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Small grocery retailers should embrace an online shopping option, particularly if they want to remain relevant and competitive, say two retailers who have taken the leap. James Cheney, president and CEO of Wade’s Market Center, Farmington, N.Y., and Noah Katz, co-president, Foodtown/Freshtown Supermarkets, Mount Vernon, N.Y., shared their journey into online at the 2015 NGA Show, which took place this week in Las Vegas.
Expansion of large players, including Peapod, Instacart, Amazon Fresh and Fresh Direct are frequently reported, but there’s evidence that independents are just as determined to have a place in this space. A recent study produced by NGA and Balance Innovations, "Grocery Retailing Payments (2015)" – also unveiled at the NGA Show – reports that the number of independent grocery retailers with some level of online ordering has risen 31 percent, with an additional 24 percent expecting to offer online ordering in the next two years.
Find the right vendor partner
A number of vendors provide turnkey solutions for independent retailers, offering varying levels of support and customization. What’s key, Katz and Cheney say, is to not be afraid, but to carefully consider the experience you want to offer customers and the support needed to ensure you can deliver successfully.
Wade’s, a single-store operation, works with Rosie App, an online and predictive software solutions provider. Rosie analytics track which products customers buy and with what frequency. The company also delivers insight into shopper demographics, and importantly, the time of day orders are placed.
Wade’s first venture into online shopping was strictly click-and-collect, but delivery was soon added and now accounts for 70 percent of online orders. While deliveries were initially made by a contracted service, Wade’s now manages deliveries internally. According to Cheney, delivery is an extension of the store and needs to be done by a store associate. Delivery van graphics mirror the Rosie website, making a strong marketing impact.
The store added a separate small footprint storefront for readying orders of most frequently purchased items and marketing materials. Online purchases are just 1 percent of total store sales, however Cheney sees that figure growing, fueled by new customers.
Developing online content has been the biggest challenge faced by both Wade’s and Foodtown. Thorough and compelling product descriptions are key, and it’s a lot of work to provide this information for all the products that will populate the database. Data maintenance is also time-consuming. According to Wade’s Cheney, other investments included the small satellite store and driver training.
“Crawl first,” says Cheney, who recommended retailers exercise patience, find a vendor that offers a lot of support, and commit to continual marketing efforts to drive customer loyalty. “Invest in service and training,” not additional space, says Cheney.
Wade’s initiative is new, and currently it’s not adding to the bottom line. “It’s been a big investment upfront and I hope we’ll be seeing a profit by year two,” he says. But he’s glad he made the leap. “Being first to market has been great visibility for [Wade’s].” One surprise, he says, is that quality trumps price in the eyes of customers, as Rosie takes a markup on orders -- online prices are higher than store prices. Wade’s has not received any complaints, says Cheney, and an average order is more than $78, three times the ring for in-store purchases.
Stay true to the store
Foodtown’s Katz felt forced to make the move to online to compete against large delivery services that operate in his areas of business, which includes New York City, as well as stores in suburban and rural New York. Foodtown partnered with Freshop, which offers a plug-and-play mobile-friendly website. Katz’s biggest change was the retailer’s website, which is now focused on “the buy.” The goal was to make ordering as easy as possible for customers; a clickable circular features hover expansion. The website’s abandon rate has been cut by 50 percent, which means that visitors are staying on the site.
Foodtown prices are the same online and in-store, which Katz feels is a necessary, competitive advantage. Launched in November 2014, Katz predicts the retailer’s online offering will conduct $1 million in sales in the first year. More than 50 percent of users are new to the store.
Service levels for e-commerce have to be high, says Katz, who has department managers personally prepare offerings for e-commerce customers, such as a butcher cutting meat for a delivery order. “Just because you’re a grocery retailer doesn’t mean you’re only being compared to other supermarkets,” says Katz. “Your customer service is being compared to every e-commerce provider.”