Grocery stores have long been a staple for consumers, but with changing purchasing dynamics and new technology, customers are expecting more. Some grocery stores are rapidly adapting to these changes, offering customers a more robust, complete experience, while others are falling behind.
So how, exactly, are grocery stores getting ahead in the modern world, and is it possible to incorporate these tactics?
Balance Between Brick and Digital
First, we need to consider the importance of finding a balance between brick and mortar locations and stores’ digital presences. Online shopping is incredibly popular, with some analysts still insisting that someday, brick and mortar stores will disappear altogether. But current evidence suggests physical retail stores are still practically necessary. For many people, the experience of going to a physical store, seeing products in person, and getting help from human beings is irreplaceable.
That’s one reason why stores like Publix are outperforming other grocers; while they have an online presence, they’re generating more profit than their contemporaries, in part, because they’ve prioritized their brick and mortar stores.
The balance is different for every business, but leaning too heavily to one side or the other can be problematic. If you invest too heavily in your online web presence, you’ll be neglecting the physical locations that your loyal customers have come to love. But if you completely ignore digital and focus only on your physical location, you’ll be leaving a large chunk of revenue on the table.
Customer Loyalty Rewards
Customer loyalty is another important factor for grocers to consider. Today’s consumers have more choices than ever before. In their neighborhoods, there are probably a dozen or more viable options for where to get groceries. On top of that, they can order groceries online using any number of websites and mobile apps. Why would they choose your business over all the others?
Once they get customers in the door, grocers are desperate to keep them loyal to the brand. There are many reasonable approaches to this goal; for some grocers, the priority becomes fleshing out a customer rewards program. Customer rewards programs take different forms and allow significant room for experimentation, but often share the same underlying goals. For example, you might allow customers to earn points on each of their purchases, then provide them with discounts and freebies once they hit certain thresholds.
Until recently, prevailing hypotheses have pushed the size of physical grocery stores to be bigger. Hypermarkets, which offer an impressively large selection of different products, have begun to emerge in communities all over the country. The idea makes sense; if you make every conceivable product available to customers, you’ll broaden your target market, and you’ll become the ultimate go-to destination whenever a customer needs anything.
But there are downsides to this gigantism-spurring model; big stores require much more inventory and have higher overhead costs, directly affecting profit margins. To make matters worse, thanks to the paradox of choice and analysis paralysis, too many choices can actually be a bad thing for customer experience; many shoppers have a more satisfying experience when choosing between a small handful of options.
Of course, small stores are also disadvantaged. If you offer too few options, or if you don’t have what customers need, you could turn people away. The dominant stores today have a balance of size; enough variety and coverage that they appeal to a broad demographic, but still small enough to make customers happy.
Overall Customer Experience
For most people, getting groceries is a solitary and predictable experience. But if you do run into a problem, or if you can’t find what you need, you’ll want someone there to provide you with a better customer service experience. Small touches, like offering greeters and guides throughout the store to help customers find what they’re looking for, can make a big difference to the average shopper’s outing.
Stores are also investing more in analytics, which help them dissect and understand how customers interact with their storefronts. They get a better understanding of how customers walk through the store, where their pain points seem to be, and different opportunities available for optimization. Oftentimes, the factors stores imagine to be important for customers aren’t nearly as valuable as the ones that are actually important to them.
To survive, grocery stores will have to pay close attention to what their competitors are doing—and how their customers’ needs are changing. With a combination of objective data from analytics apps, creative brainstorming from leaders, and a willingness to experiment, grocers can greatly increase their odds of success. If you feel stuck in coming up with ideas for your own grocery store, consider finding a balance between new concepts and familiar ones; that gray area is proving valuable for many retail brands.