Why retailers need to get real: Gen Z prefers in-store experiences
Does anyone remember the weekly shop? That Saturday morning trip to the supermarket complete with car park queues and a big trolley.
Personally, I hated it and it seems I’m not alone. The Waitrose Food and Drink Report revealed that shoppers are abandoning the weekly shop in favor of ‘as and when shopping’. They prefer to treat supermarkets like walk-in fridges, popping in several times a day to grab what they need as they need it.
Consequently, the battleground for grocery today is in speed and convenience. AmazonGo brought grocery innovation into the spotlight back in 2016 with its checkout-free store. Now, smart speakers make shopping as simple as speaking a command across your kitchen when you realize you’re out of blueberries.
In the face of such changes, grocery brands are busy overhauling their businesses in an effort to stay relevant. They're experimenting with self-checkouts, cashless stores, and same-day delivery.
Grocers are also recognizing the importance of the in-store experience. They're offering product samples, wine tasting, and even supper clubs.
So, with this shift towards digital transformation, coupled with the doubling down on in-store experiences, what are the key grocery trends in 2018?
Say what you like about Amazon, it certainly keeps us on our toes. Its forays into checkout-free grocery and acquisition of Whole Foods has helped spur an entire industry into action. JLL explains further in its 2018 Grocery Tracker report:
“This acquisition gives Whole Foods the ability to test new ideas and concepts within the grocery industry. This forces competition and innovation in an industry that, until recently, has not seen much change.”
AmazonGo has fueled a surge in smart shopping solutions to remove friction from the process. And many grocers are now introducing rapid checkout technologies. In the US, for example, Kroger and Walmart have joined Amazon in testing checkout free concepts. And in the UK, Tesco is trialing its Scan Pay Go app.
Dutch chain Albert Heijn and Belgian chain Spar have teamed up with Adyen to go checkout-free. In the case of Albert Heijn, this is managed via its Appie app, which shoppers use to scan barcodes. Once the shopper has finished, they can pay either with a pre-registered credit card or with Dutch online banking method iDEAL - both are one-click. In the case of a credit card payment, Adyen stores and tokenizes the card to make recurring payments seamless and secure.
Once payment is complete the app generates a barcode that the customer scans at the barriers to leave the shop.
Meanwhile, at home, there are also exciting things happening to grocery shopping.
Alexa, Google Home, and Apple’s Home App are having a huge impact on the way we buy food and household items. It also paves the way for subscription services; smart devices can detect the regularity of your purchases and suggest repeat orders at a discount. This helps to increase customer loyalty as Jenny Zelger from Mintel says:
“There is an exciting new chapter dawning in which technology will help brands and retailers forge more personalized connections with shoppers.”
With easy ordering comes the importance of easy delivery. Amazon is already making huge strides and Albert Heijn is testing a service that delivers orders within 2 hours in Rotterdam and within 15 minutes in Amsterdam. Meanwhile, Domino's pizza has delivery robots in the Netherlands and drones in New Zealand.
This just goes to show that we’re catching up with China, where JD has robot-managed warehouses and Alibaba is trialing food delivery drones.
While ecommerce investment continues to be paramount for grocery brands, figures show that the store is still the channel of choice for many. In the US, 65% of shoppers state they prefer buying groceries in store. And in the UK, Waitrose tells us that 65% of shoppers are visiting stores more than once a day.
This is why grocers are investing in great in-store experiences, as Waitrose explains:
“The future of supermarkets looks likely to be an experiential retail space - immersive hubs where shopping is only one of the activities on offer. After all, who’d have thought ten years ago there’d be supper clubs and wine bars in supermarkets?” Waitrose Food and Drink Report.
Related: See how other retailers are using experiences to win customers on the high street
Of course, the real magic lies in marrying online and offline shopping to create a unified experience that’s centered around convenience. This means supporting cross-channel journeys such as home delivery for in-store orders. This investment pays off ten-fold according to our report, which revealed that home delivery for in-store purchases would increase loyalty for 29% of shoppers.
To achieve this, grocers must invest in unified systems that span both the digital and physical worlds so they can recognize shoppers regardless if they’re shopping in store, on their phone, or via a smart speaker.
Our 2018 European Retail Report revealed a disconnect between shopper expectations and the service retailers are offering. Interestingly, despite the high-profile external pressures discussed above, grocery seems to be lagging behind other retail verticals in terms of innovation.
Our report confirms that shoppers want cashless stores, self-checkouts and more flexibility. But only 28% of grocers surveyed are considering cashless stores, compared to 52% of Luxury retailers. It’s true that fully eliminating cash may not be realistic for grocery due to average transaction value and customer preference. But it’s definitely worth considering cashless kiosks or checkout lanes to help reduce queues and cater to customers who prefer card and digital payment options.
Another area highlighted in the report was mobile point of sale (mPOS). Just 35% of grocery retailers are planning to equip in-store staff with mPOS terminals compared to 55% of hospitality businesses. Grocery brands have a huge opportunity to differentiate themselves by eliminating the dreaded checkout queue. It could also be a good stepping stone towards a cashier-free store.
Overall, the challenges and opportunities facing grocers are similar to those facing all retailers. Technology is enabling new experiences that are changing the way we think about shopping. Consequently, expectations are evolving, and new players are emerging with fresh ideas and new technology to capitalize on these demands.
When faced with such changes, it can be challenging to know where to start. We understand that overhauling all your systems at once simply isn’t practical. Instead, we recommend a data-driven, iterative approach based on testing and feedback.
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