success in the digital era.”