Omnichannel Grocery Sales are Ripe for Picking

by Heidi Chapnick and Mike Chirveno

Online grocery sales are projected to be about $23 billion in 2014, growing to $100 billion in 2019 (Packaged Facts). This is a huge number, and although estimated similarly ten years ago, the onslaught of online grocery shopping has been fast and furious, many times without the executive engagement necessary to keep up. As a pioneer in online grocery shopping, the six steps I (Heidi) created three years ago are still timely and still not fully realized. We’re listing the steps below and will go into more depth with the six steps in the second part of this series.

  • Executive Engagement – Mandatory to the creation of a strategic enterprise growth strategy across channels
  • The Science of Analytics and ROI – Using science to guide our direction and steer the ship
  • IT Engagement Modeling – creating a successful balance of power and priorities for the it dept as well as the brick to the click initiatives
  • Business Planning and Employee Engagement – Roadmapping an integrated plan an enacting it with the ambassadors of our company – our employees
  • Marketing – Integrating a consistent message across channels
  • Customer Centricity – Always circling around the customer – this changes as customers demands change -big data, getting down to the individual with personalized recommendations and other social media components

It has recently been written that online sales are cannibalizing in store sales. In order for true cannibalization to occur, the store must offer another shopping channel that is siphoning sales from the store, while the revenue still stays in the organization. In most cases, this isn’t what’s happening. Instead, sales are being lost to other companies who are offering addition sales channels (online ordering, home delivery, drive-through pick-up, etc.). To keep this revenue in the store, grocers need to offer additional ordering and fulfillment channels for the customer to stay loyal to the company.

From all of the research and experience we have, the shopper that shops across several channels spends over 5x more annually with the organization than the shopper that shops only in the store. This research has been borne out by the major consumer insight companies, including Forrester. It’s all about convenience and customization. Convenience dictates choice and choice means offering several channels.

The increasing deployment of online shopping has, up to this point, been a rising tide that lifts all boats, i.e. overall sales in the industry have increased. All channels profit from the push from the store to the web and the web to the store, with integrated programs that make sense and are relevant for the consumer, no matter the channel. In many companies, one out of 9 customers visiting a website will follow up with a trip to the store.

A shift in sales by distribution channel is only problematic if net sales per channel declines and the channel becomes less profitable. Bill Bishop, from Bricks to Clicks said, “It looks like more retailers are finally realizing that the consumer’s growing use of digital is affecting how they shop for groceries and that online shopping is more than a niche. At the same time, they see that they’re losing sales (or sales potential) faster than online is growing so that there’s more going on here, and that’s confusing to them.”

The advantage of omnichannel capabilities is that the grocer has the opportunity to more fully engage that customer and increase overall revenue from them regardless of distribution channel. The challenge for grocers is to create tools that take a 360-degree view of a customer and a single view of sales across all channels. This is still the Holy Grail. These tools will allow a customer to easily start, stop and restart a shopping experience from desktop, mobile and in-store in an integrated fashion.

The tools (as will be described more in depth in the second part of this series), are capable of capturing information about each customer and personalizing the experience for them, no matter what channel they shop. The integration of these tools with the shopper’s social media networks and voice-of-customer tools delivers a shopping experience that is beyond any former expectations of the customer or grocer.

As we, in the grocery industry, stand on the threshold of explosive growth in omnichannel grocery shopping, we have a profound opportunity to control our own destiny. We are not in a situation where we must just watch our business erode from new competitors. Given the opportunity, shoppers prefer retailers with both in-store and online options as opposed to retailers with only one or the other. Moving quickly into omnichannel allows us to effectively defend against new entrants and gives us a new weapon against existing competitors.

WE CONTROL OUR DESTINY HERE.
LET’S DO IT FROM THE TOP DOWN.

This is the first article in a series. Next time, we’ll line out some concrete steps for grocers to take to successfully enter omnichannel or supercharge their existing omnichannel offerings. We’ll give a roadmap for success, actionable steps and important metrics.

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Heidi Chapnick

Heidi Chapnick

Being passionate about ‘fresh’ food is who we are. Some of us volunteered, feeding the hungry and got interested in all the waste in this country, always wondering how to make things better for our hungry masses and keeping it, "fresh". We also feel for the growers who are scrambling to sell their products and keep them fresh and the retailers who keep us fed. Working with all channels of sales and from seedling to table, it gives us the ability to assist with making sure the integrity of fresh items remains, keeping food borne illnesses and cross contamination at bay for happy growers, shippers, retailers and shoppers.