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Online companies pioneered the concept of putting the “custom” in customer, but can traditional grocery retailers offer the same type of customized products and services?
Entrepreneur Anthony Flynn tackled that question in his session, “Engagement of the New Consumer,” Tuesday morning during the closing sessions of the FMI 2015 Midwinter Executive Conference in Miami Beach, and a panel of industry players analyzed how grocers could boost their relevancy to Millennials in the coming years.
Flynn’s the CEO of YouBar, an online-based company that makes customized nutrition bars for customers who select their own ingredients and order bars in small batches.
“Millennials love customizing— they expect customizing,” said Flynn, whose mother prepared special nutritionally balanced recipes for him as a kid. When he went to college, he explained, he fell into bad eating habits, and his mom taught him how to cook. Flynn started making his own nutrition bars, which attracted attention of fellow students who wanted their own, with specific ingredients. This eventually spawned YouBar, launched by Flynn and his mother in 2006. A mention on a nutrition website got orders rolling in; business boomed after attracting national media exposure.
YouBar’s example inspired other web-based grassroots businesses offering customized cereals, ice cream, jerky, chocolate, tea and coffee. Since then, some larger companies got in on the game, including General Mills, P&G and M&M’s.
Making Customization Profitable
Flynn chronicles his experience in his book, “Custom Nation: Why customization is the Future of Business and How to Profit from It,” written with the goal of answering the question, “How to customizers make small batches profitable?”
He says online business card customizer VistaPrint pioneered the methods: a configurating website that allows customers to make choices; and batched production to minimize waste and changeovers.
“People aren’t that good at knowing what they want,” Flynn noted, allowing customizing services to be streamlined by limited options and offering curated templates upon which customers can build.
More recently, Flynn observed, subscription-style food services have emerged, like Blue Apron, which ships recipes with all needed ingredients and which, as of last November, served a half-million meals.
But how can brick and mortar grocers offer customization?
Flynn maintains that opportunities abound, especially since traditional grocers are unlikely to go extinct - only 3.3 percent of grocery shopping currently is online, and that’s expected to rise to 11-17 percent over the next 10 years.
Fitting online style customization to brick-and-mortar retailing is a significant opportunity that can be a reality through the use of emerging technologies, Flynn explained. Half of all Millennials are already shopping using digital technology, and 60 percent of all shoppers want to use digital coupons.
In-store beacons can detect smartphones of participating customers and send them coupons, suggestions and other guidance to curate their in-store experience. PayPal’s payment beacons are designed to allow shoppers to avoid checkout lines.
Flynn cited a test in which 60 percent of shoppers opened beacon-sent messages, and 30 percent of them purchased based on those messages; 50 percent indicated they’d shop at a store more often after a positive beacon experience.
Meanwhile, Google has introduced a process that would let stores pay for potential customers’ cab rides to their stores and actually lets stores compete for business by bidding or upping the ante with deals and other incentives to entice customers to choose them.
Curation can further be expanded beyond the store through Twitter feeds, beacon messages and events by in-store butchers, cheesemongers and other grocery experts offering advice and solutions to enhance the customer experience at multiple points along the decision chain.
How to Make it Happen In-Store
A panel of retailers, suppliers and analysts agreed that a curated experience is eventually possible for shoppers of traditional supermarkets, but it’s still a ways out from becoming the norm.
“First and foremost, make sure you stand for product that will give you reputation and believability, then you can start on curation,” said Bill Nasshan, EVP and CMO for Bi-Lo Holdings, who sat on the panel with Tom Furphy, CEO of Consumer Equity Partners, and Paul Grimmwood, chairman and CEO of Nestle USA Inc.
Grimmwood agreed, suggesting that the focus on customization was inevitable. “There was a point when big business stopped listening to customers. What’s happening now is a wake-up call,” he said. “These [online] businesses are developing quickly because customers are being listened to.” He said the biggest challenge is “getting information and acting quickly to give consumers what they want.”
Nasshan said grocers have to put an emphasis on the relationships they have built with customers and suppliers. “We’ve worked hard to be good at mass selling,” he said. “Supermarkets have the ‘all’ shopping trip down pretty well. The ‘me’ – more than a little, less than a lot – we’re not very good at. Unless you can get ‘me,’ you’re not going to get to curation. It’s a journey … make sure you understand demand occasions and you can get to curation.”
In addition, retailers and suppliers need to share consumer data to maximize their mutual opportunities: “Curation is a great opportunity to give people what they currently don’t have. It will take mating their customer insights with our customer insights.”
Moderator Joseph Pine agreed. “Learning is so important – the more you know about a customer, the better you can serve them,” said Pine, co-author of "The Experience Economy: Work is Theatre and Every Business a Stage." “The better you serve them, the more they want to stay with you.”
More news and exclusive video interviews from FMI Midwinter are available at Progressivegrocer.com.