Online grocery shopping is steadily making inroads into traditional brick and mortar grocery markets – potentially even reaching 20%.
Perhaps, AmazonFresh expanding their service outside of Seattle was the spark that lit the fuse, but traditional brick and mortar retailers are getting their heads in the game and testing new ways to fulfill orders and enhance their value prop – as they see that the real growth available today is in e-commerce.
Even though consumers won’t stop shopping at traditional brick and mortar locations altogether anytime soon, as the overall grocery landscape changes, it’s essential for brick and mortar grocers to adapt to the changing times and modify their business models in order to remain competitive.
How do brick and mortar stores fit into e-commerce?
In general, the grocery stores that are dipping their toes into e-commerce have adopted various versions of three models:
- Click & Collect
- Home Delivery
These formats offer the best of both in-store and online shopping and are attractive to the transitional shopper. However, because consumers are extremely diverse and have their own unique preferences and definitions of service, retailers need to customize communications and retail formats in whatever way their customers prefer.
Furthermore, the online grocery consumer is not a homogeneous segment either. While some are initially attracted to online grocery shopping due to its convenience and time saving factors – other shoppers tend to be those who don’t own a car, elderly shoppers, people with changing lifestyles and those who temporarily use online shopping while recovering from an injury.
But at the end of the day, Millennials will be the ones propelling the e-commerce format into the future. These consumers were born and raised in a digital age and it has caused a shift in their thought process. Ordering online is second nature to this group and the next logical progression will be for them to start ordering groceries through this medium.
Customer analytics gives grocers the right online strategy
While some brick and mortar grocers have merged into e-commerce and have been successful, others have tried and failed. In order to enter the e-commerce market effectively, retailers need to understand their customer and specifically their online customer.
By leveraging shopper data to create unique customer profiles based on the customers within the trade area of each individual store, grocery retailers can understand what their customers want and provide the experience they desire.
Once there is a complete customer profile, grocery retailers can identify the best store locations to create an online presence and which service format would be most appealing to those customers.
The customer profile will also help grocery retailers create a seamless omni-channel approach in terms of pricing, targeted promotions, services and optimal category assortment for both online and in-store – which is perhaps one of the biggest obstacles brick and mortar grocers will face.