Grocers face a number of challenges as consumer shopping habits continue to change, including the threat of online grocery shopping. According to a study by Nielsen,one-quarter of respondents say they order grocery products online, 55 percent are willing to do so in the future, and the main driver of this growth is millennials.
However, research from Accenture shows that while millennials are supplementing their shopping trips with online research to make informed purchasing decisions, they still see great value in physical retail stores. When asked why, one millennial highlighted the need for a physical experience by explaining, “You want to touch it; you want to smell it; you want to pick it up.”
This sentiment is key. By 2020, millennials are expected to spend $1.4 trillion annually in the United States, and will represent 30 percent of total retail sales, according to the same research. This spending power, combined with the fact that food is one item that is best experienced through all of a shoppers’ senses, means there are valuable opportunities to reach millennials within grocery retail.
Meeting The Needs of Millennials
If millennials are still interested in shopping in-store, what can retailers do to maintain this?
Based on research from the Food Marketing Institute earlier this year, “Millennial shoppers continue to report less list making and advanced planning, and more spontaneous reliance on recipes or whimsy.” This presents a major opportunity to add offerings that will ultimately impact purchasing decisions in-store, complement planned visits and purchases, and increase basket size.
But before grocers can take advantage of this, they have to start by getting millennials into their store. Research conducted by Seurat and Field Agent in 2014 showed that the availability of front-end services played a part in the grocer and location selection for four out of five shoppers.
Creating opportunities in the front-end that increase shoppers’ spending ability will help make up lost revenue and make a specific grocer the retailer of choice. Here are some of the specific benefits retailers can expect to encounter:
Drive foot traffic and new trips. The Seurat and Field Agent research also discovered that 91 percent of people who use front-end services reported also shopping in-store during the same trip. Combined with the four out of five shoppers who select a location based on its front-end services, the opportunity is clear: reallocate the often underutilized front-end space into a dedicated space offering a variety of services. Self-service coin-counting kiosks have several advantages because they provide options to budget-savvy millennials looking to stretch their spending power with either cash or eGift Cards, which have no associated fee, and also build incremental revenue for grocers.
Grow basket size. According to a study by Barkley, millennials are placing a higher value on in-store amenities like deli’s, samples of new foods and creative menu ideas than previous generations, further demonstrating that millennials are not pre-planning their shopping lists. What’s more, the Seurat and Field Agent research found that 80 percent of people who used a kiosk to instantly sell their gift cards used nearly half of the cash they received in-store during their shopping trip, and on average, spent 26 percent more than they had planned. By combining “found money” services with other amenities, retailers can give millennials increased spending power that can allow for and inspire more spontaneity in their shopping trips.
Improve loyalty. If grocers provide a variety of front-end services, they can build shopper loyalty as customers begin to see their retailer as a one-stop shop that meets all their requirements and diverse needs. Front-end services – particularly those provided by known, trusted retail brands – can impact store visits on a weekly, monthly and annual timeframe. Notably, the 2014 Seurat and Field Agent research showed that two-thirds of front-end users would go elsewhere if their desired service wasn’t available.
Prioritizing and fully managing the front end means more than just an extra revenue stream for grocers. It means retailers can capitalize on the shopping habits and needs of millennials to get them in-store. It means grocers can combine trusted services and new amenities to take advantage of their ever-increasing buying power. And most importantly, it means growing brand affinity and loyalty because you gave this group of shoppers what they wanted, when they wanted it.