How independent grocers can win the digital grocery game
Not all that many generations ago, grocery shopping was an all-day, logistics heavy affair that involved several visits to several specialty merchants all over town. Consumers who needed meat went to a butcher; fish were sold by the fishmonger and bread by the baker.
The modern supermarket changed all of that. The combination of consumer packaged goods and a single place to buy all of the food that went on a consumer’s table from one big store ushered in a huge innovation in consumer convenience, as well as the selection of food that went on their table.
“What drives grocery shopping today is what has been driving it for the last several decades. The idea of a supermarket was a convenience revolution when it first came out. They made it possible for groceries to be a single stop event — instead of a multiple shop pile-up,” Independent Grocers Alliance (IGA) president and CEO John Ross told Karen Webster for this week’s edition of the Monday Conversation.
But evolution didn’t stop with the opening of the first grocery store. Consumers are an ever-evolving group, and the emergence of the digital commerce age has undeniably changed the grocery landscape. A lot is going on in the space today, Ross noted. The number and types of merchants looking to get into the game have exploded — as of the end of 2019 eCommerce giants like Amazon, big-box players like Target and Walmart, the mainline grocery chains and dollar and discount merchants alike have all made moves big and small when it comes to grocery.
That, Ross noted, should come as a surprise to no one, food is an attractive category because everyone eats and as merchants can no longer build-out “and add more big boxes” to drive more sales — the natural move is to build in and add highly attractive categories like food to the lineup.
But the bigger sea of change over the last generation has been how consumers are approaching the grocery space, he noted. Grocery store customers, particularly younger ones, aren’t coming in to pick up food to take home and prepare nearly as often as their parents and grandparents were. Consumers are bringing food home to prepare it less and less and grocery stores are directly competing with the carry out of restaurants, blurring the lines between the once sharp division been prepared food and food to be prepared at home.
“What we are seeing now is a second round of this industry redefining itself. What you see in stores today looks a lot more like a food court for adults than the standard grocery store we all remember,” Ross explained. Customers can find full, freshly prepared meals or full boxes of pre-prepped ingredients that only need the last mile of cooking at home.
Groceries can fight against the sea of change, but it rarely makes sense to fight against consumer desire when one is in the business of selling to them. The challenge for independent grocers going forward, he noted, isn’t in giving them what they want. The data available indicates they are, in fact, better positioned to do that than their larger competitors. The challenge is finding ways to leverage technology and deliver that at scale to national audiences.
Delivering On The Data
A simple, but easy-to-overlook rule in retail of all kinds is that you have to give the customers what they want — or they won’t be your customer anymore. But that is often easier to say than do, Ross, noted, because expertise over the long term has a way of blinding firms to the fact that the customer changes fast and it is easy to get caught behind delivering on an out-of-date value proposition instead of adapting to a new one.
Moreover, he noted, making these kinds of adjustments and adaptations is something that requires real and broad data. That, he said, is where the IGA provides for its members — because it can offer that broader data context they need.
“When you want to deliver for your customers, data is what we need to do that; you can’t just build by anecdote. Because what they need to be able to do is roll it out and scale it up and to make that possible, you have to understand what shoppers are doing, what they are buying, how they are behaving online. You want to roll it up and scale, what shoppers are doing, how they behave online. The challenge is aggregating all of that data over time and acting on it.”
What makes technology in the independent grocery context interesting, he noted, is that questions about updates, upgrades and capabilities are never started with a conversation about the tech itself. They always start with the service or customer need they are meeting for their customers. And, he noted, what small independent groceries are delivering is pretty impressive. One of their partners, he said, has in-store delivery from the deli department: a customer leaves an order, continues shopping and when the order is ready, it is delivered to their shopping basket. Another partner, he noted, is working with a local health club to construct and deliver or allow customers to pick up in-store, pre-made meals that are tailored to the customer’s health program nutrition goals.
“Local providers can really zero in on that very tailored level of individuated services in a variety of ways that really only work for independents.”
The challenge, he noted, is in bringing those unique applications and expansions of things like delivery or pick-up and then finding ways to build them up and out. What technology has done for IGA, he noted, is provided was to combine local insight and national scale in ways that have never been done before.
And with that capacity attainable, Ross believes local grocers are positioned to compete uniquely in the ecosystem, and in a way, tailored to what modern customers keep saying they want in a contemporary grocery experience.
The Under-tapped Potential Of Local
Something in a grocery that will likely never change — the customer is always going to be looking for convenience (though how they define that may vary), and they are always looking for a good value. But some things change a lot, he noted, particularly when it comes to what the modern consumer is looking for in terms of product and experience. Customers don’t just want to be sold food, so much as they are increasingly looking for a curated consumption experience.
The idea of trusting your grocer with your personal decisions of smarter- and better-eating choices is new, Ross said, noting that it also represents a massive opportunity for smaller local grocers.
“When you really talk to customers and ask them about what they want in the grocery experience, they almost immediately noted that they want a shorter supply chain from the farm, to the store, to the table; they want healthier choices; they want transparency about their food and the ecosystem that supplies it.”
That, he noted, is a unique want to grocery — no one goes to an office supply store and asks about what path the paper clips took to get to their shopping basket. It is an emerging and unique need that the independent and local grocers are in an ideal position to meet and serve just by design.
Drawing that connection in consumers’ minds, he noted, is a major project on the table for 2020. The message they are delivering at a national level — and working with partnerships with brand manufacturers and farmers — is simple: Local equals fresh. The goal is to expose that more direct supply chain right in their members’ stores and build an association that customers can get all the service and convenience they expect at their local merchant — and higher quality, more local products at the same time.
It is a very different and much busier grocery environment than it has ever been, he noted, but also at base a really exciting one for independent grocery.
“The shopper today wants to know a whole lot more than they ever have. They are more engaged with the products on a whole new level we’ve never seen before.” he said. “So for us, we have to find a way to make the experience easier and more convenient for the shoppers, while meeting emerging needs. If we can do that, I think we will have a great future.”