Disruption in aisle 3: How grocers can thrive amid Amazon's Whole Foods takeover
Traditional supermarkets can succeed by knowing their customers, expanding beyond the store and playing to their strengths. Efrain Rosario with Retale offers advice for retailers.
Efrain Rosario, chief customer officer at Retale, has more than 20 years of marketing experience in the retail, CPG and technology environment.
There have been countless articles about Amazon’s $13.7 billion purchase of Whole Foods. One thing these articles agree on is that it represents a seminal moment in retail — the leader of online is crossing over into brick and mortar in a big way, with 400-plus physical stores in the U.S. Amazon needed a point of entry into this space to capitalize on the increasing influence its online expertise can carry in terms of driving sales across channels. Whole Foods was it.
What most articles haven’t addressed, however, is how incumbent grocery retailers should respond, seizing the opportunity to improve their overall business and drive growth.
Here’s what you need to do.
1. Know Your Shoppers
Traditional grocery retailers need to move beyond basic demographic information when trying to understand their shoppers; they need to segment based on multiple filters such as demographic, behavior, attitude and location. To do this, you need to consider five key questions:
- Who are they? For most grocers, the household manager, typically mom, is a primary target shopper. Previously, you could assume that mom wasn’t necessarily a heavy user of digital tools. However, that’s changed because the availability and performance of apps for in-store shopping have improved, as well as an increasing number of digital-savvy, millennial moms.
- What do they buy? Identify the destination items from your store — those items that shoppers buy regularly from you — to build out their baskets.
- How do they buy? Which trips are shoppers more likely to do: stock–up versus fill-in? Which type of trips can you grow, in terms of frequency and basket size, with your existing shoppers?
- Why do they buy? Not just from you, but also from other grocers, including Amazon. Are there items that shoppers buy elsewhere (e.g. ready-prepared meals) that you could offer to source trips from these other stores?
- Where do they buy? A key driver in choosing where to shop is convenience. Do your shoppers typically buy from stores within a set proximity, close to home or work?
Considering these questions enables more effective identification of key targets and shoppers based on value and growth potential to a grocer’s business.
This information also helps grocers move quickly to respond to Amazon’s push into brick and mortar among their customers. Assess which trips (by shopping mission – i.e. stock-up versus fill-in) could feasibly be fulfilled online, through Amazon/Whole Foods (or another grocer). This helps you compete.
2. Pick Your Spots
A growing number of shopping trips begin on mobile, influencing how, what and where shoppers choose to buy. To win against Amazon, traditional grocers need to expand beyond standard in-store levers (e.g. lobby display, end caps, bundled offers) and consider digital purchase triggers along the shopper journey, targeting and engaging shoppers with the right message at the right time to drive conversion and build loyalty.
- Are shoppers using a shopping list for planned purchases? Are your destination items on that list? How can you leverage this data around these planned purchases to anticipate and respond with the right solution to drive them to your store?
- Are they seeking deals or coupons through aggregator apps? Are shoppers seeing your products and stores in these deals? Otherwise, you’re probably not in the consideration set.
- Are they viewing weekly ads via your circular? Weekly ads remain a key influencer in shopping decisions (78% of shoppers read weekly ads at least once per week) and are the only medium that can tell a story around your products or key events (e.g. Super Bowl, Black Friday) in 15 seconds or less.
- Are they searching for product information and reviews? Know what product they’re seeking and then show the right personalized offer to close the deal.
- Are they looking for a nearby store? Share accurate store information, hours and directions based on the shoppers’ actual location to facilitate a store visit.
Incumbents can fight back against Amazon by starting to think and plan from a digital perspective — embracing mobile and investing in web and app capabilities to engage shoppers across the entire shopper journey and drive them into their stores. Otherwise, they risk being left behind as Amazon dives headfirst into their space — the offline realm.
3. Measure, Measure, Measure
Calculating the value or impact of each touchpoint in the shopper path to purchase remains a challenge for most marketers. But compared to Amazon, when it comes to the interplay between online and offline, incumbents have an advantage. In digital, attribution technology – provided by leaders like Placed – has helped traditional grocers measure their online efforts and the performance of a specific digital marketing element or campaign, in terms of driving store trips and incremental sales. Mastering this digital to brick-and-mortar measurement and unlocking value from that data to inform future strategies is key in a post-Whole Foods-by-Amazon world.
Incumbent grocers have a leg up on Amazon here, mainly because Amazon is still a newcomer to brick and mortar. Despite recent forays with bookstores and Amazon Go convenience stores, today Amazon lacks in-store expertise. They don’t fully understand how shoppers discover, shop, buy and evangelize products through brick-and-mortar channels, and how they can use that data to drive incremental sales (online and offline). For incumbent grocers, their knowledge of offline — coupled with online attribution data from third parties — is a key advantage.
However, Amazon being Amazon, it won’t take them long to figure it out, as they assimilate expertise from their Whole Foods colleagues. So, incumbents have a narrow window of time to mine cross-channel attribution data for campaign insights.
As Amazon signals a new era in retail, traditional grocery retailers feel challenged – and those feelings are understandable. However, to use a surfing analogy, “old school” grocers, or incumbents, can ride the wave of their lives by starting to think digital, embracing mobile and investing in web and app capabilities to engage shoppers across the entire shopper journey and drive them into their stores. Otherwise, they risk paddling furiously, but falling off the back of the wave, being left behind.