Shopping Reinvented in Grocery Retail
This article originally appeared in the March/April 2018 issue of Canadian Grocer.
Thanks to technological, economic, and cultural shifts in Canada, North America, and the world, the retail environment is rapidly changing. Euromonitor International has identified the eight most influential megatrends affecting consumer goods and services worldwide to help businesses understand and respond proactively. One of these megatrends is the idea that shopping is being reinvented, which reflects how economic and technological shifts have rewritten the shopper journey holistically. Several Canadian grocery retailers exemplify the principles of Shopping Reinvented by focusing on three key customer points of engagement.
Signaling value before the transaction
Moving beyond the transaction to build a relationship with consumers requires retailers to communicate their value before consumers are at the moment of purchase. Growing numbers of consumers weigh not only price when making shopping decisions, but also evaluate convenience as part of the purchase cost. This shift explains in part the recent flurry of activity around online ordering and grocery delivery in Canada, with Whole Foods products now for sale on Amazon.ca and Loblaw available on Instacart. Even Sobeys, a late-comer to e-commerce, recently announced concrete plans to partner with Ocado Group to launch online sales. These initiatives touch on two features customers increasingly look at: convenience, including the opportunity to grocery shop from one’s couch, and personalization through greater variety of products.
Meeting consumers when, where, and how they want to buy
Top grocery retailers are expanding their offerings beyond traditional fresh and prepared food to increase the frequency with which they interact with customers. The technological and consumer trends driving a reinvention of shopping is also a driver of new grocery models, including GoodFood and MissFresh. “Grocerants”, or prepared hot and cold restaurant-quality food available for sale at grocery retailers, is another case. Loblaws’ home meal replacement offerings, often featuring variety and healthier options, have been a big driver of growth for the grocery retailer. This proliferation of options offer Canadian grocery shoppers quality food in a format more suited to unique daily needs.
Encourage a restart of the shopper journey
Retailers that are the best at building relationships with their customers generally find that they sell lifestyles in addition to products, and lifestyles do not disappear when a consumer leaves the store. Grocery retailers have an advantage over non-grocery players in this respect: given the repeat nature of grocery purchases, there are more obvious opportunities to continue to engage the consumer. Exclusive, personalized offers in the form of tailored coupons have long been a mainstay of grocery marketing, but now there are more ways to offer this sort of follow-up online. Lufa Farms, a Montreal-based start-up, achieves this particularly well. Shoppers sign up to receive a box of fresh food sourced from local urban farms that the shopper customizes on a weekly basis. The subscription model ensures consumers continue to make purchases by forcing them to opt out rather than opt in, and there is a lifestyle appeal of locally sourced fresh food that taps into growing interest in ethical and healthy living.
Reinventing the relationship
The initiatives by established grocery players and the early success of Canadian grocery start-ups to fill gaps left by the major players reflect the fact that competition for relationships, not just sales, has intensified as shoppers are now increasingly armed with information and a greater ability to switch their loyalties. Retailers need to demonstrate value through services that personalize the shopping experience – not just price and product mix – in the years ahead in grocery retail in Canada and elsewhere.