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By Barry Clogan, SVP of business consulting services at MyWebGrocer
As one of the largest multinational retail corporations, Walmart is well aware of the importance of bridging the gap between online and in-store sales. In 2014, in an attempt to connect these two channels, the company launched its click-and-collect service, which allows shoppers to make grocery purchases online and then pick them up in stores. Given the results of early pilots, and increasing competitive pressure from Amazon, Walmart is expanding its click-and-collect service to 10 new cities across the nation as part of its latest two-year $2 billion e-commerce investment.
Walmart’s substantial commitment to grocery e-commerce indicates that brands need to rethink their understanding of who shops for groceries online. Typically, grocery executives consider e-commerce as a service best reserved for Millennials and the upper middle class. However, if Walmart’s "everyday" customers are any indication, a broader spectrum of shoppers desire online grocery too.
Walmart’s click-and-collect program has indicated that all grocers – from larger supermarkets to smaller specialty stores – can benefit from developing a stronger e-commerce presence. As technology is expanding to make digital grocery shopping possible, grocers must change their perceptions of who shops online.
Think About Lifestyles, Not Demographics
There's a common misconception among grocers that it’s "not my customer" who wants in-store pickup or delivery. However, this is simply not true. In a recent Nielsen survey, 22 percent of respondents ages 35-49 said they order groceries online, as did 17 percent of those 50-64 years old. This data proves that it’s more than just Millennials who are interested in online grocery offerings.
Grocers need to take a step back and forgo the traditional method of generating consumer categories via demographics. In today’s world, focusing on why and how customers shop matters more than who is shopping, and traditional demographic categories like age cannot fully capture the stimulus behind purchase. Motivations for grocery shopping are more effectively derived from lifestyle insights.
The Why: Knowing why customers shop for groceries can help grocers find the best way to market e-commerce options. Insights like whether or not a shopper typically purchases food based on price or quality offers grocers more useful information than focusing on what generic age bracket this shopper falls into. For example, cost-conscious shopping is a trend that can be found across all age groups, and weight-loss diets are popular among both young and old shoppers.
Once a grocer understands why consumers shop for groceries, it’s easier for them to encourage shoppers to buy online. For the budget-conscience consumer, online grocery sites or apps can help them stay within a specific budget much more easily than they might in-store. And for the shopper on a strict diet, digital sites can offer extensive information about nutritional value. Also, consumers shopping large baskets for special events can take advantage of being able to plan and amend their basket up until the day of delivery.
Grocery stores have always been motivated by improving their customers’ shopping experience, giving them a wide selection of products, good quality and a competitive price. Online grocery is a natural extension of this desire to make customers’ lives easier.
The How: The way consumers shop is just as important as why, and online shopping continues to change customers’ shopping behavior. Shoppers expect to be able to shop online and they don’t differentiate between a retailers’ physical and online store. Customer behavior is influenced not just by life stage but also lifestyle.
Empty nesters shop for fewer items more regularly, as do young urbanites, but for different reasons. Anybody who has endured a shopping trip with uncooperative toddlers will appreciate why parents can be reluctant to shop in-store. All of these customers have had their lives influenced by technology and all of them have expectations to shop whenever, however and wherever they want. Retailers need to embrace that change. Whether it's the empty nester who favors the online meal solution provider to reduce waste, the urbanite who favors the immediacy of Instacart or the young family who order diapers through a subscription to save money, they are all finding ways to make their lives easier by not having to visit a store.
Focusing on lifestyle segments allows grocers to target underperforming groups more strategically than focusing on demographics does. With a comprehensive understanding of why a certain group of customers isn’t engaging as they should, grocers can adjust their strategies to meet those customers’ unique needs. There are many reasons why grocers are less successful among certain consumer segments, and exploring customer lifestyles is the first step in understanding how e-commerce fits into your customers’ day-to-day lives.
While all consumers, regardless of demographic, benefit from convenience, all grocers benefit from loyalty. Providing e-commerce options is a way for grocers to scale a personalized experience across generations, locations and income groups. Walmart has proven that online grocery shopping isn’t just for the rich or the young, and its very public commitment to grocery e-commerce shows that online grocery is going mainstream.