Home » Digital Path to Purchase » Grocery Shopping: The Digital Path to Purchase is Here and It’s Mobile

Grocery Shopping: The Digital Path to Purchase is Here and It’s Mobile

October 9, 2014

supplu-chain

In the hustle and bustle of this year’s holiday season, will online grocery shopping be part of the consumer experience? “Despite the spread of options offering online groceries shipped to customers’ homes,” writes Brad Tuttle (@bradrtuttle), “consumers have largely been reluctant to jump on board.” [“The Grocery Store May be on Its Death Bed,” Time, 8 October 2013] During the 2012 holiday shopping season, Vision Critical conducted a survey for Symphony EYC, a player in retail and distribution improvement software, that supports Tuttle’s observation. The survey, which included one thousand U.S. holiday shoppers, “determined that in the United States shoppers want to use their mobile phones to make shopping easier, more personalized, and to have more control over inventory, but that purchasing groceries with a mobile [device] is still in its infancy.” [“Shoppers Taking to Mobile Commerce More, But Not for Groceries at This Point, Survey Finds,” SupplyChainBrain, 16 January 2013] If the survey is accurate, the dire warning sounded in Tuttle’s headline — that grocery stores may be on their deathbeds — is premature. It’s way too early to be writing the eulogy for traditional grocery stores. The Symphony EYC survey found that 68.7 percent of respondents indicated “they preferred traditional store shopping for groceries.” Interestingly, however, 40.2 percent of respondents indicated that they would like “to order online with home delivery.” That’s probably why there is serious competition being waged in the online grocery business. To learn more about the latest developments in that area, read my article entitled “Online Grocery Shopping: Is That Your Supper in the Mailbox?

 

When respondents to the Symphony EYC survey were asked if they would “like to be able to order their groceries and select the relevant pick-up or delivery service through a mobile app, almost half said, ‘No.'” Does that indicate that mobile technologies have little future in the grocery business? The answer is a resounding “no.” In fact, mobile technologies, particularly smartphones, are likely to play an important role in the grocery business in the years ahead. A study from KSC Kreate found “one in three grocery shoppers use a mobile device while in a store to look up recipe ideas, coupons, nutritional information or competitor pricing.” [“One-Third of Shoppers Use Mobile in Stores: Study,” Supermarket News, 5 June 2013] This corresponds with the findings of the Symphony EYC study which found, “60 percent [of the respondents] said that receiving personalized promotions on their favorite products would make shopping for groceries online easier while almost 73 percent said they wanted price comparison services available on their mobile phones.”

 

Digitalization could play an important role in getting customers back into the center of the store. Monica Watrous notes, “Many packaged foods companies chase consumers to the perimeter of the supermarket.” [“Kraft Foods: The center of the store is still important,” Food Business News, 4 September 2014] Stocking the right products encourages consumers to shop the center of the store and studies have shown that the deeper into a store a consumer goes the more he or she buys. When respondents in the Symphony EYC study were “asked how they would like to influence the products that are stocked within their preferred grocery retailer, 85.9 percent would like to be able to request that a retailer carry or stock a product that they do not currently offer while 79.8 percent would like to be able to give their opinion on what they like/dislike about products. In fact, almost half said they would consider switching to a new grocery retailer if they could influence the products stocked.” That finding represents a significant opportunity for stores as they consider their digital strategies. Watrous reports that Deanie Elsner, executive vice-president and chief marketing officer of Kraft Foods, told participants at a recent conference:

“Center of the store represents about 75% of total grocery sales, and about 75% of total profit. The perimeter would have to grow by more than 2.5 times to be the size and the scope of what center of the store is today for the retailer. So given the margins and the labor it would take to grow a perimeter, you can understand why the retailer is motivated to reinvent the center of the store.”

Elsner added, “Today within C.P.G., we are in the middle of a transformational shift in the landscape, and it’s all being driven by the consumer.” Part of that transformation is the increased use of digital technologies in the consumer’s search for bargains. In another article, Watrous reports that Campbell is also trying to strengthen its center-of-the-store strategy, because “sales of soups, simple meals and other center-of-the-store businesses continue to disappoint.” [“Campbell remains challenged at the core,” Food Business News, 9 September 2014] Denise Morrison, Campbell’s president and chief executive officer, told financial analysts, “To win in the long term, food companies will have to embrace change and lead change, and we are doing this at Campbell.” Part of that change should include working with supermarket chains to understand how consumers are going to use mobile technologies to shop for groceries in the years ahead. Diana Udel, executive producer at KSC Kreate, stated, “Grocery shoppers are online savvy and it’s important for brands to provide compelling content on the channels they are using.” She continued:

“We found that online recipe and meal sections are very popular among consumers and play a big role in purchasing decisions. Grocers, consumer packaged goods companies and private label brand owners should be highlighting their products across channels with exceptional content and branded recipes.”

Grocery shoppers are providing are providing supermarket chains with mountains of data about their shopping habits through the use of loyalty cards. That data needs to be mined for actionable insights that can help stores stock the right items at the right price point (or help them to make offers at the right time) to increase sales volume and profits. The Symphony EYC survey found that most shoppers (62.2 percent) don’t mind grocery retailers “knowing their shopping habits and using that information to provide products and services to fit their lifestyle.” The study also found, “Younger shoppers were more likely to want benefits from stores keeping their details while older shoppers were more distrustful.” It’s important to know who your shoppers are and what they want. No two stores serve identical clientele. Watrous reports that Kraft Foods “tracks three key consumer segments: low-income shoppers, who represent 6 in 10 households; millennials, accounting for 27% of U.S. consumers; and Hispanic consumers, representing 17% of the population.” Food and flavor preferences vary greatly among those groups and a store that primarily caters to one of those demographics is missing opportunities if it doesn’t recognize those differences.

 

In a press release announcing the results of a study conducted by the Boston Consulting Group (BCG), IRI, and Google for the Grocery Manufacturers Association (GMA), Elise Fennig, GMA’s vice president of industry affairs stated, “Like most other industries, the CPG industry is experiencing the signs of digital disruption. That’s why it was vitally important for GMA to examine how CPG companies can holistically adapt their digital and e-commerce agendas to plan for the future effectively.” [“Digital Is the Future for CPG Companies, And They Need to Plan for It Now,” SupplyChainBrain, 3 September 2014] The release concluded, “CPG manufacturers will need to participate in multiple retail models; the winning models have yet to be established, and it is likely that numerous models will prevail.” Jamil Satchu, a partner at IRI Global Analytics and Consulting and a coauthor of the report, added:

“The cost of inaction for incumbent manufacturers is ceding control of their brands, share position and margins in the fast-growing digital channel. Companies that do not play in the digital game are likely looking at flat or shrinking sales. Brand equity is at risk as the purchasing pathway shifts online and consumers more often search for and discover brands digitally. But the experience of other sectors demonstrates that early movers often establish tough-to-trump positions and advantages.”

Even though the online grocery market is small, digital technologies continue to play an increasingly important role in the grocery business. The best course to pursue for retailers and manufacturers is to collaborate in the digital arena and implement a strategy that leverages the growing consumer use of mobile technologies in their food buying decisions.

Related Posts:

Full Logo

Thanks!

One of our team members will reach out shortly and we will help make your business brilliant!