Grocery Disrupted: Dawn of the Digital Grocer

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Grocery Disrupted: Dawn of the Digital Grocer

By Joe Skorupa - 10/24/2016
10/24/16
 
By Joe Skorupa
 
Although the products in your local supermarket are always changing, the basic technology has remained pretty much the same since the invention of the bar code. But disruption is currently underway in the grocery segment, according to findings in a study done by the research firm Carbonview. (Click here to see the full report.) What emerges from the data is a rebooting of the pillars of food retailing.
 
By digital transformation, I mean a strategic embrace of business models, processes and customer services that leverage new digital technologies. This embrace is aimed at developing new opportunities to grow sales, increase productivity and improve the shopping experience by adding new services and conveniences.   
 
Although grocery is a late arrival to online shopping, click-and-collect, mobile POS and a few other technology innovations, the findings in this study indicate grocers have recently begun investing in some of these technologies while other findings uncover a need to catch up.
 
And catch up they must. Online competition is fierce and getting fiercer. It is coming from Amazon Fresh, Peapod, GrubMarket, Instacart and Rosie as well as Walmart and Target, both of whom continue to make major investments in new digital technologies and innovative business models.
 
Digital Marketing
 
The good news is that an overwhelming majority of grocers (86%) say that spending on digital marketing has increased year-over-year. The rest say it will remain the same. Importantly, none (zero) say their budgets are decreasing.
 
For the majority of grocers digital marketing means using a website (83%), e-mail (79%), social media (74%) and a mobile app (62%).
 
Frequency is critical for digital marketing and too much of it can be counterproductive, which is why a majority of grocers prefer weekly over daily communication with shoppers. This plays out through weekly e-mail (57%), the website (53%) and mobile apps (51%).
 
The three media that score the highest for daily frequency are: social media (43%), in-store kiosk (41%), and the website (40%). Interestingly, mobile apps scored the lowest for daily marketing messages at 31%, which is a missed opportunity because it is the one medium that customers are most likely to use in stores during in-the-moment decision making.
 
Taken as a whole, digital marketing in all its varieties is perceived to have a strong impact on a grocer’s online business performance and sales, according to 55% of respondents. The number rises to 73% when asked to look ahead two years. These figures validate the importance of digital marketing today and even more so in the future.
 
What about the store? It is surprising to learn that 45% believe store sales are being strongly impacted by digital marketing today. In two years this grows to an overwhelming majority of 77%.
 
I believe this is one of the study’s major findings and a clear justification for grocery executives who have influence over dollars invested in digital transformation to stick with the plan.
 
How will the impact of digital marketing drive an increase in stores sales? In two ways: through improved shopper returns/frequency and conversion rates. In both of these areas the number of grocers who recognize the impact of digital marketing on sales increases 400% when comparing the impact today versus in two years.
 
Loyalty Programs and Coupons
 
Grocers have been pioneers in the adoption of loyalty marketing, so it is not surprising that 76% say they currently have a loyalty program in place.
 
Digital coupons have become a standard practice in retail today and grocers are staying competitive – 78% of grocers say they deploy them. Of these, 79% say they offer digital coupons via their website and 73% say they offer them via text message.
 
Omnichannel Services
 
Omnichannel technologies and services run a broad gamut of capabilities. Here are several key omnichannel findings from the study:
 
  • Smart phones and apps are the wave of the future, so it is not surprising to learn that more than half of grocers (55%) have a unique, branded native mobile app today.
  • In-store digital signage is a relatively mature technology compared to mobile commerce, but it is still not universally deployed. A little less than two fifths (39%) currently use it.
  • What’s more prevalent among grocers click-and-collect or home delivery? The answer is home delivery, which is offered by 86% of grocers. Click-and-collect is offered by a sizable 65%.
  • A majority, but barely at 51%, say they offer mobile payment options today, i.e. via Bluetooth.
  • A much bigger majority (74%) say they offer free WiFi for customers in stores.

To download the full report and see the full set of charts and conclusions, click here.
 

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