Consumer-facing supermarket technologies are all about improving the shopping experience and keeping buyers happy. With intense competition and slim margins, grocers are embracing a number of technology tools to not only boost sales but simplify the process from start to finish.
Two areas of intense focus are mobile marketing and online shopping, but social media, digital coupons, mobile payment apps, and loyalty shopping programs continue to command attention. Keeping it all in perspective is crucial to success.
High-Tech = High Rewards?
“Technology is never the solution, it enables innovation,” insists Neil Stern, a partner at McMillan/Doolittle, a retail consulting firm in Chicago. “If we can help customers save time, save money, or make the shopping experience more enjoyable, it will be a win for them and ultimately for the retailer.”
There are many brick-and-mortar improvements and just as many online innovations for shoppers. Among the many mentioned by Stern are mobile apps to help find products; scan-as-you-go programs and electronic shelf tags; online ordering with either in-store pickup or delivery; traffic or store congestion monitoring; digital couponing and loyalty programs; and automated shopping list systems like Amazon Dash and Hiku.
All of these technologies can have an impact at retail. “Helping people avoid checkout lanes has benefits for both customers and retailers,” suggests Stern. “Companies like Fetch Rewards (an app for shoppers to scan grocery selections) enable this to happen and integrate couponing as well. Easing the burden of shopping is key to making future technology work.”
Mobility For The Masses
For many supermarkets, seeing the big picture means looking beyond the store to mobile marketing and social media, says Michael Sansolo, president of Sansolo Solutions in Potomac, MD. Sansolo is the director of the Coca-Cola Retailing Research Council and a former senior vice president at the Food Marketing Institute in Arlington, VA.
“The most impactful technology for supermarkets today is not in the store; it’s probably the smartphone,” Sansolo says, which continues to influence how sellers communicate and interact with customers, and how they market their products.
The term most used to encompass the wide-ranging integration of new technologies within retailing is ‘omnichannel,’ or using multiple channels to provide a seamless shopping experience whether online by computer or mobile device, or within a brick-and-mortar store.
The Produce Challenge
Because fruits and vegetables are perishable and shoppers have distinct preferences when selecting them, produce is both a great opportunity and a major challenge to implementing new technologies.
“Produce is the most dynamic part of the store,” Sansolo comments. “Because of seasonality and growth patterns, the products change all the time.” This variability produces colorful displays and plenty of selling opportunities in stores—but has drawbacks for online sales. Shoppers may be unfamiliar with some items, such as how to select or serve them, or even how they taste. This is where social media comes into play with recipes, recommendations, and forums, as well as grower or retailer-supplied information on varieties and perishability.
Consumer-facing supermarket technologies are all about improving the shopping experience and keeping buyers happy. With intense competition and slim margins, grocers are embracing a number of technology tools to not only boost sales but simplify the process from start to finish.
Two areas of intense focus are mobile marketing and online shopping, but social media, digital coupons, mobile payment apps, and loyalty shopping programs continue to command attention. Keeping it all in perspective is crucial to success.
High-Tech = High Rewards?
“Technology is never the solution, it enables innovation,” insists Neil Stern, a partner at McMillan/Doolittle, a retail consulting firm in Chicago. “If we can help customers save time, save money, or make the shopping experience more enjoyable, it will be a win for them and ultimately for the retailer.”
There are many brick-and-mortar improvements and just as many online innovations for shoppers. Among the many mentioned by Stern are mobile apps to help find products; scan-as-you-go programs and electronic shelf tags; online ordering with either in-store pickup or delivery; traffic or store congestion monitoring; digital couponing and loyalty programs; and automated shopping list systems like Amazon Dash and Hiku.
All of these technologies can have an impact at retail. “Helping people avoid checkout lanes has benefits for both customers and retailers,” suggests Stern. “Companies like Fetch Rewards (an app for shoppers to scan grocery selections) enable this to happen and integrate couponing as well. Easing the burden of shopping is key to making future technology work.”
Mobility For The Masses
For many supermarkets, seeing the big picture means looking beyond the store to mobile marketing and social media, says Michael Sansolo, president of Sansolo Solutions in Potomac, MD. Sansolo is the director of the Coca-Cola Retailing Research Council and a former senior vice president at the Food Marketing Institute in Arlington, VA.
“The most impactful technology for supermarkets today is not in the store; it’s probably the smartphone,” Sansolo says, which continues to influence how sellers communicate and interact with customers, and how they market their products.
The term most used to encompass the wide-ranging integration of new technologies within retailing is ‘omnichannel,’ or using multiple channels to provide a seamless shopping experience whether online by computer or mobile device, or within a brick-and-mortar store.
The Produce Challenge
Because fruits and vegetables are perishable and shoppers have distinct preferences when selecting them, produce is both a great opportunity and a major challenge to implementing new technologies.
“Produce is the most dynamic part of the store,” Sansolo comments. “Because of seasonality and growth patterns, the products change all the time.” This variability produces colorful displays and plenty of selling opportunities in stores—but has drawbacks for online sales. Shoppers may be unfamiliar with some items, such as how to select or serve them, or even how they taste. This is where social media comes into play with recipes, recommendations, and forums, as well as grower or retailer-supplied information on varieties and perishability.
“We know people want to eat healthy and they want to eat produce, so find a way to get information to them,” Sansone suggests. “It’s so painless to do these days because nearly everyone has a smartphone.”
Smartphone Apps
There is no shortage of smartphone apps in the world, or even in the grocery sector. Beacon technology is a new way to reach customers while in the store, with some specific applications for the produce section. Small transmitters send a variety of marketing or educational materials to shoppers with a special app on their phone.
A form of location-based marketing, beacon technology sends digital coupons to shoppers near a particular product or item. According to Tanya Bhothinard, senior director at Partners in Loyalty Marketing (PILM) in Chicago, the technology is beginning to catch on with consumers and grocers, and coupons can be linked to store loyalty cards.
ONLINE SHOPPING HABITS
The Retail Feedback Group in Lake Success, NY polled 446 primary grocery shoppers about their purchasing patterns in today’s highly digitized world. Of those surveyed, the study found:
• Those who shop online with some regularity: 38%
• Frequency: once per week or more (5%); a few times per month (8%); about once per month (5%), less than once per month (20%)
• How purchases are received: by mail or truck (58%); picked up at local store (36%); delivery from a local store (11%); delivered by online grocery service (9%); at a designated location (4%); delivery from a third-party like Instacart (2%)
• Top purchase categories: natural/organic (55%); health/beauty (49%); dietary needs/nutritional supplements (45%); produce (14%)
• Top reasons: availability of hard-to-find products (56%); lower prices/better deals (54%); saves time (44%); more convenient (33%).
“We’ve seen some cross-marketing with produce,” Bhothinard says, citing Grand Rapids, MI-based Meijer as an example. “Using beacon technology, Meijer offers coupons with produce based on their ‘mPerks’ store card,” she explains, such as “an offer of buy $20 worth of produce and get $5 off the total order.” Other grocers trying out similar beacon programs include national chain Safeway and Marsh Supermarkets in Indiana and Ohio.
But retailers must be careful about the intrusiveness of their technology. “There is a limit to how much you can interrupt consumers before they either delete an application or just turn it off. If a consumer gets frustrated,” Bhothinard cautions, “you’re done—you’re not going to get that second or third [chance] to improve on your message.”
Some retailers have been testing limited-time “flash” deals, sent via social media for free or discounted products. Examples include Meijer’s offer of a free cheesecake and $10 gift card, while Schnucks in St. Louis promoted one-day specials, and a Kroger in Cincinnati used Facebook for its “Free Friday Download” of digital coupons.
Although digital and load-to-card coupons are still relatively new technology, Bhothinard says shoppers have embraced them and they can be more effective than traditional paper coupons.
A study conducted by PILM and the Shopper Technology Institute contrasted the success rate of newspaper insert coupons versus digital, finding the former brought in 34 percent of new product buyers, while digital coupons attracted 46 percent. The study also found 68 percent of paper coupon use resulted in incremental (above normal projected) sales.
Instant coupons, which represent slightly over 20 percent of all coupon redemption, continue to gain favor with shoppers too, while digital load-to-card coupons climbed for the fifth consecutive year. Bhothinard says the next step is better tracking and evaluation, as more stores and brands use digital coupons to incentivize their products.
Collecting Data
The ability to collect data across a wide range of customer experiences will continue to be of interest, “particularly as it relates to how brands and retailers can better personalize an experience or an offer, and how that data is collected, analyzed, and then applied to digital touch points for customers to get a personalized experience,” Kent says.
“We believe online and digital shopping is a major part of the future. Offline and in-store shopping will always play a big part of a consumer’s experience, but digital will be a strong complement along every step of the purchase journey—from discovering new products to in-store solutions, to the review and post-purchase phases,” Kent explains. This is backed up by a number of studies, with Mobile Commerce Daily reporting 59 percent of all consumers use their mobile device while shopping, a leap of 16 percent from last year.
Although loyalty programs have been capturing and storing data about customer habits and purchases for years, retailers have become increasingly sophisticated in how they use this material for marketing. Yet due to highly publicized breaches of private information at Target, Home Depot, and others, and because of broader concerns raised by government intrusion, privacy is a major concern for grocery marketers.
“We as an industry are trying to be self-policing,” comments Larry Burns, president and chief executive officer of StartSampling in Carol Stream, IL. Burns discussed the issue during a conference hosted by the Shopper Technology Institute in Cleveland, OH. Unfortunately, he admits, transparency is not at the level it should be and predicts more startup companies will emerge to help consumers control their data. First and foremost, he recommends being open about data policies and how consumers can expect to benefit. For example, if a customer enters a store and a retail app creates a shopping list based on previous purchases, this should both simplify and enhance the shopping experience. Though some shoppers may find this intrusive or presumptuous, others will gladly accept the assistance.
Online Grocery Shopping
While online grocery shopping has been around for almost two decades and is well established in the United Kingdom, France, and South Korea, convincing U.S. shoppers a retailer ‘picker’ can select fresh produce to their satisfaction has not come easily. This concern has been a “profound” hindrance to the development of online perishables shopping, says Keith Anderson, vice president for strategy and insights at Profitero, an Irish consulting company with a San Francisco office. Anderson also took part in the Shopper Technology Institute conference.
“There’s definitely an issue of quality or freshness perception when shoppers are thinking about placing an online order,” Anderson explains. “The more experienced online grocers like Fresh Direct and Peapod, and even Instacart, have now developed sophisticated approaches to providing daily freshness ratings for produce, so consumers have real visibility into how fresh today’s produce will be.”
Nancy Childs, professor of food marketing and Peck Fellow at St. Joseph’s University in Philadelphia thinks online produce shopping will only succeed “if the online aspect delivers something extra, not immediately available elsewhere. This is akin to the concept of community supported agriculture where participants do not see the produce, but the seasonal contract is more about supporting a local farm for local produce and authenticity.”
An online shopping study by the Retail Feedback Group in Lake Success, NY confirms the hesitance to order produce via the Internet. Among those purchasing supermarket items online in the last year, top concerns included freshness (82 percent), damage (53 percent), too ripe or not ripe enough (46 percent), and limited assortment or variety (18 percent). “For shoppers to embrace online shopping, specifically to purchase produce,” comments Retail Feedback’s principal Brian Numainville, “these concerns need to be overcome.”
Caputo’s Fresh Markets, a specialty grocer in the Chicagoland area, applies a ‘personal touch’ to all Internet orders, according to produce buyer Paul Stallone. “We overcome the concern about ordering produce online by assigning one person to the online orders. This employee selects product as if it were for his/her own use.”
Mobile Pay
Mobile payment systems are gaining traction for their ease of use and ability to slash checkout times. Most enable shoppers to scan items and bag them as they go, hitting the checkout line only long enough to pay and depart. Walmart began testing such an app in 200 stores in 2013, though it did not work with bulk produce. When customers found it too difficult to use, the program was scrapped in 2014.
There is also the much talked about Apple Pay, which already has a sizeable footprint in the greater retail world, including a number of grocers, including both regional and national chains such as Associated Food Stores, BJ’s Wholesale Clubs, Jewel-Osco and Albertson’s, Lucky Supermarkets, Save Mart, Shaw’s Supermarket, United Supermarkets, Wegmans, Whole Foods Markets, and Winn-Dixie.
“Mobile payments are a big in-focus technology right now,” observes Patrick Kent, managing director for CouponFactory in Rogers, AR. “It’s an interesting place because there are three key factors: the brand, the retailer, and the physical mobile and point-of-sale device. Apple Pay took a big leap to help drive consumer adoption, but is still working to attract the biggest retailers such as Walmart and Target.”
By The Numbers
Recent research points to an impressive upside for online grocery shopping. Packaged Facts in Washington, DC reports that online shopping is the industry’s fastest growing channel with double-digit growth, expected to rise to $100 billion annually by 2019.
Much of this growth is attributed to “more familiarity with technology, more millennial shoppers, and more effective models,” according to Childs. “Retailers are savvy about creating fun and enticing
marketplaces for buying food, especially perishables. For about half the shoppers, grocery shopping is experiential and as long as this outweighs it as a ‘chore,’ it will be a personalized and social undertaking.”
A recent study by Deloitte details the interrelationship of online and offline shopping: about half of all brick-and-mortar purchases were influenced by some form of online stimulus—though for grocery sales the figure was lower, at 33 percent. Further, Anderson says, “At least a quarter of offline [food] purchases had some digital influence from shoppers either researching before they leave home, looking at ratings and reviews, or pricing and nutritional information.”
Amazon’s Big Grocery Push
Not many years ago, most grocers’ biggest concern was Walmart’s expansion into grocery. Now they have a new worry that is shared by Walmart: Amazon. Amazon is making a splash with several platforms, including AmazonFresh for local deliveries and the AmazonDash ordering system.
Sansolo believes Walmart is gauging Amazon’s progress and will be ready to respond, both online and in stores. “Nobody has as many stores as Walmart, so they always matter. Even if Amazon flops, which is unlikely, the world is going to change,” he notes.
With such ongoing experimentation, Sansolo is sure “somebody is going to figure this out. It’s impossible to think that five years from now we won’t have a successful model operating in online grocery—and everybody will be trying to catch up.”
Numainville agrees: “Amazon is just one example of the wide range of retailers and others experimenting and testing various concepts.” He says to be on the lookout for new offerings from Walmart, as well as Google, Uber, Alibaba, and many others.
