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Global full-service branding and sourcing partner Daymon Worldwide has released its "Grocery Retailing Goes Digital" whitepaper, revealing five key steps grocery retailers need to follow to successfully compete in the rapidly-evolving E-commerce world.
"E-commerce is redefining the retail shopping experience, and shaping the fate of many retailers, particularly as online grocery retail is growing at nearly twice the rate of any other industry," said Daymon Worldwide CEO Carla Cooper. "We understand that the time for action is now for grocery retailers who want to continue to be market leaders. Our whitepaper offers advice to help retailer partners successfully navigate the complicated digital world."
Today, industry estimates report that E-commerce accounts for more than $1 trillion in retail sales and is projected to grow at a double-digit rate for years to come. According to Cooper, while grocery retailing remained relatively unaffected for many years, those dynamics are rapidly changing as shoppers become increasingly comfortable buying more categories online, including traditional grocery items.
Significant challenges exist for grocery retailers entering the online market for the first time. "Barriers for grocery retailers include heavy upfront investments, logistical challenges associated with delivering perishable items and the inherently low margins associated with the industry," said Cooper. "There is no single strategy appropriate for every retailer. However, sustainable models in online grocery are cropping up, and there are certainly important insights to consider that can make the process easier."
The five steps are as follows:
1. Start with the Shopper: It's crucial to understand that shoppers' digital lives are not separate and distinct from their physical lives. While the number of digital mediums influencing consumers has grown exponentially, the basics haven't changed. Shoppers fundamentally want convenience, ease of shopping and value. So while many grocery retailers are already engaging shoppers online, linking digital and physical shopping experiences offer more substantial opportunities for growth. By understanding shoppers' paths to purchase, it's easier to find ways to deliver the right combination of both to win loyalty and sales.
2. Re-imagine the Notion of Service: E-commerce is more than a delivery mechanism; it's an opportunity to differentiate your offerings in new, exciting ways. By examining successful E-commerce business examples in other channels, grocery retailers can start thinking differently about how to add convenience for their shoppers and break down any existing barriers to shopping online. Best practices focus on overcoming the limitations of traditional in-store grocery shopping by creating services that align well with core shopper preferences and expectations. For instance, many major retailers across categories now use online sites to showcase what's available in-store for quick, convenient pick-up at preferred locations. Others address consumer concerns about ordering fresh produce online by offering daily quality ratings and recommendations for next-day delivery.
3. Create Compelling In-store Experiences: Brick-and-mortar grocery retailers offer advantages that online retailers can't, including the ability to appeal to all five of a consumer's senses and the availability of real-time conveniences. Creating compelling in-store experiences that complement a retailer's digital presence is a key strategy to attracting target shoppers. Consider providing freshly prepared specialty foods and sampling opportunities in every aisle. Leverage the private brand portfolio to offer creative pairing and serving suggestions to showcase exclusive products. Enlist the expertise of qualified on-site associates who can make meaningful connections with the shoppers they service on a regular basis.
4. Expand Offerings with a Well-curated "Endless" Aisle: Considering that 58 percent of shoppers say they regularly leave the grocery store without at least one of the items they intended to buy, offering well-curated "endless" digital aisles allows retailers to help shoppers remember everything on their list while providing new opportunities to search and sample new options. Endless aisles also provide a virtual treasure hunt for consumers who enjoy browsing for new experiences, and because they are digital, they can easily be altered as frequently as necessary to reflect seasonal products, specials and promotions and new products. Digital aisles also offer opportunities to increase "shelf space" and even reduce store size.
5. Think of Your Shopper as Your Partner: Retailers who go beyond communicating product specials and simple e-newsletters that regurgitate weekly circular information have excellent opportunities to build more meaningful relationships with consumers. Facilitating two-way dialogue that makes it easy for shoppers to express their opinions and share their preferences allows retailers to capture valuable information.
"E-commerce is a game changer," said Cooper. "Don't worry if you're not a pioneer. Coming late to the party can often allow you to learn from the mistakes of others. Don't forget to leverage all of your existing assets to better serve your consumers and look beyond your store website to consider local networks, loyalty programs, Private Brands and partnerships that will help you communicate your offerings. Expect geographical and cultural differences from one market and country to another, and be prepared to handle supply chain implications. If you feel out of your element, enlist the help of a trusted partner to ensure you're able to create a seamless, multichannel experience."
Stamford, Conn.-based Daymon Worldwide provides retail branding and sourcing expertise to more than 100 major retailers and 5,900 manufacturers in 49 countries.