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AI may promise smarter loyalty, but quality data delivers it
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Amazon surprised us all a few weeks ago with its announcement about a new brick-and-mortar grocery presence beyond Whole Foods. The Whole Foods relationship has not been outstanding, and the new stores will offer a cheaper, expanded inventory of food and personal care in an attempt to gain customers that aren’t sold on the Whole Foods way of life. The more traditional grocery store is Amazon’s attempt to “cover critical gaps.”
But Amazon isn’t the only threat to traditional grocers: Walmart’s innovation has earned it a 21% share of the grocery market. By comparison, Amazon and Whole Foods combined are only about 4%. Walmart has focused on making shopping easier for customers in every channel, introducing mobile updates to more easily navigate each store and developing a mobile app “list” feature that modernizes the classic paper grocery list. The retailer also launched a new grocery delivery service in dozens of cities across the country, appealing to those who prefer to shop online.
In the face of changing market dynamics, how do you make sure your brand is always looking toward the future? Amazon, Walmart and other big-box stores clearly see the value in traditional grocery marketing and using new technology to gain that share. Here, we take a look at what these bigger industry players are doing across online and offline and how you can stay competitive.
Part of Amazon’s shift to physical spaces over the past few years is because its e-commerce growth is slowing—the store has essentially outgrown itself. Since it’s getting harder to expand online, it has to go elsewhere. As Amazon adds more physical space, brands like Target and Walmart are also changing the way that consumers shop. Target is ramping up its digital options, and Walmart’s website traffic outpaces all other big-box stores, but Amazon is still on top with 2.25 billion visitors as of February 2019.
When it comes to grocery, all of these players see opportunity in a huge market. Amazon is still a relatively small player, but the grocery industry is worth $830 billion. Amazon captured about 3% of that in 2018, so there’s a lot of room for growth, and they know that a physical presence can help.
And the in-store grocery experience is very much alive. Only 15% of people buy their groceries online, 77% prefer to pick out their own groceries, 32% prefer to go to a particular grocery store and 30% like to have control over picking the quality of their fruits and vegetables. For many, going to the grocery store is part of their weekly routine; the average American goes to the grocery store about twice a week.
Walmart has continued to invest in its in-store experiences. It has focused on back-room automation, which frees up time for associates to assist customers out on the floor, and the use of robots to take over time-consuming tasks like restocking shelves, moving misplaced products and monitoring inventory. All of these enhancements ease the shopping experience for customers.
Other brands also see value in the brick-and-mortar experience. Aldi plans to open 130 new stores in 2019 and remodel several hundred existing stores; Costco is launching 20 new stores; and Dollar General is looking to open nearly 1,000 new locations.
With big brands encroaching on an old-school industry, it may feel like all hope is lost for grocers. But think of it this way: If Amazon is moving into brick-and-mortar grocery stores, it must mean that there is a lot of opportunity in this industry. The same goes for big brands like Walmart and Target.
To keep up with these players, you need to:
Grocery retailers have been in the data and digital space for years. Some are doing very well, but data must continue being used strategically.
In a panel at ShopTalk, Freshly Co-founder and CEO Michael Wystrach commented that “In its most simplified form, data is information. And for us, it’s information on our customers.” Freshly is a grocery and food delivery start-up, and its technology innovations can serve as a good example for those in the grocery retail space.
Freshly collects information to make its products better for customers, adjusting based on attributes like taste preferences and recipe ratings. What’s powerful about this approach is that when data is used properly for the customer, it delivers the intrinsic value that those customers are looking for. It improves the quality of Freshly’s product over time.
Collecting data is not enough, though. Most traditional grocers are conscious of data hygiene, but there need to be more concerted efforts. Grocers have some information about their customers, but it is often outdated.
For example, many grocery store loyalty members use old landlines as their “main phone number.” Not only is that an inaccurate piece of data as they likely have switched to cell phone use over time, it also precludes you from reaching people on a relevant channel.
Getting customer information right is the first step, and then it’s about continuing to focus on identity resolution. Do you have a plan to identify, know and reach customers outside of your owned properties? People engage across the web more than they engage with you on your social pages, in your stores and on your owned apps and websites. Can you reach them where they are? And if you can, are you working with the data from your CPG brand partners to serve them relevant ads?
With good data and accurate identity practices, traditional grocers can stand up against the behemoths of Amazon, Walmart and other big box stores.
Learn more about our digital solutions for grocery marketing.
