Physical Grocery in a Virtual World: How to Stay Competitive

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So much of our lives happen on the Internet. We work, communicate with friends, watch movies and TV, read books, listen to the radio, and even shop – and that increasingly includes online grocery shopping. While we don’t think traditional physical grocery stores are in danger, companies that incorporate popular ecommerce techniques are quickly gaining ground with customers that demand online options.

Food delivery is nothing new. In the past, we relied on delivery for basic necessities like milk and eggs. Larger refrigerators, and bigger, closer grocery stores brought about delivery’s initial decline. But for many years, direct home delivery was the only option.

New technology has resurrected this earlier convenience. Even if a customer can buy an item in-person, they may find it more convenient or cheaper to buy online. Online grocery shopping has removed the everyday stresses of writing a list, going to the store, and navigating large crowds or waiting in long lines.

In fact, you’ve likely already interacted with one of these new-aged milkmen. You’ve seen their trucks, or maybe you’ve even used their services yourself (especially if you live in a major city or if travel by car isn’t an option). Grocery delivery is growing fast.

This might strike fear into the hearts of brick-and-mortar grocers, but it doesn’t have to. With the exception of delivery services like AmazonFresh and meal kit operations like Blue Apron, grocery remains firmly rooted in the brick-and-mortar world. It’s much easier to ship pants than perishables over long distances. This means that most of us, especially those that live outside urban centers, will be leaving our homes to fill our pantries.

Fortunately, grocery stores are uniquely positioned to succeed through multichannel strategies. The idea of fully entering the ecommerce marketplace is daunting for many smaller-format stores. So, how can you stay competitive?

Go multichannel!

We have some excellent news for anyone wary of an ecommerce takeover. Brick-and-mortar grocery stores that incorporate an ecommerce element do better than online-only stores.

Consultancy firm Brick Meets Click looked at online orders from 19 multichannel grocery stores over the course of one week. More than half of the stores in the study recorded average online orders between $120 and $180. In comparison, average sales at online-only grocery stores were lower. For example, Fresh Direct’s average sale totaled $105 and AmazonFresh’s average sale was $84.

There’s no better example of this evidence than Amazon. The retail giant scaled back its online grocery service AmazonFresh and purchased organic grocer Whole Foods in 2017. In 2021, Amazon is projected to sell more than $23 billion worth of groceries through both channels combined.

For online grocery shopping to continue to grow, companies need to improve the way customers receive their food. The current high cost of home delivery, paired with long delivery windows, makes delivery a luxury. Lower prices and more punctual delivery are essential to increasing sales. Additionally, options for in-store pick up need to expand. Surprisingly, food distributors and brick-and-mortar supermarkets are better equipped to meet these challenges than online-only sellers. Consider your multichannel existence a major asset for the future – because it is!

Lean in to what makes your grocery store special.

Consumers are increasingly turning to smaller retailers that set themselves apart from their competitors in unique ways. Small, specific businesses like book stores, shoe stores, and pharmacies have been threatened by large retail chains in recent years. However, a growing demand for stores to distinguish themselves in other ways is turning this trend on its head. Customers wan to know if you provide exemplary customer service, sell unique products, or uphold their values.

It is becoming more and more crucial to stock up on merchandise that customers won’t find anywhere else. Setting your store apart by offering in-demand specialty products can expand your customer base faster than you might imagine.

Source hard-to-find, specialty, or foreign foods and products to make your store a unique, “destination” grocer. Try creating a line of exclusive merchandise, introducing savvy branding and one-of-a-kind (or highly localized!) products to set your store apart.

Incorporate “geofencing.”

Geofencing helps retailers engage with their customers based on their physical location. It works by identifying mobile devices upon entering a certain area. This technique is a great way to decrease wait times for pick up orders and give customers a more efficient way to shop.

Woolworth’s supermarket, for example, successfully used geofencing to increase mobile app downloads and use. The app alerts in-store staff to prepare an online order based on the physical location of the customer. That means the order is not picked until the customer is physically nearby. After the order is completed the app sends a push notification to the customer that it is ready for pick up. Woolworth’s was able to use geofencing to improve two of the most common problems with online orders – freshness and efficiency.

Emphasize speed and convenience.

Online grocery shopping means waiting for your purchases to arrive (or paying significantly more for overnight shipping). As a brick-and-mortar merchant, you can use this to your advantage. Highlight what makes you different from online-only options, your ability to provide instant gratification to your customers.

Consider offering same-day delivery of in-stock items at your brick-and-mortar store.To do this, you no longer need to create delivery infrastructure from scratch. Utilize solutions that already exist like Postmates or similar external services. It’s as easy as listing your products and their prices, then alerting your customers of their new option to shop.

Include technology in-store.

Consumers do online research, even while in the store. Shoppers may look online to find what they see in-store, so be sure to brand in-store and online presentation spaces similarly. Create a cohesive brand across platforms.

Interactive kiosks can create multimedia immersive experiences, help shoppers find items in other locations, or improve wayfinding at large retailers. When in-store kiosks are well designed and match branding perfectly, they can become a seamless facilitator of an enhanced customer experience.

Another technological improvement? Consider giving your customers the option to digitize the checkout process. For example, allow customers to pay with their phones through Apple Pay and similar services. Another idea is to follow up after customers leave the store. Send a quick email asking for feedback or offer a sincere thank-you for shopping. Perhaps include a discount code or coupon for their next visit!

Today’s customer takes advantage of the conveniences established by ecommerce. While buying groceries used to be the exception, that’s just no longer the case. With the advent of online-only grocers and brick-and-mortar stores providing delivery, customers are becoming accustomed to online grocery shopping. Don’t leave money on the table because you’re not online.

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