How Grocers Recover Will Shape the Future

As online sales jumps from 7% to 10%+ of business, grocers are pivoting to make once unprofitable online channels profitable, while maintaining the safety of staff and customers.

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Grocery shopping once seemed like a regular routine — a quick trip to the market to grab missing ingredients for a recipe, a box of essentials delivered to a doorstep, or a weekend errand to restock for the days ahead.

But the COVID-19 pandemic underscored how essential grocery really is. When lockdowns swept the world, the comfort of relying on that trip to the store or that weekly subscription box was threatened, sending shoppers into a frenzy to ensure they had what they needed as they faced uncertainty. Grocers were challenged to provide for their local neighborhoods and broader markets, support workers on the frontlines and become a resource people could rely on as other businesses were forced to close their doors.

Using technology, grocers were able to connect with customers though online channels that weren’t always readily available – or as in-demand – as before. To adapt, grocers rapidly developed new ways to manage supply chain, expand online ordering, delivery, and resources like extended hours, contactless payment, curbside pickup and scan-as-you-go to keep consumers safe and satisfied.

The Future of Grocery

As society transitions into a post-COVID world and the economy begins to reopen, grocers have the opportunity to emerge stronger than before, armed with a set of innovative strategies, born out of necessity, but capable of driving growth by providing new experiences for customers whose shopping habits may remain permanently changed. Some consumers will return to stores – but with different expectations of what an in-store experience should look like. Others may fully embrace curbside pickup or at-home delivery, choosing to shop more exclusively online.

“Grocery is one of those industries that will never go away. The winners are the companies that can best offer the customer what they need – and that changes over time,” Guy Elliott, retail & consumer products lead, EMEA & APAC, said. “Grocers who succeed in a post-COVID will double down on their online offerings (home delivery and click-and-collect) and figure out creative ways to move the volumes of customers through their stores while keeping people safe.”

Sustaining profitability through new value propositions

COVID-19 elevated need for online grocery options, with many consumers adopting digital channels to shop for the first time. According to Engine Insights, online grocery shopping jumped 74 percent through the height of the pandemic, with a steeper sustained growth trajectory forecast over the next few years.

Looking ahead, grocers have the ability to leverage consumer demand to refine connected online experiences and further establish digital as a longstanding alternative. To do this, grocers should double down on programs which demanded acceleration in the wake of crisis – services like click-and-collect, curbside pickup, home delivery, D2C and supply chain optimization. How can grocers grow, and how can they apply consumer insights to sustain acquisition while maintaining operational costs?

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Providing a sense of certainty

At the pandemic’s onset, customers often faced frustration securing delivery slots and receiving online orders on time. Looking ahead, grocers can provide a greater sense of certainty by offering guaranteed pickup/delivery slots (at a premium), optimizing subscription/D2C services through curated baskets based on shopping habit, and AI-powered demand/inventory management that shows consumers what items that are available and when they will be delivered in real-time.

Increased desire for home delivery has also left many grocers lacking the capacity to cope with shifts in demand. As the economy reopens, incentivizing click-and-collect over home delivery can lower associated last-mile costs, while bridging the gap between physical and digital channels. Further, partnering with third-party delivery providers can expand picking capacity in a way that’s flexible in the face of shifting demand – optimizing investment only when additional help is needed.

Safer in-store experiences

With restrictions lifting, lingering uncertainty around COVID-19 urges grocers to build trust with consumers who may be hesitant to return to physical stores. To feel safe, consumers need more transparent lines of communication that provide details on sanitation procedure, alternate methods of shopping (like click-and-collect) and steps stores are taking to keep more vulnerable consumers safe. Grocers should leverage channels like social media, brand websites and in-store signage to reinforce messaging, ensuring they engage with shoppers in the right place and at the right time.

As in-store traffic increases, grocers can also use technology to safely manage shoppers as they navigate new in-store experiences. Contactless payment, scan-as-you-go and in-store shopping slots can expedite time spent in store while reducing crowding that risks adherence to social distancing guidelines. Location analytics like LiDAR and in-store beacons can also identify areas of the store most prone to bottlenecks, allowing grocers to rearrange physical spaces to best improve traffic flow while optimizing on-floor inventory to meet demand.

Managing Supply Chain in Our “New Normal“: A Fireside Chat

Led by retail experts Reva Bhatia, Hilding Anderson, Andy Halliwell and Guy Elliott, the discussion will reach beyond the current crisis to explore how modernization can help future-proof retailers when looking ahead to what's next.

Building resilience with data

Demand for digital shopping is anticipated to remain high even after the current crisis subsides. To sustain growth, grocers must upgrade their technology to mitigate supply and demand challenges shaping the new normal of grocery, while also protecting themselves from other potential black swan events.

Creating an agile work environment can help grocers remain flexible in times of change. Advanced analytics, AI and machine learning can be applied across the supply chain to meet this need in a number of ways:

Flexible infrastructure: Move operations to a scalable cloud-based system to enable rapid resilience against demand surges through AI/machine learning. Demand planning tools can capture intent signals across channels, detecting consumer intent and anticipating need for resources like additional delivery vans/scheduling, warehouse employees, inventory and last-mile partners in times of heightened demand.
Flexible networks: Create virtual hub-and-spoke networks to redistribute inventory and efficient delivery of in-demand items.
Flexible storefronts: Enable best practices and automation within “dark store” scenarios, whether it’s through standalone locations or allocation of space within existing physical storefronts dedicated solely to delivery picking.

This approach has already benefitted grocers responding to the COVID-19 crisis. For example, Publicis Sapient worked with one large UK-based grocer to effectively double capacity for online orders in less than a week at the height of the pandemic, accommodating a surge to nearly 1 million online requests and 1.2 million delivery slots as customers flocked to digital channels.

“Grocers have realized that they can move fast when they have to,” Elliott said. “Now leaders in the grocery sector must figure out how to take that momentum and turn it into a new culture – one that focuses on getting things done quickly and then getting into data-driven test-and-learn cycles to improve.”

The COVID-19 pandemic challenged grocers to rethink how they operated in the face of overwhelming consumer demand and uncertain outcomes. While the way people shop for groceries may never look quite the same as it has before, grocers have the opportunity to create new traditions for consumers – ones that blend the physical and digital in a way that makes experiences safer, more efficient, and even more memorable.