Digital grocery solutions became invaluable this year at the onset of the pandemic, ushering in a period of delivery and curbside pickup unlike any before. Retailers responded swiftly by hiring hundreds of thousands of additional employees to meet the needs of both online and in-person shoppers. Delivery services did the same as demand skyrocketed, initially outpacing both the supply of workers, as well as the supplies being ordered.
I am confident that consumers will happily embrace in-person grocery shopping again when the time is right, but these abrupt changes are sure to leave a lasting impact on the industry. As brands and grocers prepare for other unexpected events, they should keep a close eye on the following developments:
Free-standing inserts will continue their downward trend
Consumer packaged goods (CPGs) are always looking for new ways to influence product buying decisions. While they once relied on paper free-standing inserts (FSIs) to reach the millions of Americans who read newspapers, CPGs have recognized the shift to digital media consumption. As consumers moved away from the Sunday paper, offline FSIs declined and are now expected to lose more than 20% of their coupon distribution from leading CPGs over the course of 2020 and 2021.
At the same time, coupons have also evolved to meet the needs of our digital world—providing one of the most effective and efficient ways for CPGs to connect with shoppers. Digital coupons also allow brands to intelligently target and reach customers with unprecedented accuracy and positive results.
And while the print FSI has been notoriously prone to fraud, digital coupons are significantly safer. Embracing digital coupons gives CPGs the ability to use their marketing dollars more efficiently by targeting the right kind of customers with the right products, all while being able to quickly activate or pivot campaigns as needed—a flexibility that becomes even more important during a pandemic.
Retailer brands will advance—and more consumers will take notice
In 2004, Safeway CEO and industry savant Steve Burd went on a mission to brand stores the way CPGs brand products. He believed that retailers could forge a grocery “experience” relationship with shoppers to transform their view of store brands.
His initiative began with the arrival of Safeway’s “Lifestyle” store format for new locations. The company also remodeled some of its stores to attract more customers. This strategy proved to be hugely successful and gradually inspired other grocery retailers to do the same. Now that most grocers carry their own trusted, well-marketed brand, this trend has become an important one to watch.
Customer value will take center stage
Shoppers have always wanted a great deal, but many have an affinity for certain brands. Historically, this has been an important way for CPGs to build loyalty among their customers.
However, during times of economic hardship, consumers are more inclined to notice if there are multiple options at varying price points. If the products appear to be equal in quality, customer preferences can take a backseat to value—allowing more economical items to take center stage. This has been especially true during COVID-19, when out-of-stocks and supply chain disruptions forced many consumers to trial new brands. With so much uncertainty in both the economy and the pandemic, value has become—and will continue to be—an important factor in determining which products consumers decide to purchase and which brands they’ll keep coming back to.
Grocery eCommerce will offer new avenues for revenue generation
Digital promotions allow brands to target shoppers with greater precision. They can be tailored to fulfill the needs of each consumer and ensure they see all relevant products, as well as items that closely match their shopping history.
This is an important step up from physical circulars, which are only able to promote a few hundred of the thousands of items put on sale each week. Only a digital environment can feature every one of those items, and both shoppers and CPGs have caught on.
Consumers will continue to rely on mixed-mode shopping
This has created a mixed mode of shopping that brings the best of both worlds—physical and digital retail—to consumers. Flexibility will be a highly desired feature even after the pandemic has subsided, as consumers may be interested in purchasing perishable items from their nearest physical store while shopping for toiletries online.
Building a better future, no matter where consumers shop
Consumers want customized experiences whether they shop online or in-store. Grocers need to show their customers that they understand who they are and what they want, all the while providing the best products and value. In doing so, they can strengthen their bond with customers and better serve them now and in the future.