The COVID-19 pandemic brought rapid and seismic shifts to the way the grocery industry does business. Even with surges in revenue, practices had to be continually adjusted to meet the changing needs of consumers. Now that the country is poised to emerge from pandemic-era shopping, some adjustments may become permanent. Some of these innovations were brought on stronger by shifting needs; some have been a long time coming. What will grocers invest in the most after facing the challenge of COVID-19? Grocers will invest in streamlining omnichannel grocery—particularly online services—as well as in AI and cloud technology, hiring and labor, and the continuing development of private labels.
COVID-era grocery saw rapid growth in eCommerce solutions across the board— and the popularity of online grocery shopping is not dissipating post-pandemic. Grocers continue to innovate online grocery platforms in an effort to make the omnichannel experience effortless for both retailer and consumer. One way retailers are doing this is by making the eCommerce platform private and branded.
Stater Bros. recently announced development of “an online grocery platform under its own brand using technology provided by Mercatus, a Toronto-based provider of e-commerce systems for retailers.” A privately branded eCommerce platform will allow Stater Bros. to build stronger relationships with customers with a “journey that truly embodies [Stater Bros.’] promise of excellence in food and service,” says CEO Pete Van Helden. The Mercatus platform specifically will also allow Stater Bros. to take advantage of the CitrusAd retail media network, creating additional revenue streams through CPGs looking to advertise products on the site.
This development follows a trend of grocers investing in their own online grocery platforms while maintaining pre existing relationships with third-party delivery providers like Instacart and Shipt. Another grocery operating its own house-branded online platform, Sprouts Farmers Market, is seeing a growing percentage of digital revenue coming from the private system. Privately branded eCommerce allows grocers a direct avenue to consumer habits and information, allowing the experience to be personalized, streamlined, and user-friendly. A Total Retail article on the transformative year of COVID-19 for grocery indicates that the shift to online ordering is already encouraging “many grocers to take in-house control of their commerce, fulfillment, and martech technology, moving away from some partners….[allowing grocery to] own the customer relationship and customer data for a better chance at retaining customers for the long term.”
Data is another rising trend in grocery. Some grocers are harnessing AI and cloud technology in order to further customize and enhance the omnichannel experience—and, most importantly, to put the consumer first.
Midwest grocer Hy-Vee recently signed a multiyear partnership with Google in an effort to enhance digital offerings in-store and online. The partnership will allow for a range of Google Cloud-powered solutions to streamline online shopping, including incorporating the Hy-Vee Aisles Online program, integrating their virtual dietician services, and allowing customers to create vaccine appointments online. The merger will also allow Hy-Vee customers a variety of other services like predictive shopping cars, and simplified processes for grocery ordering, pickup and delivery. Similar to Hy-Vee, Albertsons Cos. announced its own partnership with Google Cloud earlier this year in an effort to merge their broad reach and retail capability with Google Cloud’s efforts toward customer-centric disruptive innovation.
Data technology and grocery stores will become increasingly prevalent. Joining forces with information technology companies allows grocers more access to consumer habits, and the ability to watch these habits change over time. Reaching consumers with streamlined solutions for online ordering, special perks of loyalty reward programs, and personalized coupons are just a few things predictive technology can allow grocers to achieve. Subtle personalization toward the consumer online or on-app helps the shopping experience feel exclusive and tailored without feeling invasive—and may just help retain that consumer for many years to come.
A deficient digital grocery experience runs the risk of being disconnected from the physical shopping experience, or being difficult to navigate. Even post-pandemic, online shoppers will expect easy-to-use online platforms and quick and quality service when it comes to pickup and delivery. Presenting a more holistic digital experience benefits both the grocer and the consumer.
The future of collaborations between information services like Google and grocery stores is full of innovative possibilities. Carrie Tharp, VP of retail and consumer at Google Cloud, explicated future developments Google Cloud hopes to tackle with grocery retail in the future: “We’re looking at inventory optimizations; we’re working on early proofs of concept for how to have the right product in the right place at the right time, using AI to improve performances. Another big one for our grocers is logistics optimizations, especially the last-mile fulfillment and delivery experience.” Cloud and AI technology present myriad opportunities for streamlining grocery logistics; and can serve to interconnect the operation of the retailer and the grocery shopping experience with ease.
Hiring & Labor
Despite a still-high U.S. unemployment rate, grocers are struggling to retain workers. Given the health and safety concerns of working on the frontlines of grocery retail during the pandemic, hesitance to return or apply is understandable. But as summer brings customers in larger droves, vaccinations continue to roll out, and mask mandates are lifted, retailers find themselves in a labor predicament, and will have to be creative and thoughtful when it comes to employment outreach and hiring events.
Kroger recently held its first week of “hybrid” hiring events—both online and in-person interviews—looking to hire 10,000 associates in positions in retail, e-commerce, pharmacy, manufacturing and logistics. The grocer recently completed its Restock Kroger strategic plan, which involved investing heavily to raise wages for frontline workers. An incremental $800 million increase took place from 2018 to 2020, $300 million over initial plans. “The company reported that the investment lifted the average wage rate to more than $15 per hour and, including its comprehensive human resources and retirement benefits, the average hourly rate exceeds $20.”
Investment in labor—at all company levels—is an investment in business success. Fair compensation and treatment of employees is a no-brainer good practice: Workers employed by companies with clear disinterest in them will undoubtedly lack motivation to remain with such a company. Investing in employees as humans improves morale, customer service, and can positively influence revenue.
Private brands are increasingly garnering consumer attention, surging in both popularity and sales. The results of a recent survey conducted by DemandTec and Progressive Grocer parent company EnsembleIQ found that consumer interest and trust in private labels is on the rise. Their findings stated that “an astounding 80% of respondents to the survey considering them to be of similar quality to or higher caliber than national brands.” With growing interest shown by consumers for often more price-savvy selection of private label products, grocers are stepping up to the challenge.
When it comes to growing and advertising private labels, innovation will help retailers make their own brand stand out. Albertsons recently revamped it’s private brand Soleil, the refresh coming just in time for summer. The relaunch of Soleil sparkling water came with exciting, colorful new packaging, and features four new flavors: Mango, raspberry lime, tangerine and watermelon. Heightened demand for sparkling water is here to stay: “According to Nielsen, sales of sparkling water were up 21% in 2020.” Albertsons has also partnered with Spotify to feature Soleil in its “Sip to the Beat” summer promotion, allowing shoppers to unlock one of three exclusive playlists—Amped Beats, Chill Vibes and Good Times—while enjoying a refreshing can of Soleil.
Optimization of private brands is the key to a competitive advantage over national brands and CPG distributors. Like Albertsons with Soleil, many retailers are looking to optimize private brands by marketing toward trends. For example, the rise in plant-based products is currently a wide-open door for private label brands like Target. The retailer recently debuted Good & Gather Plant Based, an expansion of its private-label Good & Gather, in an effort to meet growing demand for plant-based options. Kroger has also expanded plant-based private label products over the past year, as has Albertsons, launching a line of sustainable wines and introducing compostable nonfood items under the Open Nature brand.
In efforts to make private labels begin outpacing national brands once more post-pandemic, it will be up to grocery retailers to entice consumers through trendy products—whether that means plant-based meat or sparkling water—and creative, interactive marketing campaigns.
Innovations in eCommerce, Tech, Hiring & Private Labels will Help Grocers Stay on Top of Revenue
As shoppers emerge once more into in-person experiences, grocers will have to get creative in their efforts to retain the high profits of the pandemic-era. Investments in streamlined eCommerce systems, cloud and AI technology, labor initiatives and private label brands can all help grocery retailers retain the increased consumer interest brought about by COVID-19.