Team eCommerce Next interviewed Sean Turner from Swiftly to get more insights on Grocers need a new playbook to combat inflation. Following is our interview with him:
1. How can brick-and-mortar grocers fight inflation and help their consumers?
With inflation news hitting headlines—and pockets—every day, it’s becoming very clear that consumer budgets and the revenue of brick-and-mortar grocers are starting to feel the impact. With costs steadily increasing, and no slowing in sight, grocers must evolve and implement new strategies to keep prices low for consumers while delivering their own profit margins.
Creating digital solutions and adopting the tools and technology that shoppers have grown to depend on, will be key in not only helping customers save, but in building loyalty and bottom lines. By investing in retail technology and implementing a corresponding loyalty program—grocers can seamlessly connect the customer’s digital experience to a stress-free in-store experience.
When armed with the information they need, like up-to-date pricing and availability, along with the personalized experience of a loyalty program, shoppers can better budget their visit to the store. Available technology solutions that are currently in-market allow grocers to provide just that with first-party data that connects the individual shopper to the best deals and savings based on their specific shopping habits.
For grocers, these digital solutions can also create new revenue streams while building brand relationships and their bottom line. A robust retail media platform that uses first-party data from shoppers and strategic brand partnerships allows retailers the opportunity to gain their share of the margin-rich $100B retail media market.
The bottom line is, grocers need to modernize and evolve in order to gain and retain customers, especially during times of aggressive inflation. By leaning into new technology and adopting the tools that can help shoppers save, they’re choosing to take the steps that are needed to survive—and thrive—until the tides change.
2. What are the biggest challenges these grocers face today (in addition to inflation)?
Two big issues stand out when looking at these challenges. The first is the fact that popular e-commerce giants and third-party delivery services are steadily encroaching on brick-and-mortar grocers with more personalized and digital options. As a result, they’re positioning themselves to become even more embedded in the grocer’s business and are ultimately taking ownership of the digital customer relationship and valuable first-party data. In order to survive and thrive, today’s grocers must invest in their own digital strategy and connect the digital and in-store experience for their customers to ensure full control over those relationships across all touchpoints.
The second challenge lies in the fact that customers shop where they find the best deals on the products they want and, with the continuous supply chain backlogs we’ve been experiencing, it may not be at their regular store. With availability of products being impacted from day-to-day, shoppers are often forced to head to competitors that may have what they need in stock, breaking that loyalty chain and driving them away from their chosen grocer.
3. How is customer loyalty being tested during this period of great inflation?
Customer loyalty has understandably been tested as a result of inflation and changes in their behavior have put grocers in a position where they need to be laser-focused on retaining them. With shoppers budgeting more strictly and turning to technology to find the best deals and prices, retailers need to adapt to their evolving expectations and make sure to address their needs. Customers will go to the place where their dollars go the farthest, and that means one week a grocer is in, and the next they may be out.
Consumers are not only battling rising costs, but supply chain issues and escalating gas prices are adding pain points they’ve never navigated. With limited inventory on popular items, it could often take several stops for customers to get everything they need to check off their lists. However, recent data shows that people are making less trips to grocery stores because of high gas prices. Most shoppers see the value in staying at one store to save on gas and are willing to say goodbye to their regular grocery store in order to fulfill their entire grocery list.
4. What can brick-and-mortar grocers do to step up their digital strategies?
Brick-and-mortar grocers must evolve and embrace the new technology that consumers have come to rely on when shopping. With the increased use of mobile apps—and smartphones in general—these are trends that retailers can’t afford to ignore, with e-commerce and third-party apps encroaching on their customers and revenue. By investing in digital solutions—especially a mobile app—grocers are meeting customers where they are and giving them the tools to enjoy a seamless digital-to-in-store experience.
When tied to a loyalty program, mobile apps not only help increase store visits through personalized deals and offers, but they also give customers the tools they need to track purchases and rewards quickly and easily. Add in the convenience of fast-lane or cashless checkout and you’ve got a robust and appealing program that will help attract and retain today’s hybrid shopper.
Retailers can also leverage the technology—and the first-party data gleaned from it—to build their own retail media network, driving margin-rich revenue that can result in a stronger bottom line.
5. How can grocers leverage their physical store presence to maintain their market share from online competitors?
A physical store footprint actually puts grocers at an advantage over online competitors. As consumer habits change and as shoppers start returning to stores for the best deals (and to avoid costly delivery fees), it’s far easier for a grocer to build a digital presence than for an online retailer to build brick-and-mortar locations. In fact, retailers now have access to technology partners and resources that can make implementing a digital strategy quick and simple, giving them the same solutions as these e-commerce giants.
Today’s shoppers are hybrid. They want the ability to shop online and in-store, so grocers need to embrace digital tools to give shoppers the power and flexibility to shop how they want while providing the most value. By capitalizing on consumers’ willingness to go back to the store—and by offering them personalized discounts and offers—brick-and-mortar grocers are at an advantage in creating the shopping experience consumers really want.
6. How important is it for grocers to build their own digital retail media platform and retail media network?
As inflation and supply chain constraints drive up costs, a retail media network is no longer a nice-to-have — it’s a must-have. Retail media advertising in the U.S. is a $100B market and with this spending potential, it’s crucial that retailers jump on the bandwagon. By building their own network, grocers gain ownership of valuable first-party data that will help them to actively improve customer trust, access real-time shopper insight, and monetize ad platforms that drive margin-rich revenues.
The most valuable asset grocers have is the relationship with their customer. In order to nurture that relationship, they need to own the entire digital customer journey, and that includes creating a highly personalized experience. As grocers get to know their loyal customers more, they can use the first-party data they’ve acquired to align with brand partners to create highly engaging ads on the retail media side, generating new digital advertising spend.
7. How would a comprehensive digital retail platform enable grocers to provide a better shopping experience to their customers in the face of online and grocery delivery pressure?
There are many benefits retailers can leverage with a comprehensive retail platform, both for their business and for their customers. The numbers show that over 90% of purchases still take place in-store despite the popularity of e-commerce, but that doesn’t mean grocers can leave technology behind. Omnichannel shopping is here to stay.
Customer behavior has changed, and shoppers want options to purchase both online and in-store. By investing in a digital platform, grocers are creating solutions that provide shoppers with a seamless, truly connected experience across all touchpoints of their journey. Access to information like product availability and real-time pricing, along with personalized deals on preferred brands and rewards incentives means customers have all the tools they need for a successful shopping trip. For retailers, this means increased in-store traffic, basket size, loyalty and lifetime value.
From a business standpoint, deploying a comprehensive technology platform including a retail media network allows grocers to generate margin-rich revenue. The additional cashflow associated with a robust retail media program can help retailers grow market share while withstanding current inflation challenges.
8. How can the added advertising revenue of a retail media network help retailers offset the impacts of inflation?
Brick-and-mortar grocers are seeing a rise in foot traffic as inflation challenges consumers to look for the best deals. Engaging customers with targeted deals, based on their individual habits and brand preferences, not only builds loyalty with customers, but with brand partners whose content and products feed your retail media program.
The additional revenue that margin-rich digital advertising generates allows grocers to invest in valuable loyalty programs that help them pass the savings on to customers. The right technology partner can help grocers build the same tools used to popular e-commerce and retail giants to attract and retain loyal lifetime customers, all within their mobile app.
Gartner found marketing budgets have increased to 9.5% of total company revenue this year. With greater investment in marketing from brands, there is more opportunity for retailers to gain advertising revenue from their ad space. Creating a modern, agile retail media platform can ensure that brick-and-mortar grocers hold on to their dollars—and their customers—for years to come.
9. What are the top three trends the grocery industry should focus on or prepare for?
Inflation isn’t slowing anytime soon and is an obvious concern in the market now and for the future. Retailers need to be proactive—and above all—willing to evolve and adapt as trends continue to grow and change. Right now the top trends involve evolving consumer habits and expectations, increased reliance on mobile apps, and the growth of retail media networks.
Customers are more tech-savvy than ever before and the increased demand for an omnichannel shopping experience can’t be ignored. Grocers need to cater to today’s hybrid shopper and provide a seamless, connected experience that spans the online and in-store aspects of the shopper’s journey. By engaging their customers and meeting them where they are, they’re building valuable loyalty that can grow and evolve as technology changes.
Which brings us to mobile apps. Shoppers have come to depend on their smartphones to find deals and discounts in real time. The grocer who doesn’t embrace this kind of technology soon will find themselves at a great disadvantage. While shoppers are returning to stores for their final purchase, expectations are now much higher in the planning stage of the shopping trip. By delivering accurate inventory information, and by offering deals and suggestions based on first-party data, your mobile app can become the bridge between your digital presence and your store, giving you full ownership of the entire customer journey.
Finally, the implementation of a retail media program is key to generating margin-rich revenue that shouldn’t be left on the table. With the correct platform, grocers can tap into CPG wallets, obtain valuable first-party data, make thoughtful inventory choices and better serve their customers. By partnering with brands, and by using real-time insights to feed their digital marketing strategy, grocers can generate the dollars they need to help their business flourish.
While trends continue to evolve, it’s important that grocers find the right technology partners to help them grow these programs. Gone are the days where robust technology development means big budgets and large IT departments. Solutions are out there that can implement these programs in a short period of time with little internal manpower. By investing in these solutions now, and by continuing to adapt as trends morph and change, today’s brick-and-mortar retailer will be equipped to succeed and survive in this new digital age.