Now is the time to innovate
As attitudes, influences and behaviors around food continue to evolve, the marketplace of retailers and brand manufacturers will need to innovate to stay relevant with today’s shoppers. Fragmentation of the grocery channel will necessitate a wider array of strategies and tactics across the digital landscape, where the majority of influence now takes place.
At the same time, traditional grocery store visits will continue to dominate, but retailers and brands alike will need to take new approaches to maintain share and loyalty. Finally, indicators point to massive adoption in digital commerce for grocery, subscription and click-and-collect by 2020, which means that the time to act is here and the learning curve steep.
New challenges will continue to emerge
For retailers and CPG manufacturers, this expanded grocery landscape will present a continuing wave of new challenges in the way they market, sell and position their products (and stores). Razorfish has extensive experience working with both sides to help create innovative strategies, digital tools, content, social, media and digital commerce platforms to help businesses tackle their unique challenges. Following are key considerations for how to win in each new channel.
Traditional grocery: With the expansion of digital influence and knowing the majority of CPG searches are already on mobile devices, it will be important to reach out to shoppers via owned and retailer digital tools. These tools present the opportunity to provide value via product curation, store locators and digital promotions. Brands can also co-create functionality within retail partners’ digital ecosystems using bespoke action plans against top retailers to leverage these unique capabilities.
Most important for brands will be to win the digital shelf by becoming the “single URL of truth” for all of their products, controlling how they are perceived and presented everywhere.
Click-and-collect: Retailers and brands can work together to train their key consumers to utilize these services, understanding the benefits to both. Brands will see increased loyalty via list repurchase, and the retailer stands to gain from additional purchases at the store. Together, retailers and brands can co-create functionality, such as reminders for fulfillment with past purchasers and those who shop in specific categories, helping to retain shoppers.
For brands specifically, strategies to get on the reoccurring list (and staying there) can drive loyalty and repurchase.
Online single-item purchases: As previously mentioned, grocery has half the digital commerce penetration of other products, which means many existing shoppers (up to 60 percent on Amazon alone) are already digitally shopping, but not in CPG, grocery or food categories. Driving awareness among this group will be key to expanding digital purchases of grocery and individual (nonperishable) food items via traditional digital portals.
Brands and retailers alike can work together to create “stock-up” or “online-only” SKUs to help reframe the value equation for shoppers while providing the convenience of an online purchase.
Online grocery: Understanding the landscape of big (AmazonFresh, FreshDirect) and specialty (Thrive Market) online grocery in a rapidly expanding retail marketplace will be key to success. These services are expanding their reach and building tools to improve shopper efficiency. Communicating and connecting with this new group of adopters, who will push online grocery shopping into the mainstream, will be a priority for successful businesses.
Food brands will need to leverage their deep content (recipes) and breadth of brands to bring service and utility to these customers as they integrate into the retailer’s existing digital commerce ecosystem.
Service-based grocery: This category is most important for brands, since these services are retail channels unto themselves. While this channel will never drive significant revenue or unit sales, the influence for purchase across other channels will be tremendous, as noted earlier. Brands will need to tie bespoke communication of each offering into the larger value proposition of its core service.
Early on, it will be necessary to create a number of tests in the hope of developing programs that will work across multiple services and drive traffic or tie in with owned digital offerings.
- Digital Touchpoint Investments Significantly Influence US Retail Sales. Forrester Research, 2016
- The Future of Grocery, Nielsen Global e-Commerce, 2015
- Like it or not, ‘click and collect’ is here to stay, CNBC.com, 2016
- Tesco internal reports, 2014
- CPG E-Commerce Sales Soared 42% Last Year, Advertising Age, 2016
- The Retale Millennial Grocery Report, Retale Perspectives, 2016
- Sales of meal kit subscriptions surge and show no sign of slowing, Food Navigator USA, 2016
- Shopperculture.com, Integer Group / MARC research, February 2015
- Hands and Bowls and Melty Cheese!, The Washington Post, 2016
- Global eCommerce and the New Retail Survey, Nielsen, 2015
- Can subscription services help CPG marketers find mobile success? Mobile Marketer, 2016
- Majority of CPG research is Done on Mobile, McKinsey, October 2015