With four days of keynotes, hosted meetings, and tech talks, GroceryShop 2019 did not leave many topics uncovered. This year we saw retailers continuing to grapple with the digitization of grocery, brands figuring out what their new role is with retailers and consumers, and consumers expecting retailers to deliver the price, convenience, and health benefits that matter to them.
At the conference, Engage3 announced the availability of a new metric in pricing strategy – Price Image Management. In a world of experiential retail, customer satisfaction is a critical driver of long-term loyalty. And nothing can turn off a consumer faster than an unexpected price on the analog or digital shelf. Price Image management is the ability to understand, manage, and optimize price image. It is a new muscle for the retail industry, and represents an emerging frontier with the opportunity to meet or delight consumers’ expectations. IDC’s Market Spotlight Report on Price Image Management in Retail, announced at the conference, can be requested here.
Here are my biggest takeaways from this year’s conference:
1. The future of the grocery store is mobile-first
There is no turning back on consumers’ use of their smartphones. And as more and more retailers are finding out, they can’t dictate what channel the customer will use to purchase what they need. Buy-Online-Pickup-In-Store has become an expectation rather than a perk for consumers, culminating in retailers like Walmart creating pickup-only locations for convenience. Integrated shopping experiences are becoming the norm, and shoppers are relying more on their smartphones and apps at home, and in stores.
Oliver Chen, Managing Director of Cowen and Company, said in one of the presentations that curbside is “a huge thing right now.” Curbside, he said, not only accounts for about 14% of the increase in sales where it is implemented, but he is also forecasting that number to go up to 20% next year. He also said that the internal rate of return for this service is in the high twenties with a break-even point in nine months. What’s more, his firm notes that check sizes are double the normal basket.
In Dallas, Sam’s Club Now is leading the way in using mobile as its operating platform. With its mobile-scan-and-go program, members enjoy the convenience of an almost frictionless transaction. The retailer is also enabled to process their data in real time, “acting as an active recording device within the store,” as Chris Walton, in a Forbes article, said. “Sam’s Club Now is likely a living, breathing U.S. East-Meets-West incarnation of the Holy Trinity of New Retail — cloud computing, mobile activity recording devices, and location analytics,” he added.
Another area that mobile-first is gaining ground is in competitive operational efficiencies. As an example, large retailers are implementing bring-your-own-device programs where store associates are empowered to collect competitive pricing data using mobile apps from technology providers like Engage3, on their own smartphones. A win for retailers who can now eliminate double entry and the wait for capturing timely competitive pricing and assortment data to compete on a localized level.
2. Product attributes and customer experience are king
During the show, we recorded a video interview of Jon Springer, Winsight Grocery’s Executive Editor, with Engage3’s Ken Ouimet, where Jon confirms that consumers now interact with brands differently than they used to. They expect more from stores than they used to expect, they’re taking personal control of what they’re eating, and thinking a little more about how they’re shopping.
Consumers are are paying more attention to the benefits they can derive from products and they are willing to trade in their trusted brands to give other products a chance, especially new companies with offerings that are not only on par or better, but with social causes to boot.
Aldi and Lidl have disrupted the industry with their 95% private brand strategy, and they’re coming to consumers with a much better proposition with a heavily-discounted, curated high-quality assortment. This has resulted in consumers who are more and more concerned with product attributes, and less and less concerned with brands.
If there was a single idea that most GroceryShop attendees can agree on during the conference, it is that shoppers, not brands and retailers, are in the driver’s seat of the retail marketplace. “The customer is leading the way,” said Narayan Iyengar, Albertsons SVP Digital & eCommerce, on Monday morning. With more options and choices, shoppers have become more demanding and more segmented. Grocers will be forced to match customer expectations to retain them.
3. “Convenience is the new dollar off”
Anil Aggarwal, CEO of GroceryShop, said that “shopping is no longer synonymous with taking a trip to the store.” With the coming of digitally-native brands and the power of influencer marketing, the near future may see consumers who may not even go to stores to acquire what they need. Convenience now reigns supreme, and the consumer gets to decide how to get what they need, and when.
While pricing promotions like the “dollar off” was a sure-fire traffic driver, convenience has risen to the top of what is now valued by more consumers. This is evidenced by Amazon’s success with their Prime 2-day shipping – a “perk” now offered by Target, Walmart, Whole Foods, Costco, Sprouts and others.
Jennifer Silverberg, CEO of SmartCommerce, said it best: “People want to buy your brand, not spend more time with your brand. Convenience is the new dollar off.”
4. Digitization’s two goals
In his Monday keynote speech, John Furner of Sam’s Club summarized it succinctly: that grocery digitization’s two main goals are happy customers and operational efficiencies. 89% to 95% of grocery purchases still happen in stores. But retailers and brands are rightly preparing for an inevitable digital future.
According to a survey conducted this year by Kelton Global, 69% of in-store shoppers would rather consult a product review on their phone than ask a store associate. This may seem frustrating to some stores that invest large amounts of time and effort in training their employees, but is also an advantage for more digitally-integrated retailers. Regardless, consumers are becoming increasingly involved in shaping their shopping experience. Grocery stores, as a result, are challenged to keep up with these demands on a national scale. Apps, online shopping, personalization, and many other resources that could be considered supplemental to grocery shopping are transforming into necessities at a rapid pace.
From the various keynotes at the conference referencing frictionless shopping, it’s evident that retailers are focusing on “cutting out the middle man” and creating extreme efficiency in their stores. This can come in the form of direct-to-consumer brands and electronic shelf labels, as well as any technology that allows for a simplified store visit. Attributes and their accompanying shelf labels make it easy for consumers to navigate a store and find the products that matter to them, for example. Most of these investments also translate into cost-cutting for the retailers; bypassing the process of manually changing prices can help brick-and-mortar retailers compete more effectively against e-commerce stores and free up employees for other tasks.
Farhan Siddiqi, chief digital officer for Ahold Delhaize, during one of the presentations, said the digital penetration will happen in grocery “in part, because of the inherent convenience of online shopping and the expansion of same-day grocery delivery across the country.”
Summary
What will make brands, grocers, and industry influencers come back to next year’s GroceryShop 2020? “It’s their attention to detail that makes this conference one of a kind,” says Mike Lee of The Future of Food, in a recorded conversation with Ken Ouimet of Engage3. For me, it would be the Original Content series that the GroceryShop team will hopefully continue to present (my favorite speaker is Zia Daniell Wigder, Co-Founder & Chief Content Officer at GroceryShop). For those of us who have had the opportunity to attend both conferences for the last two years, we know that Aggarwal’s secret sauce of focus on doing the right thing for the growth and development of brands and retailers is definitely working!
