Article

4 Major Players Leveraging Channel Optimization in the Digital Grocery Industry

By
Shalmali Prakash
February 27, 2023
4 Major Players Leveraging Channel Optimization in the Digital Grocery Industry

At A Glance

  • Grocers must adopt modern channel optimization strategies
  • An ideal channel optimization strategy allows grocers to serve consumers no matter where they are
  • Grocery retailers must understand their target audience, implement strategies that foster brand loyalty
  • Many grocers have already jumped on the bandwagon and deployed channel optimization strategies
  • In this article, we look at some of the significant players leveraging channel optimization

Grocers must evolve as customers expand their shopping channel preferences - in-store, online, or a combination. Grocers must adopt modern channel optimization strategies, allowing them to reach customers at every touch point in their purchase journey. An ideal channel optimization strategy allows grocers to serve consumers no matter where they are and offers the most convenient means to shop for groceries and household necessities. 

Grocery retailers must understand their target audience, implement strategies that foster brand loyalty, and help meet shoppers' growing expectations, whether in-store, online, or both. Many grocers have already jumped on the bandwagon and deployed channel optimization strategies shaping the grocery industry. Here are some of the significant players leveraging channel optimization:

Kroger

One of the key contributors to Kroger’s continued success is its seamless integration of the physical brick-and-mortar model with its digital offerings. Kroger can effectively address customer needs and expectations using an omnichannel strategy. Consumers appreciate the convenience of online ordering and delivery but still prefer visiting stores to see new brands or select a specific product. “We were on a journey before COVID, trying to make sure that a customer could engage with us seamlessly, whether in-store, with pickup or with delivery. COVID significantly accelerated that by three or four years. The people that used to shop online or use pickup, more than 90% of them are now shopping in-store also,” as per Kroger’s CEO, Rodney McMullen.

Over the past few years, Kroger has also worked towards expanding its digital footprint with its automated customer fulfillment centers (CFCs). These fulfillment centers allow Kroger to leverage its eCommerce offerings and reach remote customers who cannot access physical stores. Kroger doesn’t limit itself to enabling online grocery purchases through its app but also helps inform customers of ongoing promotions or product availability.

Walmart

Walmart’s focus on its omnichannel strategy has been a strong pillar of its business model. With the omnichannel approach, Walmart ties the physical stores to its eCommerce offerings, fulfillment solutions, and more. Walmart caters to customer needs across its online and physical channels to boost profitability. “If people buy in-store and online with Walmart.com, they generally spend twice as much, and they shop in-store more often,” according to Walmart’s President and CEO, Doug McMillon.   

Walmart leverages its mobile app to introduce customers to new capabilities. Walmart’s customers and members can quickly build a shopping cart, schedule a time to pick up or have an order delivered at a time that is convenient for them, skip the line with scan & go, or find an item in their local store. 

Target

Target relied heavily on its foot traffic in brick-and-mortar stores for many years. This was easy enough since 75% of the American population resides within a 10-mile radius of a Target store. However, as increasingly more customers sought omnichannel convenience, Target started working towards striking the right balance between its offline and digital offerings. From streamlining supply chain operations to improving the eCommerce experience, Target made significant investments while continuing to make its brick-and-mortar stores more desirable. 

In its third quarter FY2022 earnings call, Target discussed how it continues to draw attention to its simple and attractive promotions, free in-store pickup and drive-up services, and new, accessible payment alternatives. Target offers extra savings options through its RedCard and Target Circle programs, neither of which has a membership fee.

Albertsons

Albertsons has continually leveraged technology and invested in digital innovations to further its channel optimization strategy. These digital innovations include a grocery list curation feature that also factors in customers’ dietary requirements, pairing recommendations on scanning a product, an in-app feature that converts a simple shopping list to a guided store map offering the fastest ways to grab a product, and an in-app recipe discussion tool. 

In 2022, Albertsons also introduced a weekly budget helper online tool for its customers. “Albertsons is leveraging customer data to personalize the shopper journey as it aims to create a seamless connection between offline and online shopping,” said Albertsons Companies’ Chief Merchandising Officer, Jennifer Saenz.

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