Digital Disruption of Grocery

Grocery is being Rapidly Re-shaped by Digital

While driverless vehicles and delivery drones get the buzz in today’s headlines, the digitally engaged food shopper is
the thing that will directly affect our behavior more than drones and bot-driven cars in the coming few years. This is
according to an analytics alliance with FMI and Nielsen, who recently released a report on the subject.

They identified five key trends that will shape and drive this change:

  1. More shoppers are buying more of their groceries across channels.
  2. Center-store categories are already migrating online, and this migration is expected to continue.
  3. Grocery retailers and manufacturers are meaningfully experimenting with business models and technologies to find their way online. However, the road to success has not been paved.
  4. Grocery shopping will reach digital maturity and saturation faster than other industries that went online before, such as publishing or banking.
  5. Younger, newer and more engaged digital shoppers adopt digital technologies more quickly and will hasten the expansion of digital grocery shopping further.
  6. Grocery purchases online are already increasing rapidly.

Even before Amazon announced their purchase of Whole Foods, local grocers have been trying different solutions, such as Kroger’s ClickList. They are also making a bigger effort into prepared meals to compete with the likes of Blue Apron.

However, an anecdotal example shows a challenge of traditional retail. In a recent grocery shopping visit, I was looking for deodorant. This was a “mega-store” that had nearly an entire aisle dedicated to men’s and women’s deodorant, but after a few minutes of not being able to find my brand I gave up, came home and ordered it on Amazon Prime. It took less than three minutes. This highlights a challenge that Amazon presents: It has surpassed even Google for product search by American Consumers.

Items like books, music and banking have reached a near-saturation point in digital sales during the Availability and Accessibility phases of digital shopping evolution. The next phase, Automation, will herald a rapid period of growth for online grocery shopping.

Though online grocery sales could hit $103 billion by 2025 (equal to 3,844 stores), it is not all bleak for retail grocery, especially those who are aware and adept. The following tactics can help grocers leverage this digital shift:

  • Deep understanding of digitally engaged shopper behavior
  • Supply chain and logistic capabilities that support the strategy
  • Integrate marketing investment and measurement without silos
  • Shift merchandising focus from the shelf to the individual consumer

Also, taking advantage of these enablers:

  • Digital Technologies: Multiple technology platforms are required to drive seamless shopper connections and reduce operational costs. The modern CIO needs to be a champion for change.
  • Analytics and Big Data: It will be impossible to understand the digitally engaged food shopper without connecting the dots across every consumer interaction, across all of those platforms. But, unification is just the first step. Turning that measurement into prediction will enable differentiated engagements.
  • People and Culture: People and the corporate culture that guides them will be the lifeblood of the transition required to ready an organization for the digitally engaged food shopper. This is why it’s imperative that they receive the training required to evolve the necessary skill sets.

To view the full report, click here.

    By Mike Bigley, Director of Creative Technology, RGI

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