E-Commerce Players Up the Ante for Grocery and Convenience StoresOctober 16th, 2017 | Posted by in Retail
56% of US retailers say they face significant competition from e-commerce players, according to a new report from APT, with research and analysis from The Economist Intelligence Unit (EIU). Respondents say quality, pricing, product selection, and delivery speed pose the greatest competitive risk from online-only retailers.
In particular, 31% of US survey respondents cite delivery speed as the most threatening attribute of e-commerce retail. For example, today, delivery services have become table stakes for many brick-and-mortar grocers—even big box retailer Costco is offering grocery delivery, working through Instacart and offering a same-day delivery option for orders with fresh foods. Traditional grocers now face competition on price from discount and online grocers, and are also taking a hit on convenience, with the rise of online grocery ordering and delivery services.
In convenience retail, one area where convenience chains have expanded their offerings is self-service lockers, which enable shoppers to pick up online orders in-store. For e-commerce players, this helps mitigate the “last mile” delivery challenge: moving products from the hub—such as the store—to the consumer’s home, the final destination. Meanwhile, for convenience retailers, this move is likely to drive traffic—and ultimately in-store purchases. Relatedly, APT’s recent research shows that 35% of US retailers plan to offer click-and-collect services in the coming years, which is a merchandise pickup method that grocers—such as Tesco—are already tapping into to drive add-on purchases in a way that grocery delivery alone cannot.
In the face of growing convenience delivery options like goPuff, lockers and other strategies enable convenience store chains to capitalize on the advantage of their brick-and-mortar networks. As another example, many convenience retailers are further striving to differentiate their in-store experience by challenging the idea that customers should only come to their stores to fuel up or grab snacks. Some are adding seating areas, free Wi-Fi, or drive through windows, while others are investing in features such as growler stations and expanded foodservice offerings.
Additionally, both convenience retailers and grocers are implementing new in-store technologies. In the grocery space, one store technology example comes from Kroger, which uses infrared cameras to monitor traffic and shelf sensors that can detect when shoppers are nearby, pushing promotions and recommendations to their smartphones. Kroger alone has 17 million customers with digital accounts, highlighting the fact that even for grocery shopping, digital is playing a growing role in the customer journey.
As grocery and convenience retailers continue to innovate and update their offerings, it will be important that they invest only in the programs that will be most profitable—be it new in-store technologies, offerings such as seating areas or foodservice, or adopting or refining a delivery program. Often, such programs have high associated costs, in addition to the significant time investment required to implement and develop them. Many retailers are already using scientific testing to measure the impact of new programs before broader rollout, introducing them on a smaller scale in some locations and not others, and leveraging test vs. control analysis to compare their performance.
Using this strategy, grocery and convenience retailers will be able to make data-driven decisions and optimize their investments in the changing industry environment.
You can follow any responses to this entry through the RSS 2.0 Both comments and pings are currently closed.