Source: NGA
Independent grocers need to make dramatic upgrades in marketing tech
Marketing technology, such as promotion optimization and personalization, has long been a nice-to-have for independent supermarket operators instead of a must-have, like product, operational and sales systems. These marketing systems are expensive and take dedicated teams to implement and run, and even most 50-store operators don’t have the resources required to make the effort deliver a positive ROI.
This is changing very rapidly as community-based retailers face ever more sophisticated challenges from larger competitors and online adversaries, but also as the costs of these systems has come down drastically.
Presenter after presenter at the National Grocers Association Annual Convention in San Diego this week read attendees the riot act, warning the gathered independent supermarket operators of what many consider an existential threat for the sector.
Good examples of marketing technology being applied at nearly the same levels as big chains can be seen at Coburn’s and Harmon City, two mid-sized operators in the Upper Midwest and Greater Utah, respectively. Both retailers have loyalty programs running with either owned or affiliated fuel stations that enable them to create personalized promotions for their best customers.
Coburn’s, for instance, has more than 600,000 loyalty members that represent 20 percent of shoppers and account for more than half of all sales. Emily Coborn, vice president of Operations East at Coborn’s, stressed that this makes it critically important to target this segment with valuable marketing outreach.
Ron Bonacci, vice president of marketing and advertising at Weis Markets, explained that success with marketing technology efforts is based on the collection and analysis of data. “Now it’s so cost effective that there’s no reason not to be collecting and analyzing it for retailers of any size,” he said. “AI tools support both your back-of-store decisions to have the right products on the shelf, without the hurtful shrink and the ability to use shopper data to keep them coming into the store and going to the website.”
Mr. Bonacci also suggested that basic digital engagement campaigns, including social media and digital promotion through text and email, can be up and running in weeks rather than months.
Discussion Questions
DISCUSSION QUESTIONS: What marketing technology solutions are most critical for independent supermarket operators to deploy in 2020?
Poll
BrainTrust
Michael La Kier
Vice President, Brand Development - IGA, Inc.
Tony Orlando
Owner, Tony O's Supermarket and Catering
Customer Experience (CX) capabilities are key for identifying gaps in the shopping journey. Where is the shopper getting frustrated? Where are you losing upsell opportunities? And where are you losing shoppers completely? There are many elements of the CX and you may want to take a look at each step of the path to determine where you are weak.
Getting to know your customers to better serve them should always be the goal. Today that means understanding their behavior and preferences through data. A high-performing CRM program is table stakes at this point (note: this does not need to be a rewards program). Data is the fuel for expansion and growth; a lack of data leads to stagnation and decline.
Any technology implementation for small grocers has to begin with the collection and mining of shopper data. The use of AI tools to improve promotional effectiveness and identify best shoppers has become table stakes for retailers of any size in order to compete and provide the personalization consumers demand.
For any retailer, the critical marketing technologies are: customer internet shopping/ordering, some type of rewards/loyalty program, mobile technology marketing and promotion analytics. I agree with the insight that independent retailers have been falling behind with these marketing technologies because of cost. But these marketing technologies are now table stakes to retail success. A smaller independent retailer struggling with cost and associate expertise needs to turn to their wholesaler for help and expect their wholesaler’s support in these areas.
Without an online and delivery component, the independent retailer will eventually be out of business as a traditional grocery store.
The challenge for many independent operators is that so much of what is being hyped these days doesn’t even suggest a near term payout. It is crucial that the retailer’s technology efforts are focused on tangible, customer-facing improvements or promotional efforts that can deliver positive sales gains.
Ron Bonacci mentioned the low hanging fruit for independent operators when he talked about how quickly personalized promotional programs can be implemented. Done properly, that’s an area where retailers can see an immediate profit impact and create a competitive advantage.
As someone who has been to 30 NGA conventions, I can say that the changes in retail have made life very difficult for independent grocers and especially for rural single stores, which are struggling big time.
I have read with great interest the comments above. Implementing all of these technologies is not going to save many of these stores. The second- or third-generation owners, for the most part, are trained almost exclusively in center-store, which at one time was the golden goose for the bottom line, with a mix of 75 percent to 80 percent of store sales. As time passed, many owners relied on the knowledge of their meat and deli managers to make their departments grow and prosper, without actually getting involved with hands-on skills — as they they did not have it themselves.
Those days are gone, and anyone who is a single store operator today must have expertise in perishables, as a 50 percent to 60 percent mix is needed to pay the bills. I wouldn’t be here if I didn’t start cutting meat at 10 and making homemade foods for well over 35 years in our deli. You cannot exist just selling groceries anymore. Now I will address the technology issue.
Some have said that without delivery we will perish. Perhaps that may be true for some. Others talk about the importance of AI and mining for consumer data, to personalize loyalty programs that are more effective — I agree with that as well. For me, I have found social media to be a great thing. Since I cannot afford a full-time tech guru, I utilize my son and a few high school kids to help insert the digital ads into our Facebook, Instagram, Twitter and our e-mail blast, with my guidance on content.
I added a digital Hot List, which is a second ad each week offering crazy meat and deli deals, above and beyond our eight-page tab, and this is working. I struck a deal with our local paper, to create it all in digital, and it is sent out weekly. So far I’m liking the results, as our area of coverage goes into Western Pennsylvania and towards Cleveland.
It takes an enormous effort to stick around in retail grocery, and for those who think they can run their stores like they did even five years ago, they will be out of business real soon. Build your niches in perishables with top quality, promote them on social media and, above all, make sure your service levels are top notch. Sorry for the long post, but I hope you understand my viewpoint on this.
The challenge isn’t the tech – it’s using the tech to meet the challenge. How do you get local? How do you connect with your customers and service them (and educate them) better?
Gathering, understanding and using customer data is #1 on the list. Operating without it is running blind to half of your business; the equivalent of not having product scan data. How that data gets used (and the value prop with the customer to get it) can vary by retailer and what their strategic positioning is: EDLP, best customer focus, etc. The strategy should drive what marketing technologies sit on top of that customer data to make use of it appropriately.