How Grocers Can Win in the Digital Age
In order for grocers to thrive in our increasingly digital world, they have to know their customer. Transforming from a vendor/customer relationship to a customer-centric organization is critical to succeed, and can't be done without a data-driven business.
The next battleground for all grocers is data. Most retailers are using technology to create personalized experiences for their customers, but many are still using the same five data points that marketers have used for decades. This is resulting in average returns at best, and more often than not sub-par results.
Companies need to look at more than just demographics, lifestyle and life-stage to predict behavior. Life events like having children, caring for an older parent at home, or starting a new diet are all events that retailers can use to make recommendations.
- Identifying core customers should be the first step before developing new technologies.
- Consumers across all generations are looking for more information than ever before.
- The current state of consumers remains healthy. People continue to buy at the middle and trade up.
- Retailers should leverage data to understand when sales shifts are driven by a change of assortment – or by the consumers themselves.
- The pace of innovation in China is faster than ever seen.
Retailers need to test, learn, and develop new products and services for their customers using data and offer personalization services that make sense in the moment. However, there’s a fine line to walk between personalization and what might be considered too much and thought to be a violation of personal privacy.
The online battleground
For example, during the Groceryshop conference, Michael Wilhite, VP in data strategy at Kroger’s 84.51° said that Kroger "is more focused on using personalization on customer experiences rather than on operations." He went on to say that "Kroger wants to create a better environment for customers when they shop." He added that because of the frequent interaction between customers and grocery retailers, personalization has the biggest potential in grocery. "As technology continues to evolve, when making product recommendations, personalization should address the aspirational “me”, instead of simply recommending repeat purchases."
Grocery is one of the last analog frontiers, but we live in a digital world. To succeed in this time of "what's next", grocers need to deliver connected experiences. Grocery has to transform itself into a digital business, but still be hands on.
More and more retailers across the board are taking on digital transformative journeys, and grocery is no different. However, more so than for any other category, grocery getting it right is critical as there are many places to buy groceries.
As the digital world continues to proliferate across all facets of our lives, grocers are facing even more pressure to ensure that they are able to offer customers the same digital experiences in grocery that they have grown used to in the rest of the ecommerce world. This includes 30-minute delivery, endless aisles and flexible fulfillment options.
How it's always been done won't work in the new digital era. Organizations need to be rebuilt to reflect the customer's needs and wants; everything anywhere. The digital world for grocery will look much like the digital world for other retailers at different points on the transformation spectrum.
Grocers need to ensure they are on the forefront of digital transformation, not waiting on the sidelines for change to come to them. Building an organization made for digital, as opposed to loading up an existing organization with new digital duties is critical. In 2012 less than 20% of the Fortune 1000 had a chief data officer, in 2018 that number was approaching 70%. Grocers are not immune to this digital revolution, and ones that embrace this change now will be in the driver’s seat in the future.