Creating incremental revenue streams to drive purchase intent and loyalty
Amazon and other big players are moving into the grocery industry. It may seem odd that high-tech brands are adopting an old-school space, but it certainly highlights one fact: Brick and mortar is still thriving. In recent research, we found that only 15% of people are buying groceries online, and the average American goes to the grocery about twice per week.
High visit frequency gives grocery retail an advantage over other industries. As a grocer, you have an in-depth view of shoppers: You know how often people shop at your store, whether they purchase in-store or on your website and (through loyalty programs) what brands they’re purchasing.
With a comprehensive view of the shopper, you can improve your customer’s experience and your brand image, and you can even create opportunities for incremental revenue using your database. First, we’ll look at ways that grocers are enhancing the customer experience through data, then we’ll show you how to monetize that data for additional revenue streams over time.
Within the store, grocers enhance the customer experience with data
Your grocery brand already has deep insights on your customers, and when you combine those insights with external data, you can make it actionable in your digital marketing. The most obvious way to use this information is to improve your customers’ grocery shopping experience. Let’s explore how many grocers use customer data today:
1. Personalizing rewards and recommendations
Most retailers have elevated their loyalty and marketing programs to include personalized rewards, such as discounts and deals for products they purchase in store. These rewards are delivered on multiple channels, like email, in-lane, online offers and load-to-card coupons.
Some retailers have even expanded their programs to include “Personalized Circulars,” which take deals from the weekly circular and delivers a “preview” to shoppers based on their purchase behavior data.
Wakefern/ShopRite’s “My ShopRite Deals” is one example of a personalized circular that can be delivered in-lane, in-app or on their website.
2. Provide unique products and solutions based on what customers want
The rise of e-commerce makes it easy to find most products online, but brand-specific items can incentivize shoppers to go to a specific store to get what they want. In fact, 38% of Amazon grocery shoppers will switch if another provider offers products they can’t find on Amazon.
Kroger has seen strong performance through its private label brands, which are only available through Kroger outlets, with 92% of Kroger households shopping its private-label brands. Kroger developed its private-label brand Simple Truth when they realized that customers were looking for an easier way to access natural and organic products. Knowing what their customers want has paid off: Simple Truth and Simple Truth Organic are Kroger’s fastest growing brands, with double-digit sales growth in Q3 2018.
Kroger also recently launched an in-store experience called “EmporiYum,” that showcases their private-label products. This endeavor has driven up sales of the featured products by 57% on average.
Kroger created brands that customers want and other grocery providers, including Amazon, can’t provide. By focusing on what their customers wanted—easier, more affordable access to healthy products—through a private-label solution, Kroger built a competitive advantage.
3. Grow digital channels to make customers’ lives easier
Amazon is growing its physical locations, in part, to ease the transition into digital grocery shopping. By decreasing the distance from fulfillment center to the customer, known as the “last mile,” Amazon can offer perks like same-day shipping and in-store pickup.
But Amazon isn’t the only brand that is tapping into this field. Traditional grocery stores already have the physical presence, and they are making it seamless with their digital channels.
Kroger grew digital sales by more than 60% in Q3 2018. From the CEO perspective, William Rodney McMullen understands the importance of growing digital platforms so customers can “have anything, anytime, anywhere from Kroger and because they're our catalysts to grow our business and improve margins in the future.”
Beyond the checkout line, grocers’ access to data offers new ways to monetize
Grocery stores have slim margins, and finding new revenue streams is critical to business growth. With all of their available customer data, grocery chains like Kroger and Ahold Delhaize are looking to monetize through the advertising side. Grocers can make the most of their relationships with CPG brands by allowing more access to consumers.
Opportunity for grocery retailers
Grocery retailers have CPG brands’ secret to success: customer data and information on specific buying habits. Shopper marketing budgets are one way you can innovate while simultaneously creating new revenue streams for your business. The right advancements not only help your in-store offerings, but also build your relationships with CPG manufacturers.
Well-known brands like Walmart and Target are quickly moving into the digital advertising provider space. And when it comes specifically to grocery, Albertsons is leading the way.
In 2018, they launched Albertsons Performance Media (APM), a marketing service that reaches millions of grocery shoppers on social media, Albertson’s digital properties and third-party publishers.
“We’ve been able to target the right shoppers at the right time and in the right digital places,” says Karen Sales, VP of national and shopper marketing at Albertsons. “It has exceeded our expectations.”
They also hosted a Shopper Marketing Summit to discuss the launch of their “shopper marketing arm.” The impending ‘Shopper Marketing Vendor Portal’ will allow the manufacturers to increase their return on advertising spend (ROAS).
Your grocery brand can look toward developing similar solutions, even if you’re not one of the big brands. The next phase may be for a syndicate of retailers to pool together anonymized data about customer spending habits, brand choices and channel preferences and sell it back to the CPG manufacturers. This would allow even smaller grocery players to participate and have access valuable data.
Make the most of data
Your grocery store should be motivated, rather than afraid, of the incoming digital phase of grocery. To stay sharp, you need to make sure you understand what your customers want by using both online and offline data.
While players like Amazon may seem daunting, you need to remember your vast customer data gives you a competitive advantage. That data can not only to enhance your in-store experiences, but also develop alternate, digital revenue streams.