It’s a good time to be a consumer. The proliferation of shopping channels makes it easier than ever to get what you want when you want it. It’s not as easy for the grocery industry. Ever-changing technology as well as new consumer demands and shopping rituals are requiring a continued transformation of the grocery business model.
For example, online-based industry players are growing and expanding their market share. Instacart recently raised $600 million at a $7.6 billion valuation and expanded the availability of its ‘click and collect’ pickup service to nearly 200 stores in the U.S. Large retailers in the grocery space, such as Walmart and Target, are making grabs for shopper marketing budgets by launching or revamping their own advertising platforms for CPG brand partners. And now Amazon is increasing their prominence in the grocery space (see this infographic for more on what consumers look for from grocery retailers).
Driving growth, and simply competing, is more complex in an increasingly fragmented marketplace. And there’s no end in sight.
Traditional grocery retailers cannot give up their turf as new players enter an already competitive space. They must continue to retool their in-store experience, omnichannel business model and marketing strategies. While making wholesale changes can take time, there are a few steps you can take now to survive and thrive in the age of the consumer.
1. Expand digital strategies to reach shoppers beyond your website.
People are spending more time on digital and mobile channels than ever before, yet grocery retailers continue to rely on traditional advertising such as direct mail, the weekly circular, email and TV. Some retailers are advertising on Facebook, but, like other channels, that approach offers limited reach and even more limited measurement within a “walled garden.” These tactics are just one of many components in an integrated marketing strategy that effectively engages existing and prospective shoppers in the right place, at the right time, with the right message.
The bottom line: there’s more out there beyond a your website and Facebook. A fully optimized digital strategy requires a presence outside your own walls (and the walls of social platforms) to communicate with consumers across their preferred websites and apps. It also creates new opportunities to deliver tailored advertising messages that meet different objectives such as acquiring new shoppers, retaining existing shoppers or brand building.
2. Tap into digital advertising to gain more marketing insights and accountability.
Nielsen’s 2018 CMO report indicated that a chief concern for marketing executives is getting more insights from their marketing efforts. The reality today is that more marketing insights, and therefore, more accountability, are accessible through digital advertising. There are technologies and platforms out there that can draw a direct connection between digital advertising and in-store sales.
Still, many grocery retailers place their trust in and allocate media budgets to TV advertising because it’s what they have always done. But the insights and results are not as apparent and far more difficult to prove out. Digital advertising allows marketing teams to understand which ad drove a consumer to complete an action and whether an ad inspired a consumer to stop in on their way home from work, and ultimately tie that consumer’s purchase back to the ad. Greater transparency around marketing results allows grocery retailers to optimize their budgets and maximize their dollars.
3. Look for ways to monetize shopper data.
In the grocery industry, scale and reach get attention. The larger retailers are getting the majority of national digital advertising budgets because they reach the most consumers at scale.
The good news: thanks to data, there are opportunities for regional and mid-size grocery retailers to create enough scale and reach to remain competitive. Regional retailers are sitting on a treasure trove of consumer and transactional data; it’s simply a matter of being willing to experiment and get creative in leveraging it.
The monetization of shopper data is one approach that has gained traction among grocers. They’re engaged in sharing their shopper data with CPG brands selling in their stores, which provides valuable insights that those brands previously lacked. As CPG brands increase their investment in national digital media, they are now looking to utilize that data to make their advertising and consumer interactions more relevant. The shopper data allows them to track sale in stores, understand their consumer and make marketing messages more personalized to shoppers.
It’s a win all around. Shoppers receive more relevant experiences and personalized value from retailers and brands while retailers gain shopper consideration and incremental revenue streams that can be re-invested in campaigns that drive more sales and loyalty.
When considering this approach, grocers must ensure they have the support of executive management as well as an updated consumer privacy and data statement that adheres to data privacy and security regulations.
Final thoughts
Survival for grocery retailers, and specifically the regional/independent chains, depends on a commitment to strategies that get your brands closer to shoppers. Building trust and consideration requires greeting your shopper wherever they spend their time online.