Despite stubbornly high inflation and aggressive interest rates biting into consumers’ disposable income, as prices remain elevated, new data suggests that shoppers are continuously looking for more seamless digital experiences in retail and department stores.
At the end of January, online grocery sales declined by 1.2% finishing off at $8.4 billion in the U.S. market. Demand for ship-to-home was also down, which includes the likes of FedEx, UPS, and USPS.
Experts suggest that the decline in these services was largely driven by the uptick in big-box retailers now offering direct-to-home delivery for shoppers, taking on logistical responsibilities themselves, instead of using third-party carriers.
Mass demand for online shopping during the height of the pandemic helped solidify the future of the online retail industry, and today shoppers can find nearly anything and everything they need online.
While this has created a massive opportunity for retailers, from all industries to transition their operations online, and present consumers with a more accessible channel – grocery retailers were slow to adapt, despite seeing steady growth during the pandemic era.
With many pandemic-related concerns now in the rearview, grocery chains and mass stores are creating a more digital in-store experience, as it hopes to draw in walking customers to their brick-and-mortar locations.
The drive to digital
Consumers have become accustomed to the convenience of online shopping, whether it’s for home goods, clothing, or even groceries. Everything they want and need can be found online, price-matched, and shipped straight to their door.
On top of this, shoppers can shop from any device they see fit. From computers to tablets, smartphones, and even mobile apps – it’s all accessible through a few clicks and swipes.
The rise of smartphone adoption among consumers in recent years has meant that retailers can create a multifaceted shopping experience. Research shows that around 82% of shoppers will consult their phone before making an in-store purchase.
With the internet so readily available, shoppers can now quickly compare prices from different retailers and stores, read reviews, or in this case, follow up on nutritional and dietary information relating to their grocery purchases.
What’s more, is that nearly every popular and big-box retailer now offers an online option. In the past, a few niche brands and businesses had a website, with a small online store – today, the picture is completely different.
A February report showed that around 7.8% of U.S. consumers purchase groceries online. That’s because big names such as Walmart, Amazon, Target, and Krogers, among others, all now offer online shopping and delivery services.
Even more, these stores are making use of their delivery teams to get items from stores and warehouses to consumers, in record time.
The competition for same-day delivery means that retailers are constantly looking at how they can deliver online purchases to shoppers quicker than their nearest contender.
That’s because consumers want convenience. They also want to see which retailer has the best deals or online benefits. The same February report showed that 62% of shoppers cite convenience as the reason for shopping online rather than in-store. A further 52% cited that online benefits and app-only deals led them to use online platforms for their grocery shopping.
In a similar vein, some have found that buying groceries online is often more affordable than having to go to a store.
A Travel Daily News article found that buying groceries online in the United Arab Emirates (UAE) can cost consumers less. The reason why consumers can save more money on their grocery bills is that they have more access to digital channels that allows them to compare prices, look for coupons, bundle deals, and even free at-home delivery.
There’s plenty to get excited about when a mass store or a household brand offers online deals – and now grocery chains are noticing that they need to step up their digital game if they want to continue playing with corporate contenders such as Walmart and Amazon.
The digital experience coming to a store near you
Digital needs are creeping into every known industry, and as the Internet of Things (IoT), Software as a Service (SaaS), and Artificial Intelligence (AI) become more mainstream, we could soon see technological innovations reach our favorite local grocery store.
In this instance, the case may be true for a small handful of well-known grocery chains that have already started mapping the customer journey through digital and technological innovation.
Kroger has more than 2,800 stores nationwide across 35 states and operates other grocery retail stores including Ralphs, Dillion, Smith’s City Market, Jay C, Pay Less, and Bakers, among a list of others.
In the last couple of years, Kroger’s introduced digital product displays on shelves in some of its stores. Powered by Microsoft Azure, the digital sensors, or EDGE – Enhanced Display for Grocery Environment – can help process data generated by customer behavior, buying trends, and demand for certain products.
EDGE is connected to IoT sensors, which can deliver real-time data to stores, allowing them to monitor which products have low inventory levels, require restocking, and for customers display discounted prices.
Idaho-based grocery store, Albertsons, which has more than 2,500 stores, has steadily been experimenting with digital “smart” shopping carts in some of its stores.
Albertson’s “smart” shopping carts allow customers to ring up items as they place them in the cart, eliminating the need for them to go use checkout points.
This is similar to what we’ve seen Amazon has been trialing the last couple of years with its self-checkout stores, which the company heroically named Amazon Just Walk Out.
Research by McKinsey found that if a grocery store can properly implement tech-enabled self-checkout, it can help improve in-store productivity by 6% to 12%. This means that grocery stores will require less in-person labor at checkout counters during operational hours.
While it shows how technology can benefit grocery stores, not only in terms of physical in-store sales, customer experiences, and productivity, it’s still not able to compete on the same levels that eCommerce can offer consumers.
Final thoughts
While it’s hopeful that grocery stores will in the coming years adapt for the more digitally native consumer, it’s perhaps a race against time for some to ensure their longevity and ensure their long-term growth.
While eCommerce and online retail remain the triumphant winner, the introduction of digital can only further enhance an already well-known practice that has helped shaped the virtual shopping reality. Yet this time round, it’s up to grocery chains and big-box names to bring digital back to where it was once considered irrelevant.