Winning the Grocery Wars: Examining the Link Between Consumer Behaviors and Technology Strategies

How to Win at Grocery Retailing

In just two short years, grocery retailers’ focus will shift from mastering inventory to mastering customer experience. To be sure, that is a reductive statement. These goals are ongoing, interactive and non-linear. Nonetheless it’s instructive to note the expected progression from goals such as price management, which is in the realm of internal, behind-the-scenes tasks, to scan-and-go on a store device, which sits squarely in the realm of enhanced customer experience.

1. Price Management 2. Predictive Analytics 3. Assortment Planning

2019

1. Shopper Tracking 2. Location-Based Marketing 3. CRM/Personalization

2020

1. Scan and Go on Store Device 2. Scan and Go on Shopper's Device 3. Click-and-Collect Management

2021

Top 3 TECHNOLOGIES

Source: RIS, “2019 Grocery Tech Trends Study”

While implemented at some grocers, scan-and-go is still a relative rarity. This makes sense. Inventory is the foundation on which the customer experience must be built. It all starts with the supply chain.

Supply Chain – Managing from Source to Store

Source: eMarketer “Scan and Go is the Future of Retail”

of U.S. Internet users believe scan-and-go technology would make shopping easier

would rather try scan-and-go than wait in a checkout line

Grocery is the category that draws the most interest in scan-and-go

A finely tuned supply chain is a requirement for any grocer, which must manage product in stores and in continual motion from source to store. Successfully managing these interconnected tasks is the mission of supply chain technologies, an area where grocers have been steadily investing in recent years.

Real-Time Inventory Management Fulfillment Order Management

WALMART

The world’s largest retailer has been at the forefront of blockchain technology, working with suppliers to put food on a blockchain to reduce waste and improve contamination management and transparency. Walmart announced that it would use the tech in its live food business in April and in October it began using blockchain with shrimp exports from India to bring transparency and efficiency to the process. Recently, imports of seafood from India have been rejected due to the presence of salmonella and antibiotics toxic to humans, and also because of unethical capture methods that endanger sea turtles.

Last year Walmart traced a package of sliced mangoes back to its source using traditional methods. It took 6 days, 18 hours, and 26 minutes. Then, using blockchain, it performed the exercise in just 2.2 seconds.

Source: RIS, “Unbreakable Trust: 5 Retailers Exploring Blockchain”

Blockchain technology can record every movement of a package of shrimp across the supply chain as a transaction that reveals a timeline of activity, instantly accessible. That means a single contaminated container could be traced back to its source and related containers could be pulled and tested rapidly.

Shrimp arriving at the dock from boats Shrimp being packed and sent to processing Shrimp being packaged for shipment Individual boxes loaded onto trucks Reports of tests for E. coli Temperatures in trucks and storage areas Time product stayed in each location

EXAMPLES OF WHAT BLOCKCHAIN CAN RECORD

Merchandise Management — Localizing the Experience

Grocers must forecast what will sell and plan what to buy on a continual basis, striving to buy just the right amount of merchandise to meet demand without overstocking. They must determine the best price points at which those items should be sold, and determine a cadence of promotions that will draw customer presence and loyalty, whether in store or online. Increasingly they must perform these activities at a local and even one-to-one level, engaging consumers in a way that is intimate and personal while still achieving metrics that allow them to be profitable.

Take a look! Inside the H-E-B Tech Hub

Source: “How Omnichannel Grocers Can Win as Shopping Moves Online,” reporting on a survey conducted by Google and Bain & Co.

In Japan, visitors to Japan’s Umikaze Park can now order food and beverages for in-park delivery via autonomous bots. At this three-acre green space at the mouth of Tokyo Bay, park goers can have a picnic delivered by ordering on the Rakuten Drone app from supermarket Seiyu GK. Online orders will be delivered to the customer’s exact location in the park via an unmanned, four-wheeled self-driving cart. The technology is the result of partnership between e-commerce giants JD.com and Rakuten.

Ordering Online from Seiyu is a Picnic

Analytics — Driving Better Customer Experience

Unlike “merchandising” or “fulfillment” or “warehousing,” analytics isn’t a category that stands on its own, and it also isn’t a category that sits in one spot. Analytics can — and should — be applied to virtually every aspect of a grocer’s business. Any activity a grocer needs to perform can be improved by applying advanced analytics to it and then making decisions based on the insights revealed, ultimately improving the end experience for the consumer. Of the 11 separate analytics technologies identified by RIS, the top two that have seen the most investment by grocers to date are competitive analysis and category analysis, but the trend is moving toward predictive analytics.

Canada’s largest grocer is starting to reap the benefits of investments in data analytics, providing improved customer experiences in the form of faster service, personalized communications and promotions and easy-to-prepare meals, to name a few. The company now has more than 400 employees focused on digitally driven projects at Loblaw Digital, the retailer’s new data and analytics center. Loblaws has been building its digital capabilities and recently has started to use the customer, marketing and merchandising data it is collecting to provide relevant offers to consumers, make better promotional decisions and more efficiently manage its supply chain, said Davis.

LOBLAWS

H-E-B has achieved success in balancing its customer’s happiness and its bottom line. The privately held Texas-and-northeast-Mexico-only chain prides itself on understanding not only its home state, but all of the fine nuances that make one region or city different from the next. From Texas-shaped tortilla chips to food offerings from local restaurants such as Luby’s Inc.’s signature Fried Fish, the retailer showcases its Texas pride. H-E-B also personalizes the in-store shopping experience, offering a wide variety of in-store coupons both in paper and on your phone. And the grocer has made checkout easy with scan-and-go functionality. H-E-B offers on-demand delivery (via Favor) and curbside services, and made clear its intentions to expand its digital offerings with the June 2019 opening of a state-of-the-art 81,000-square-foot, fully customized, two-story technology facility and innovation lab in Austin that houses its digital and delivery teams.

Store by store, H-E-B is known for localizing the experience with store-specific products and services.

H-E-B

“Across our stores, brands and services, via in-person or digitally, our focus is centered on our customer.”

—Sarah Davis, president, Loblaw's

What are some of the results? Faster turnaround times for its PC Express click-and-collect pickup service, for one. The grocer has started tracking when a customer arrives at the store and how long it takes to load their car — data that helps improve its service. It also now allows customers to add items to their baskets right before pick up, so that customers can make last-minute decisions about their meal plans, and it’s adding heat-and-eat meals that can be ready in as little as 20 minutes. Others of its approximately 400 digital initiatives include the introduction of electronic shelf labels, which helps to reduce labor devoted to non-value-added jobs.

Personalization — Hyper-Personalization Lets Customers Have It Their Way

Much personalization today is the result of segmentation — essentially lumping individuals into buckets of similar demographics or interests or habits, say, “shoppers who have children under the age of 10, shop more than once per week and always spend more than $50.” That’s better than not segmenting at all, but it still is far from a truly personalized experience. Fortunately for grocers, advances in data analytics and AI, combined with the ability to collect an increasingly wide range of data — consider that every move a consumer makes online is traceable, and that a consumer’s presence in-store is increasingly knowable — are enabling retailers to go even deeper, by offering the type of hyper-personalization that taps into the very specific desires and needs of each specific individual.

Where Kroger previously relied on analytics to determine the best time to target customers with a message, the grocer can now use digital technology to engage the individual customer at the moment that is most relevant. Wilhite said that Kroger is always seeking more meaningful ways to use its combined data, science and customer experience, and with the profileration of channels, comes an expansion of experiences for new opportunities to do that.

KROGER

“The opportunity we have with digital is to move from monologue to dialogue. We can enable and empower the customer to have a completely different experience, to actually interact.”

—Michael Wilhite, vice president of data strategy, 84.51°, the analytics arm of Kroger

Such as? Wilhite gives the example of a message that Kroger might send to “Cassie,” a Kroger customer. Knowing that the weather is chilly where Cassie lives, that she regularly buys soup for lunch and uses her phone for promotions, the grocer might engage with Cassie around 11:30 a.m. by sending a promotion for her favorite brand of soup to her smartphone. To execute this requires such information as GPS location data, channel relevance (what is the best way to reach a given customer), real-time inventory data (so that it doesn’t activate an offer on a product that is unavailable), and analysis to shape the most meaningful experience for her.

People who haven’t used an online grocery shopping service in the past year said they were most likely to start with their neighborhood grocer. 96% would look first to a traditional brick-and-mortar retailer for home delivery. 85% would select a store they already visit.

Source: BRP, "2019 POS/Customer Engagement Survey"

Consumers use their mobile phone while shopping in store to compare prices, look for offers/coupons, check inventory availability, etc.

Retailers indicate that the customer mobile experience is one of their top customer engagement priorities

Retailers have or plan to implement a single unified commerce platform within three years, up from 81% last year

Consumers indicate they are more likely to shop at a retailer that allows them to have a shared cart across channels

The pervasiveness and ease-of-use of mobile devices offers tremendous opportunities for retailers.

Today’s customer journey crosses channels, requiring the retailer to provide a seamless, personalized experience.

Store Systems — Where the Robot Hits the Road

Delivering a superior customer experience requires technology throughout the supply chain and into the store, and that technology is best enabled by one view of data that flows seamlessly. Regardless of the systems you’re looking at, there’s no doubt that your whole enterprise will run better when your data is unsiloed and in real-time, accessible by all relevant parties whenever and wherever they need it. Your workforce should be able to access at least as much about your products and inventory, if not more, as your consumers, and should be equipped with mobile devices that transition seamlessly from system to system so they can help consumers wherever they are in the store. Even without human helpers, digital signage and other technology can make a shopping experience easy and memorable. And some retailers are giving human associates more time on the floor helping customers via non-human helpers.

Shoppers in the aisles of regional supermarket chain Giant are receiving assistance from some tall, googly-eyed, nametag-wearing robots named Marty. The robots aren’t taking human jobs. They roam the floor unassisted to look for spills and other hazards and will alert customers verbally to prevent slipping and injuries, while also contacting employees through the PA system to make sure the problems are addressed swiftly. That frees associates to spend more time assisting customers. The robots are equipped with scanners to prevent them from bumping into displays or shoppers. Their internal cameras can ‘see’ approximately three-fourths of the way down an aisle.

GIANT FOOD STORES

“Bringing robotics and A.I. from a research lab to the sales floor has been a very exciting journey, and we were thrilled by the customer response in our pilot stores. Our associates have worked hard to bring this innovation to life with amazing partners.”

—Nicholas Bertram, president, Giant

(Ahold Delhaize)

KROGER

“The opportunity we have with digital is to move from monologue to dialogue. We can enable and empower the customer to have a completely different experience, to actually interact.”

—Michael Wilhite, vice president of data strategy, 84.51°, the analytics arm of Kroger

Conclusion

Grocery retailers are shifting focus from mastering inventory to mastering the customer experience. The right technology can help retailers win the grocery wars by perfecting inventories and localizing assortments, providing consistency across channels, mastering data, empowering sales associates, engaging consumers and much more.

Digital transformation is an imperative with virtually all grocers citing advanced digital capabilities as a top business opportunity over the next 18 months. Scan-and-go solutions have high appeal to shoppers, so the time is now to test solutions and refine your strategies. Blockchain is coming to grocery retailing, consider what this will mean for your enterprise. Invest in technology to master merchandise planning as well as source local goods that will set stores apart. Predictive and prescriptive analytics solutions are gaining ground…implement these technologies now to gain an edge. Data needs to be unsiloed, in real-time, and accessible by all relevant parties whenever and wherever they need it. Artificial Intelligence, mobile technology, and real-time data is allowing for hyper-personalization, which is where the industry is heading.

RIS Pro Tips

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