Amazon, is at it again. This time they’re after a piece of the grocery market.
AmazonFresh has expanded to Los Angeles after having success with their same-day grocery delivery service in Seattle since 2007. The growth is projected to continue as Amazon has reportedly told vendors that AmazonFresh could be in 40 U.S. markets by the end of 2014.
While grocery shopping is still very much a tactile process, the rise of digital technologies and consumers’ increasing reliance on online shopping for non-grocery related items has caused a shift in the customer mindset.
Simply put, the “normal customer” has changed.
The evolution of consumers buying more goods and services online was bound to eventually enter into market segments that were originally thought to be safe from e-commerce.
However, online shopping has entered the grocery space and is projected to reach $9.4 billion by 2017, with a 9.5% growth rate—whether we like it or not.
While the expansion of online grocery stores will increase competition in an already highly competitive retail environment, it also provides a tremendous opportunity for grocers to capitalize on this growing movement – despite its commonly perceived limitations.
So, the question then becomes – are you ready for the online invasion?
Who is the new normal customer?
The new normal customer seeks out convenience and value more than ever. They are also progressively becoming more dependent on digital channels – 67% of consumers are currently shopping online for products and services.
In the grocery space, almost 60% of consumers are using technology in their shopping already, whether that’s researching prices and products, finding online coupons or looking at recipes. Furthermore, even though the number may seem small, 15% of adults are shopping for groceries online and 19% say they plan to in the future.
The people who choose to shop online do so because of ease of pick-up and home delivery – with 65% believing that it saves time. This is especially true in urban areas where populations are denser and shopping is difficult.
What’s even more interesting is that 39% of adult consumers want their local grocery stores to offer a delivery service. That means roughly four-in-ten consumers are not having their online needs met. The value in each of those potential customers is great as the online grocery shopper spends more and shops more per month than those who are not.
The grocers that choose to adapt with the constantly changing buyer will establish an early competitive advantage over those who don’t.
How can customer analytics help you prepare?
Grocery retailers are beginning to answer the call by developing ‘click & collect networks’ where consumers can order groceries online and pick them up at the store. Harris Teeter’s Express Lane and Piggly Wiggly’s Click’n Shop, for example, offer online ordering with curbside pickup.
By knowing the profile of the established and likely online grocery consumer, grocers are able to identify where their potential online customers are. Then, by evaluating your potential and existing trade areas for the presence of these shoppers and the overall density of this type of shopper – both residentially and according to daytime/workforce segmentation – it’s possible to use that information to prioritize stores that can fulfill this type of e-commerce transaction.
From this information, it’s also possible to target marketing messages to the individual household of your best existing and potential e-commerce shoppers within this trade area.
Grocery retailers that know what their customers want and provide the experience they desire will have the greatest opportunity to grow and will be able to find solutions to the gaps that can’t seem to be crossed with conventional methods.