4 Major Players Leveraging In-Store Experience in Digital Grocery
At a Glance
- During the pandemic, grocery retailers struggled to keep up with the shift to digital platforms
- Most grocers undertook massive transformations to keep up with changing customer expectations
- The pandemic declined and it became increasingly clear that many customers were just itching to return to physical stores
- Leading grocers are pioneers in leveraging the in-store experience in a way that tremendously improves customer engagement
- This article explores how major players like Kroger, Walmart, Target, and Ahold Delhaize are cashing in on in-store experience
During the pandemic, grocery retailers struggled to keep up with the shift to digital platforms. It was sudden and shocking. Most grocers, whether big or small, undertook massive transformations to keep up with changing customer expectations. However, the retailers were in for another surprise as the pandemic slowed.
The pandemic declined, and with time, it became increasingly clear that many customers were just itching to return to physical stores. While ‘delivery’ was still an option, shoppers found value in the experience of stepping out of the house and entering into a store.
For any grocer to succeed in today’s competitive environment, it is crucial to keep the customer at the center of everything. Innovation with a laser focus on customers is a key ingredient to success. Hence, building a fantastic in-store experience for them is not just an option but an operational necessity.
Leading grocers are pioneers in leveraging the in-store experience in a way that tremendously improves customer engagement. Here, we have a look at some of these key players:
Kroger, like most companies, did see an increase in its digital sales during the pandemic. The company was quick to accelerate its digital transformation initiatives accordingly. However, as shoppers returned to stores, Kroger began looking at how the future of grocery business is going to shape up. Striking a balance and building an effective omnichannel strategy became Kroger’s top priority. This meant focusing on creating a great in-store experience, while continuing to accelerate its digital capabilities.
“We have structured our ecosystem to leverage both, forming a dynamic network with our stores, our automated customer fulfillment centers [in partnership with Ocado] to capture the full growth potential with the most relevant experience for our customers,” said Kroger’s Chief Digital Officer and Chief Information Officer, Yael Cosset. “This approach allows us to capture more trips, from the planned weekly shop to the unexpected and time sensitive dinner; more customers; more occasions, in existing and new geographies; zero compromise for our customers capturing the full growth potential and no compromise for our shareholder, delivering a sustainable economic model.”
Walmart understands that customer needs and their shopping behavior are rapidly changing, and the ways they can be served are also expanding. The goal is to appeal to the customers by creating a personalized in-store experience. This can have a significant impact on shoppers’ purchasing behavior. Walmart’s reinvention of customer experience is primarily driven by data. The retailer optimizes inventory with real-time analytics and consumer preference insights.
“Building a seamless omnichannel experience for customers and prioritizing convenience for them is critical,” said Walmart’s President and CEO, Doug McMillon. “Our stores have become hybrid; they’re both stores and fulfillment centers. Last year, we increased the number of orders coming from our stores by 170% versus the previous year, which is on top of more than 500% from the previous year. Having inventory so close to so many customers is a competitive advantage. In some cases, we’re getting items to customers in hours rather than days.”
Target's recent sales growth exhibits the relevance and strength of its strategy. The company generated revenue of $109 billion and saw additional traffic of 2.1% in 2022. Target's business strategy puts stores at the forefront of its flexible fulfillment approach, fulfilling more than 96% of total sales and offering guests convenience at a lower fulfillment cost. To support its growth and dedication to quick delivery times, Target increased its digital fulfillment capabilities and supply chain capacity, adding six new sortation centers and one new distribution center, as well as finding ways to work more effectively and control its shipping costs.
Target completely remodeled 140 stores and made investments in hundreds more through projects to improve the effectiveness of its same-day services. It also built and opened Ulta beauty shop-in-shops while expanding Disney and Apple experiences. Furthermore, Target opened 23 additional stores, including one with a larger footprint, reimagined design components, and opened more stores in significant urban markets and on college campuses.
Even the most prominent figures in the grocery sector, like Ahold Delhaize which announced a solid market share growth in Q1 2023, face challenges in harmonizing the convenience of omnichannel shopping with operational profitability. Ahold Delhaize has adeptly employed its omnichannel strategy, merging the strengths of the traditional brick-and-mortar model with innovative solutions like the grocers smart cart to enhance delivery and pickup services.
Ahold’s premier brand in the United States, Food Lion, recently celebrated its 41st consecutive quarter of comparable store sales growth. This achievement is further highlighted by the brand’s click-and-collect service, Food Lion to Go, which is now accessible in 655 stores. Plans are underway to introduce this service in an additional 50 stores within the year.
“Food Lion's recognition by Newsweek as one of America's Greatest Workplaces for Diversity is a testament to our commitment to inclusivity,” remarked Ahold Delhaize’s CEO, Frans Muller. “Over the past decade, with its easy, fresh, and affordable approach combined with the integration of In store media network features, Food Lion has exemplified the vast potential for growth and capturing market share. This is achieved by consistently prioritizing the customer experience, rejuvenating store aesthetics, incorporating new digital functionalities, and investing in our associates and organizational culture. It's noteworthy that during this period, the brand has amplified its sales per square foot by an impressive 80 percent! As we look ahead, insights from Ahold's digital profitability 2023 forecast even more promising strides for the brand.”