Grocery’s Challenge in a Digital World

It’s a digital world nowadays, and grocery needs to adapt.

To survive and prosper in today’s competitive landscape, experts believe that supermarket chains must connect with consumers digitally in a more personalized manner. The ultimate goal is to leverage that connection to enhance loyalty to stores.

“Digital is fast becoming the best way to communicate to shoppers in-store or pre-shop, provided that the retailer is smartly using shopper data to truly add value to the shopper’s trip,” says consultant Mark Heckman, former VP of marketing for Indianapolis-based Marsh Supermarkets. “That translates into meaningful, relevant offers, not random deals in hopes of finding a receptive shopper.”

Cassandra Girard, global lead of consumer and travel industries at global software provider SAP Hybris, agrees, adding that the power has shifted to the digital consumer, and grocery shopping is no exception. The takeaway for retailers is that customers will develop loyalty to the grocer that can anticipate their needs, engage with them on the channels they prefer and simplify their shopping experience, she notes.

Consistency and Specificity

What’s the best way for grocers to connect digitally with their customers?

“A grocer needs to look at its business, break down silos and ensure there are consistent experiences for shoppers across their channels and from online to in-store,” asserts Aaron Reich, director of innovation for Avanade, a Seattle-based provider of business technology solutions. “A shopper who uses a printed loyalty card may now want to utilize that card virtually on their phone. Shoppers who clip coupons should have access to those same coupons on their phones for redemption. It’s no longer good enough to be customer-centric. Grocers need to embrace every opportunity and every customer interaction to gather knowledge to know and anticipate the needs and demands of individual shoppers, specific to their profile, past behavior and location.”

Other solution providers and analysts choose a specific tactic for grocers to focus on:

Loyalty Marketing:

“The best way for grocers to create a digitally relevant connection is by understanding each individual shopper’s needs, typically via a loyalty card program. Done well, a loyalty program provides the platform and reason to connect more personally,” says David Ciancio, chief customer strategist for Cincinnati-based Dunnhumby, which developed a highly regarded loyalty program for Kroger.

Email:

According to research by MarketingSherpa, email is the most popular digital channel for customers to receive regular updates and promotions from companies. “So, if time, resources and data analysis capabilities are scarce, and a grocer can only focus on one digital channel, email would be the best option,” says Daniel Burstein, director of editorial content for the Jacksonville, Fla.-based marketing research firm.

Mobile:

Heckman, the consultant, insists that mobile is the most important way to make connections. “If you cannot connect with the shopper via their mobile with a comprehensive interface of deals, product information, points accumulated, etc., the program will be less effective than it could be,” he cautions.

Store Circular:

“The digital circular is the most powerful marketing channel to connect with consumers. It is the only way for a retailer to tell their weekly story, showcase what’s new in-store and visually merchandise hundreds of items in a beautiful way,” says Seth Stover, managing director, partner development at Toronto-based Flipp Corp., which uses technology to provide shopping solutions.

Beacons:

Amit Bhardwaj, senior director of customer loyalty for Marsh Supermarkets, speaks glowingly of beacons, which the chain has installed in 73 stores across Indiana and Ohio. “Beacons open up the store to connect with shoppers. They become a game changer. It allows you to make an offer when the shopper is in the right place and in the right state of mind,” he said in a recent presentation at the Shopper Marketing Summit, hosted by the Path to Purchase Institute.

Social Media:

Rachael Cihlar, senior strategist at TapInfluence, a Boulder, Colo.-based social media provider, says that “influencer marketing” — the practice of delivering a brand message to consumers through social influencers who are passionate about certain subjects — has emerged as one of the best ways for grocers to connect with their consumers online. For instance, a grocery chain could give high-profile food bloggers a gift card and ask them to purchase items and create an original recipe, which they would then feature in photos in their blogs and social media posts. All content would reference the grocer where they purchased the items and even include a hashtag.

“There is no silver bullet in terms of which channels or tactics grocers should capitalize on,” SAP Hybris’ Girard argues. “The key, however, lies in the ability to cater to each individual customer. One of our grocery customers, Brookshire Grocery Co., has recognized the importance of a digital core to serve their customers. Their digital core enables them to quickly and proactively adjust to demand, while helping increase sales and customer satisfaction.”

Strategic Moves

Girard urges grocers to start implementing personalized strategies to connect with consumers. Her recommendations include:

Real-time Contextual Promotions:

Send customers a text with appropriate in-store offers when they’re in a store or nearby, based on geolocation data.

Digital Promo Bundles:

These should be specific to the customer and may include next-best-action recommendations if their usual product is unavailable online or in-store.

Weekly Recipe Newsletters:

Ideally, these newsletters should point to products that the shopper may be interested in that are on sale and in stock.

Value-added Services:

Examples include subscriptions, meal kits, and recommended shopping lists based on brand, dietary habits or health goals.

Lagging Behind

With such a wide variety of tactics available to grocers, one might assume that they’re avidly connecting with consumers digitally in a personalized way. But that’s clearly not the case, according to experts who track such activity.

“Largely, grocers’ digital connection with consumers is quite low,” points out Scott Bauer, retail and consumer partner at PwC, a New York-based consultancy. “Weekly circulars put into email or online do not count as a connection; neither do blast emails informing them of special sale prices. For a digital connection to occur, it must be relevant and have an appropriate frequency to their needs, and that may vary by shopper.”

Burstein, of MarketingSherpa, believes that the grocery industry has been “somewhat of a laggard” in this regard, especially when compared with other sectors. Its use of such tactics as digital coupons and sweepstakes, he says, seems more focused on deploying the technology than on serving the customer.

“The journey has only recently begun for the grocery industry,” observes Dunnhumby’s Ciancio, “and so the effectiveness of digital connections is only modest at the moment.

“Loyalty is won in-store through great shopping experiences and respectful pricing and promotions,” he goes on to say, “but it can be lost by inconsiderate digital marketing. Grocers must not regard digital as only a channel, but rather as a more personal promise to deliver value, earn loyalty and trust, and to show respect for the shopper.”

PwC’s Bauer offers encouragement to grocers planning to start or ramp up their digital connection with consumers through loyalty programs, special offers via email or text, social media, or other tactics. “The manner in which these strategies are executed is what is critical,” he says. “They must be personalized, frequency must not be overwhelming, and they must be relevant to the shoppers’ needs. If a grocer expects shoppers to be loyal, the shoppers expect the grocer to know and appreciate their business by offering unique opportunities for products, discounts or experiences.”