Even before COVID-19 disrupted our lives and caused a worldwide pivot to a 'new normal', the push to undergo digital transformation and meet the needs of a more empowered consumer was already reshaping the way we do business. In this blog we explore 4 key trends grocers need to be mindful of in this new customer engagement landscape.
Evolving consumer expectations, innovative new business models like Amazon Go and major strides in technology all add to the complexities of planning for the future.
For the grocery industry, while the traditional brick-and-mortar store is the most profitable channel from a business perspective, consumers are increasing trending toward online shopping. According to a recent study, 23 percent of US households are buying food online today. And a similar study predicts total US online grocery sales will rise to nearly $30 billion by 2021.
The coronavirus has understandably contributed to a significant spike in online grocery shopping. And while there's no way to predict how long we’ll be in this altered reality, it's safe to assume that the upward trend towards online grocery shopping will continue. Even though the pandemic presents serious difficulties and challenges for everyone, there are also opportunities for grocery brands to take advantage of the influx of new customers by developing deep and lasting connections through personalized customer engagement solutions.
We recently developed a report into the state of the grocery industry for grocery marketers reviewing their digital strategies in the COVID era. It focuses particularly on what grocers can do to:
- Quickly connect with new customers
- Optimize the customer experience through relevant and compelling offers
- Establish habitual behaviors on mobile
- Increase average transaction value.
Our report has identified four key trends grocers need to be aware of if they're going to achieve these objectives.
1: Getting grocery shoppers to the magic number of three returns
Under normal circumstances, grocers typically gain new customers via advertising through a range of channels. But right now, customer acquisition costs are virtually zero as shoppers are jumping from grocer to grocer, actively seeking those with the most product options in stock and using online as an alternative to in-store to avoid coming into contact with others.
"Acquiring new online grocery shoppers has traditionally been a slow, gradual and expensive process, but this crisis has created the opportunity to avoid much of the promotional effort usually required," says Bill Bishop of Brick Meets Click.
However, these same consumers are likely to try out several different grocers before deciding which one best meets their needs. To turn them from a one-off shop to a long-term customer, grocers need to provide enough reasons to get them to return at least three times. This is the magic number - if a customer returns three times, they're 93% more likely to become a long-term customer. Getting customers to the magical three requires operational excellence across a combination of aspects, such as product availability, seamlessness of customer experience, pick up/delivery options and relevance of offers and recommendations to the individual.
2: Responding to broader consumer demographics
Where online shopping was typically the preference of demographics such as young city dwellers, the COVID era has ushered in shoppers from a much wider range. The Brick Meets Click survey found that 31% of US households totalling around 39.5 million consumers ordered groceries online in March 2020, compared with 13% in August 2019. That's a significant shift, and it's a trend that grocers need to watch. If they're to keep these new customers, grocers need to leverage the power of data and AI to create personalized, meaningful customer experiences.
3: Contactless payment is key
For obvious reasons, consumers prefer contactless payment options for the same reason they're eschewing brick-and-mortar stores. Not only is it safer, it’s also convenient, especially when there are mobile order and pay technologies available.
"Customers are using mobile apps tied to payments such as Amazon Prime Now to place delivery or pickup grocery orders," says Bloomberg's Olga Kharif.
Safety and convenience, the two main drivers behind contactless payment trends are more relevant than ever for the grocery industry.
4: Contactless delivery and pickup
For the same reason grocery customers prefer contactless payments, are they also leaning more towards curbside pick-up. It's an expansion of a contactless system and grocers are among many other industries to add this option to their business models.
However, because consumers have so much choice in where and how they do their shopping, grocers need to look at other ways to capture hearts and minds to turn them into repeat customers. Where consumer expectations of brands universally are increasing and now exacerbated by COVID, grocers must seek ways to foster the 1:1 relationships they demand. This is where personalization comes into play. Deeply personalized, compelling offers and marketing reach consumers at the right time with the right message. It can be used to target different customer profiles to drive specific outcomes, such as increase average basket size of regulars or win back lapsed customers. And even though the era of COVID will pass, the expectations of empowered and digitally savvy consumers are here to stay. It's all part of the 'new normal'.
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