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Several myths have grown up around the profitability of online ordering and self-ordering kiosks in supermarket fresh food departments, which may inhibit retailers from deciding to make use of these options. Following are the two biggest myths surrounding these types of ordering, and the truth behind all of the speculation.
Myth #1: Supermarket fresh food departments have to offer online ordering, and those that don't do so will suffer an immediate negative impact, or just not be able to remain competitive.
Debunking the Myth
For all of the talk about online ordering in this most dynamic segment of the modern supermarket, the reality is that even when online ordering is readily available, few consumers are using it; and that applies to both over the web or on a smartphone. Most consumers are still going into the store to experience the sights, sounds and smells of fresh food.
Some online ordering solution providers don't understand the nuances of the grocery industry, or perhaps they’re just trying to drum up sales of their own products. In either case, they try to persuade supermarket operators that they have to offer online ordering, now. One major supermarket company has offered a comprehensive fresh food online ordering program for some time, but the staging coolers where customers pick up their orders in the store are largely empty most of the time.
According to London-based Planet Retail, only 1 percent of grocery shopping is currently done online, and by 2023 this could reach 11 percent. Even these predictions have to be taken with a grain of salt, because they refer to online grocery shopping in general. According to London-based Dunnhumby, "Fresh produce, the deli counter – categories where it's important for consumers to gauge the quality and freshness of products through physical contact -- will continue to be dominant in-store."
As is often the case, the truth is somewhere in the middle of the two extremes. There is no doubt that as Millennials become mainstream consumers, the shopping paradigm for supermarket fresh food could shift rapidly. Given the current evolutionary pace, however, it makes most sense for supermarket operators to take a measured approach. This approach can best be described as one that prepares the structural foundation for online ordering while at the same time enabling the supermarket operator to conduct testing in different markets and/or with different products, maintaining the flexibility to dictate the pace of rollout, and limiting investment to just what’s required as the plan unfolds.
Myth #2: Kiosks are of no interest because customers won't use them. They’re too expensive, so the ROI isn't there.
Debunking the Myth
Time has proved that only one type of self-service kiosk has substantial ROI and shopping-experience-enhancing potential, and that’s the self-ordering kiosk for fresh foods. This kiosk works particularly well for the deli, where it's usually most busy.
Kiosks for way-finding, recipes or meal planning, wine pairing, product information, etc., have one thing in common: They're not used consistently by most shoppers. Often, these kiosks get used more when they're new in a store (as a sort of novelty), but most customers won't regularly use them. Furthermore, the positive impact they have on sales is questionable.
Self-ordering fresh food kiosks, however, do get used by customers on a consistent basis. In fact, in busy stores, where long lines can develop in front of the fresh food counters, these kiosks tend to gain many loyal customers and, more importantly, they have a positive impact on deli sales, thereby providing a highly acceptable ROI.
Once again, the truth is somewhere in the middle of the two extremes. There's absolutely no doubt that most shoppers don’t like to wait in line. What's more, when they do have to wait in line, they're not doing more productive things, like browsing or shopping for the other items on their grocery lists. Only if the store has a busy deli should a self-ordering kiosk be considered. If the deli isn't doing a sustainable sales volume week in and week out, then a kiosk shouldn't be considered.
For a busy deli, the self-ordering kiosk is almost guaranteed to do the following:
- Increase deli sales by recapturing otherwise lost sales to customers who won't wait in line
- Increase deli basket size by anywhere from 25 percent to 75 percent
- Reduce the line of customers who decide they still prefer counter service
- Give customers more time to browse and shop instead of standing in line
- Make customers happy because they know the supermarket is thinking of them by making the shopping experience more enjoyable;
- Pay for itself within three to five months
Of course, keep in mind that the self-ordering kiosk you choose has to have all of the bells and whistles that customers have come to expect. These include easy navigation and readily available product information; retrieval of order history (to make reordering even easier) regardless of whether they have their club card; recommended products, notification (i.e., text messaging) when the order is ready; and automated integration with scale management or fresh item management systems so that product content and pricing are always up to date.
Finally, supermarket operators should also keep in mind that a kiosk can be a great entry into the self-ordering paradigm that eventually ensures an easier transition for consumers to online and mobile ordering. By adding it sooner rather than later, the many benefits described above can begin to be realized.