What tech tools do independent grocers need to compete with e-tailers?

Discussion
Photo: NGA
Feb 22, 2017
Ron Margulis

Amazon.com was the boogeyman at the National Grocers Association’s Annual Conference last week in Las Vegas. The Seattle-based retailer was the focus of several panels and sessions, featured in booths on the trade show floor and the topic of many networking conversations.

In two of the educational tracks, Connected Commerce and Attracting Shoppers, audience members heard about how to compete effectively with Amazon and other e-tailers by growing customer value and moving shoppers through the levels of engagement. They also heard experts stress the importance of bringing the retailer’s knowledge of the customer in-store to any digital program.

“If we as independents run great stores, technology will be the tie breaker with our chain competitors,” explained Noah Katz, co-president, PSK Supermarkets, a 14-store group operating in New York City. PSK also uses continuity programs to reward loyal shoppers and, most importantly, the data collected from all personalization programs is being analyzed to attract new customers, retain existing ones and reward the most profitable ones.
Mr. Katz and others said e-commerce programs can provide a wealth of shopper data. Product selection, shopping behavior and the impact of specials are just a few of the data points available. Retailers with established programs are considering how to mine this shopper data to better target customers. Personalized offers and strategies to change online shopping behavior are just the tip of the iceberg.

“The pinnacle of shopping data is average basket growth over time. We all want better profits and sales, and the way we do it is by taking the information already available and give the shopper real value,” said Grant Lunde, manager of digital marketing at Unified Grocers.

Overall, the state of the independent supermarket sector is good. NGA released the results of its national grocery shoppers survey conducted by Nielsen, which revealed high consumer satisfaction among independent supermarkets. Eighty-two percent of respondents who primarily shop at an independent supermarket reported being very/extremely satisfied compared to 65 percent being very/extremely satisfied with a national chain. Findings also showed independent grocers perform highly in featuring fresh food, locally-grown produce and high quality fresh fruits and vegetables.

DISCUSSION QUESTIONS: How can independent grocery retailers most effectively deploy technology to compete with internet food retailers, including Amazon? Where do you advise them to focus their efforts to make use of shopper data?

Braintrust
"In order for anyone to better compete with Amazon, they have to change their culture before they worry about technology."
"If you do the research you can find real-time personalization and customer journey analytics tools that are very affordable for the independent grocer"
"In order for anyone to better compete with Amazon, they have to change their culture before they worry about technology."

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16 Comments on "What tech tools do independent grocers need to compete with e-tailers?"

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Cathy Hotka
BrainTrust

Independent grocers enjoy a high level of trust with their customers. The key for them going forward is to leverage technology that would allow them to adapt to the new ways that consumers purchase products. Omnichannel POS is an important step (there are several).

Grocery, as an industry, has been responsive to changing dietary preferences; I predict that they’ll adopt new technologies too.

Shep Hyken
BrainTrust

Independents need to continue to create the feeling of an independent that is appealing to many of their customers. They need to be a part of the community. They must compete on customer service to start with. They must also be careful to not be left behind with certain technologies that are expected from the national chains (and online stores). Focus on a loyalty program that captures data and allows for more personalization. Create the most “frictionless” experience possible. Consider shopping online and in-store pickup as a way to compete. And do local well. Be better at the local level than a chain or online retailer. That can give a local/neighborhood retailer, at least short-term, an incredible advantage.

Ross Ely
BrainTrust

Independent grocers have a wealth of shopper data available from their POS system. The first step to better understanding this data is to use a loyalty system that identifies the purchases by shopper. This process enables the grocer to identify specific segments of shoppers (including top shoppers) and target them with offers personalized to their past spending patterns.

A second approach is to offer an e-commerce solution so that shoppers can purchase products online as well as in-store. There are a number of high-quality e-commerce platforms available targeted to independent grocers, any of which can help retain shoppers and keep them away from the temptations of Amazon.

Jon Polin
BrainTrust

Independents should have an advantage of speed and being more nimble than their larger competitors. Independents should combine their ability to be nimble with the fact that they also have brick-and-mortar stores to holistically offer their customers better experiences than what is available at either traditional grocers or pure-play food retailers. Use technology and data to enhance the in-store experience and use physical stores to enhance the online experience (available inventory, faster fulfillment, etc.).

Phil Masiello
BrainTrust

Although it is true that Amazon is a logistics and technology company, technology alone is not going to help you better compete.

Technology tools can provide you with data about your consumer and facilitate faster orders and delivery of products customers need. But the problem is that most retailers are “buyers of product.” Amazon is a customer-centric company that facilitates the sales of products customers want and need. And they do it primarily through a network of third-party sellers.

In order for anyone to better compete with Amazon, they have to change their culture before they worry about technology. Amazon wins because they use their technology to better understand and deliver customer needs. Period.

Adrian Weidmann
BrainTrust

Based on my measurement experiences, a cost-effective first step is to get a quantitative view of your shopper traffic pattern and dwell times in your current planogram. This exercise will give you invaluable insights as to where, what, when and for how long shoppers are actually navigating your store. These measurements will provide insights that will immediately highlight recommendations to optimize the shopper journey and merchandising opportunities and prioritization.

Proximity marketing technology is another low-cost, low-risk technology that can immediately bring value to the in-store shopping ecosystem. I have been using technology that does NOT require a mobile app to function. This technology combined with a click-and-collect program at the deli/lunch counter can quickly bring value to your shoppers as well as increasing the average basket value. An additional benefit is that you can create and maintain a direct dialog with your existing customers.

Max Goldberg
BrainTrust

It’s all about the shopping experience. Independent grocery can’t compete with Amazon on technology, but it can offer a superior shopping experience. Independents can use shopper data to determine which items to carry, to make recommendations to customers and to increase sales in higher-margin areas of the store.

Sterling Hawkins
BrainTrust

Right. This is not about technology; this is about the customer. Implementing technology for the sake of technology doesn’t help anyone. Carefully curating the customer experience (online and off) with technology as the enabler opens the door to the niche the independent sector has long exploited: an overall improved experience.

The key here is to not implement these enabling technologies piecemeal. A recent BRP paper summed it up really well when then said: unified commerce is the goal; “faux” omni-channel is the reality. Independents have the opportunity here to use technology to break traditional silos and really align their organization with the demands of their customers.

Ralph Jacobson
BrainTrust

One of the statements in this article, “The pinnacle of shopping data is average basket growth over time,” reminds me of a directive my field supervision gave me as a store manager in the 1980s: “Grow the average transaction just 25 cents and you will blow away your sales targets.” It seems like we’re still trying to find nirvana. The good news is that there are, in fact new technologies that have come into the market in only the past few months that can truly address this. If you do the research you can find real-time personalization and customer journey analytics tools that are very affordable for the independent grocer. The answers are out there!

Ricardo Belmar
BrainTrust

Independent grocers need to focus on personalization to provide the best customer experience that will keep their customers coming back to the store. Whether it’s in the loyalty program and how those customers are rewarded or shown recommendations, it has to focus on each customer uniquely — maybe providing suggestions based on dietary needs or promoting related products. It’s also reflected in their assortment by knowing what products customers want and delivering that consistently. Unique products are something Trader Joe’s does well that independents should emulate.

Lyle Bunn (Ph.D. Hon)
BrainTrust

As long as the independent grocer is but one shopping option, the greater appeal of each of fresh offering, value and service, which are its strengths, must be reinforced and amplified. Technologies that can do this while adding to the shopping experience primarily include dynamic signage and push to mobile. Deli in particular has benefited greatly from digital signage investment, and grocery has the traffic volume to justify more media engagement. Competing using technologies beyond current operating applications is a grocery market transition that many look forward to.

Roger Saunders
BrainTrust

Retail grocery chains not only need to know what consumers are doing within their stores, they need to capture an understanding of who, what why, when, where and how those consumers are behaving when they are away from their stores. Without those later insights, they are limited to their own current world view.

Understanding both sides of the consumers’ view point, they are better positioned to determine technology, merchandising and marketing needs that meet the needs of core shoppers who are “very/extremely satisfied” — 65 percent of national chains and 82 percent of independents. Then they can compare the 35 percent or 18 percent who are “very/extremely dissatisfied” or “neutral” with their relationship. They can also determine the “very/extremely satisfied” consumers using e-tailers.

Pass on these steps and you’re looking at a great deal of overly-costly trial and error and “gut-feeling” planning sessions.

Craig Sundstrom
Guest

Of course the underlying premise of this question is that independent grocers SHOULD be “compet(ing) with internet food retailers,” but is that really the case? I’m sure Tony could tell us more, but my image of a typical indie is resource poor and unlikely to be able to match functions like online shopping or delivery.

Obviously there are other elements to online, and to the extent that their presence encourages sharpening one’s game all well and good, but making dumb moves like stocking 83 types of olives or matching prices on a loss-leader — isn’t Amazon itself a loss leader? — to “meet online competition” isn’t the path to follow.

Tony Orlando
BrainTrust
Hi Craig, Chiming in a day late, and I was at this session at NGA. There is a huge amount of store sizes and levels of formats in our group, and I fall into the small single store with limited resources category. It hasn’t stopped me from adapting to making my store different, and you must deal in reality not some high-tech fantasy world that the app folks want you to be in. In no way am I knocking the technology out there, but for me and many others it is best to look internally and work on creating the best customer experience for our customers walking into our stores. For the most part we are doing that, with more to come as learning never stops. I do not have the ability to do e-commerce, either direct or third party, as our rural poor area makes it very difficult to walk away with a profit. However, we have had e-mail blasts sent out since the ’90s and have a very fresh and active social media presence via Facebook and our customers respond to it quite well. I just won the Progressive Grocer Best Deli/Prepared Foods Category this year, which is… Read more »
Merrick Rosner
Guest
6 months 30 days ago

Personalization is the key, whether offline or on. The independent grocer must have a vehicle in place to identify the customer, understand their buying behavior and preferences, and to communicate with them at their preferred touch point.

In order to influence behavior, maintain loyal customers, and move the needle they must collect the data and take action on it. There is a certain level of expectation now whereby the customer expects their favorite retailers to know who they are and to personalize their experience.

The tools are out there and are very much available to the independents. As mentioned by others, the order in which those tools are acquired, stacked, and utilized is critical.

Dave Nixon
Guest
Dave Nixon
6 months 29 days ago

Independent grocers have the privilege of not having to satisfy the masses. They have built more of a personal, 1-to-1 relationship through their stores. Now it’s time for them to translate that trust, relationship and authenticity to digital channels. To compete, these grocers will need to offer the same capabilities as prominent players, but in a more personal, friendly “approachable” way AND without the complexity.

Accomplishing this will require more lightweight and flexible technology, and data insights will be key. It’s important for these businesses to REALLY understand their customers’ changing buying behaviors and preferences to minimize the risk of losing them or frustrating them enough to leave the brand. This is where leveraging the cloud, Headless CMS, PaaS, SaaS and IaaS come in. Each offers a way to compete in a less costly, more nimble manner.

wpDiscuz
Braintrust
"In order for anyone to better compete with Amazon, they have to change their culture before they worry about technology."
"If you do the research you can find real-time personalization and customer journey analytics tools that are very affordable for the independent grocer"
"In order for anyone to better compete with Amazon, they have to change their culture before they worry about technology."

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