Grocery Industry Meets New Consumer Demands With Advanced Digital Tech
As dramatic change impacts nearly every business sector, the grocery industry is facing disruption from digitally native newcomers. Large ecommerce companies such as Amazon have brought technology muscle to bear, delivering an enhanced digital experience to today’s shopper. These companies understand how personalization and convenience are changing customer expectations and are driving innovation across the grocery industry.
The growth of ecommerce across the grocery landscape continues to be the biggest driver of change across our industry. A recent FMI report indicates that as of last year, 49% of U.S. consumers shopped for consumer packaged goods online, and that by 2022, consumers could spend $100 billion a year online for groceries. Surprisingly, it isn’t just Millennials powering a shift to digital commerce: The same report found that 61% of Millennials, 55% of Generation X, 41% of Boomers and 39% of the Greatest Generation purchased a CPG online.
So what does this mean for the industry? While U.S. grocers are seeing steady growth over the past decade, many traditional grocery retailers are seeing sales dwindle and margins compress. To compete with large chains and ecommerce giants, these grocers are faced with meeting consumer demands for increased convenience, richer shopping experiences, and advanced digital options within the brick-and-mortar business.
Consumers Want Choice When It Comes Payments
Successful ecommerce companies have been quick to recognize the importance of delivering multichannel commerce to consumers who want the most convenient experience possible. Today, many brick-and-mortar stores are jumping on the bandwagon to diversify their point-of-sale options, including mobile, order ahead or scan-and-go.
Businesses are also exploring the ability to vault accounts securely into those mobile applications – whether it be Apple Pay, Google Pay, Samsung Pay, PayPal, Visa Checkout or a card on file. This allows grocers to use tokens to securely authorize transactions without requiring shoppers to re-enter card details with each purchase. By simplifying transactions, grocers can make shopping more convenient, and dramatically improve the customer experience.
In addition to enhancing the shopping experience, expanding the range of payment options enables grocers to optimize payments, which is especially important in a low-margin industry, allowing for reductions in the total cost of payment acceptance, fees and fraud rates.
Some grocers have taken authorization optimization a step further, exploring options that promote lower-cost payment methods, such as automated clearing house (ACH), in exchange for loyalty offers and other promotions. This becomes advantageous to the customer, who earns rewards, while also helping to drive down costs for the grocer.
Big Data Holds Potential for Big Advantages
To deliver the best customer experience possible, grocers need insights into what their customers like, what they want, and what their interests are. Online retailers are already harvesting consumer data from page views, clicks and purchases. Brick-and-mortar stores can similarly avail themselves of customer insights through card and mobile wallet purchases, apps, and other scan-and-shop technologies.
Obtaining shopper data affords grocers the insights they need to make important decisions about product placements and more personalized promotions that drive customer engagement and store loyalty. With the right data insights in hand, grocers are able to ensure that store shelves are stocked with the items customers want, and create targeted consumer promotions that deliver desired results.
Getting the Experience Right Will Be Crucial
Many grocers are already competing with online retailers using same-day delivery and curbside pickup services to help improve engagement and retention. In the years to come, it goes without saying that successful grocers will employ advanced digital technologies to improve the in-store experience. Leveraging data, optimizing payments, structure and delivering customer choice will help business get their digital transformation right and provide the personalization and convenience for which new generations of shoppers are clamoring.