In the grocery sector, bricks meet clicks as retailers experiment with omnichannel

Photo: iStock/LDProd

Even as commerce continues to digitize, consumer patronage keeps brick-and-mortar grocery stores alive. ‘Grocery is a key stronghold for brick-and-mortar because of the sensory habitual nature of food buying,’ one expert says.

Tammy O’Donnell, VP of global professional services at CPG data company 1WorldSync, says that assessing the quality of a product in person is a key requirement for many shoppers. “Because they shop frequently for similar products, consumers can tell when something isn’t up to their standard much more easily in person than they can when buying online,” she told FoodNavigator-USA.

Hence, pure online shopping for groceries remain low, with market analytics company IRI projecting e-commerce food and beverage CPG sales to hit only 2.7% in share in 2020 (it’s projected to hit 9.3% for non-food).

Companies instead are testing the water with mixed formats—or omnichannel—often combining an interactive digital component to existing brick-and-mortar stores.

From Whole Foods to Kroger to Amazon

Among the examples are the newest Whole Foods stores in New York City and Philadelphia, which feature a specialty produce touchscreen kiosk called Baldor Forager, where shoppers and home cooks can order items that supplier Baldor Specialty Foods usually provides only to chefs and the foodservice sector.

Similarly, Kroger is increasing the digital component of its stores. In an interview with The Wall Street Journal, CEO Chris Hjelm said that the company is trying out interactive shelves that “detect shoppers in the aisles via their smartphones to offer them personal pricing and product suggestions as they walk along.”

At the other end, Amazon is going the opposite direction by adding a brick-and-mortar component to its digital empire starting with Amazon Go, a beta convenience store open to Amazon employees in Seattle that is void of cashiers and check-outs. Instead, sensors track what items shoppers have taken and the amount is automatically deducted from the shoppers’ linked smartphones.

A new route to market: The brand and retailer dynamic is evolving

What does the rise of omnichannel retailing mean to food brands? “This dynamic is evolving. Brands have typically been focused on receiving exposure through the right shelf space or end cap, but today they have to think about getting discovered both while in store and online,” O’Donnell said.

Consumers have even more control in the marketplace, she added. If shoppers don’t have the information they need about a product, they aren’t likely to make a purchase, “and brands and retailers have to work together to close the deal, providing the right information at the right time.”

In omnichannel retailing, ‘smaller companies still run into the same issues that plague industry leaders’

With the rise of omnichannel shopping, the cost to enter the market for indie and small brands has drastically lowered, O’Donnell said. But then they face the same issues that bigger companies face, “such as managing data, inventory, and integrating supply chains across channels,” she said.

“There’s a huge demand for product data—the brand must be able to manage, aggregate, and distribute that content to the retailer,” she added. “Big brands are better equipped to make sure all their retail trading partners have the information they need to successfully and accurately represent their brand, but medium and smaller-sized brands run into issues as well.”

Larger companies and legacy brands have their own unique problem in the omnichannel age: Transparency. With increased access to information both online and print, there’s a higher expectation from consumers on knowing the products they buy from supply chain to point of consumption.

“People want to know exactly what’s in their food, and legacy brands that have had the same ingredients and recipes for a long time may be unwilling to share (or hesitant to expose) their full ingredient list and sourcing information,” O’Donnell said.

“These established companies have to choose between keeping their existing brand identity or meeting the demands of today’s consumers.”

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