Post by Laura Heller, External Communications Director
As the grocery business begins to grow e-commerce in earnest, this is a new(ish) path to purchase for a channel with just 2-3% of sales currently coming from online.
The grocery industry is undergoing seismic change. It’s tempting to say it’s on the brink of change given how slow it’s been to embrace digital, but grocery has been on the brink for a good while – then Amazon bought Whole Foods Market and gave everyone a good hard kick.
Dramatic change, or “cheese moving change,” as Groceryshop founder and CEO Anil Aggarwal said during the opening remarks for the first event from the group that produced Money2020 and Shoptalk. “[These changes] have been anticipated for over 25 years … and now it’s broadly acknowledged that the time has come.”
These changes are now being manifested in a variety of ways. Highlights from Groceryshop include keynote speeches by some of the nation’s largest grocers and CPG companies, innovators in fulfilment and retail technology, and a number of disruptors including online startups and direct to consumer (D2C) brands.
Small data is king. In particular, grocery and CPG is using data – “small data” as Tim Lowe, President of Lowe’s Foods told attendees – to refine assortment and create new products and owned brands to meet consumer needs.
Grocers need to get lean. This refers to assortment and presentation, not calorie counts. Because this channel of retail is late to the e-commerce game, many are making some rookie mistakes by taking early definitions of “endless aisle” to heart and throwing an expanded assortment online. This serves to confuse shoppers and add time to the virtual trip. The message from Groceryshop was that to improve ROI and increase profits, the opposite is true. Culled and curated assortments is the more profitable tactic.
Voice is a big deal. We’ve all heard the reports about how few people are actually buying anything online, but that’s not important. Already 20% of all mobile searches are being done through voice today, according to Google. Given the popularity and heavy promotional capabilities of Amazon, one report recently posited that close to 50% of U.S. households will own a smart speaker by the end of this year. Add to that the proliferation of screens with voice assistants, and “things get very interesting,” said Will Hall, chief creative officer at Rain.
Don’t think about voice in terms of commands issued to hardware, think about it as an ecosystem similar to a traditional search engine platform, advised Hall. Brands should be building voice skills to deliver content in the moment of intent, be it a tutorial on how to remove a stain or how to buy that stain remover. List building is an early winning use case for voice, Matt Kelleher, managing director at Morrisons in the U.K. told attendees. The grocer recently launched voice skills and is seeing younger shoppers in particular use this feature while higher-income customers are buying more via voice and using this function two to three times a week, on average.
Personalization opportunities abound with digital. While personalization is a buzzword across retail, there is low-hanging fruit in this area for grocery and CPG online. Delivering personalized messages in searches, customizing results for loyalty members and landing pages is new to most in this channel. Many traditional grocers have websites and experiences that are stagnant.
So much of the hard work modernizing this industry is happening at the back end – warehouse automation, pick and pack, and last-mile solutions – but it’s imperative they extend those efforts to how they are engaging with customers outside of stores.