Last year marked a whirlwind for the grocery industry, long-dominated by brick-and-mortar operations, as retailers were forced to adapt to the remote conditions of a pandemic-ridden world in order to survive.
But will 2021 be even more era-defining than its chaotic predecessor?
As the post-pandemic era dawns, industry leaders will begin to see which pandemic-driven trends will endure, and which will fall to the wayside. With the right insights, grocers will be able to use this array of new industry precedents to inform their business strategies for years to come.
Here are a few key trends that will define the grocery industry’s new normal.
Fusion of Digital and Physical Services
Goodbye Elvis – there’s a new king in town, and they call him e-commerce.
While e-commerce may never repeat the growth rates of its 2020 boom, its presence across retail markets has been all but cemented. So, what will the landscape look like for a grocery industry with in-person stores up and running and with e-commerce capabilities now in place?
Most individuals will become hybrid consumers: shopping online sometimes, and in-person at other times. This means stores will need to develop tools to fuse both experiences, while maintaining high quality and ensuring relevant, personalized engagements for each individual shopper.
Physical stores won’t disappear, but with in-store add-ons such as smart carts and AI-powered store mapping already set to gain traction, grocers can expect an end to the totally analog era. This fusion also poses a challenge as in-store aisles are increasingly used both by in-store shoppers and pickers fulfilling online orders. Stores will have to manage their space much more strategically to thrive and must seek the digital solutions necessary to do so.
The Need for Control
Instacart is one of the three largest e-commerce providers in the United States, along with Amazon and Walmart, which together dominate the daily consumer marketplace. Yet of these three giants, Instacart is the only one yet to make a play at entering the market as a standalone grocer, which puts it in pole position to instantly become a market leader. Its $39 billion valuation is fueled by a unique grasp of customer data – an advantage that is likely to be turned against the very grocers who were circumstantially forced to lean on Instacart’s services, thus supplying them with this customer data in the first place.
Small grocers are the operations who face the gravest risk. To head off the potential threat posed by Instacart, small grocers must seek digitization partners who won’t threaten their long-term survival.
Reimagining the In-Store Experience
Getting the in-store experience right is just as imperative as finding the right e-commerce formula – especially as many store locations are tied to multi-year rental contracts that can’t easily be abandoned.
With more shoppers online, stores must adopt new business models that highlight must-have aspects of in-person shopping. This might mean bolstering the experiential component that a store can offer – a sommelier to guide customers down the wine aisle, a deli assistant to offer insights about meats and cheeses, tasting and sampling opportunities, and the like.
Store locations with dwindling foot traffic can be leveraged for online order fulfillment, while a greater emphasis on the real-life shopping experience can be concentrated at locations with higher traffic.
Customers: Free Labor No More
Though they may not think of it consciously in terms of “unpaid labor,” a customer on a typical trip to the grocery store would be expected to walk up and down the aisles, load her cart, stand in line to check out and pack her bags.
On their own, these little grocery store tasks are far from Sisyphean. But the e-commerce ease that so many shoppers got a bite of in 2020 leaves a taste of convenience that lingers in the mouth. Many consumers see no reason to turn back.
This reiterates the need for grocers to adopt in-store tech specifically designed to enhance the in-store customer journey.
CPG – an Advertising Revolution
Consumer packaged goods (CPG) advertising is a key component of grocery-related marketing – it is often one of the primary allotments of ad-spend in the industry – that brings awareness to perishable foodstuffs for consumers. Digital transformation can play a major role in helping retailers leverage this technique to increase touchpoints with their most loyal customers.
A critical piece of retailers’ funding strategies relies on transforming analog merchandising vehicles from manufacturers (e.g. an in-store ad or display) to digital merchandizing vehicles. As part of this transformation, Trade Promotion and Shopper Marketing will have to be personalized using tech that can seemingly “combine” the digital and physical worlds. For example, notifying customers about coupons, recipes, limited edition items and more either by push notification or by regional digital marketing, stands to create a sense of cross-platform brand engagement, in and out of the store.
Typically, brand manufacturers have paid retailers who target consumers by in-store discounts or local advertising. But now that customers’ full-time presence in stores is less guaranteed, this model must be updated and synchronized with stores’ entire inventories, especially as big brands continue to leverage their massive audience to build media channels against which smaller retailers can’t compete.
Enhancing Customer Digital Engagements
As grocery shopping becomes more hybrid, the importance of robust digital engagement with customers will only increase.
This goes beyond online shopping. With a sizable digital network of shoppers, retailers will be able to connect their shopper networks to other relevant digital content – like health and wellness, for example – to provide additional services and value.
Not only will this connect shoppers to more relevant and engaging content, it will also provide new monetization opportunities for retailers, including through subscription and replenishment programs, endless aisle initiatives, and even marketplaces.
The Future is Now
As the world returns to normalcy, the grocery industry must be poised to adapt to long-term effects, prepared to straddle the dual edges of a hybridized retail world and to react to a host of newly recalibrated consumer expectations.
The “why” of food shopping will always be the same. It’s the how, what, and where that are rapidly changing and are set to redefine the next era of the industry.