Post #4 - You Need More Than Luck, You Need a Better Omnichannel CX

Authors' Note: The grocery industry has been thrust into the spotlight because of increased demand due to COVID-19. There are many short-term challenges companies are facing (keeping customers and employees safe, maintaining payroll, stock shortages, sanitization of products and stores, an increase in delivery orders, etc.). At the same time, the industry has to start preparing for what will likely be permanent shifts in consumer behavior as it relates to digital engagement. We're currently seeing more people engage online--and many for the first time--be it for schooling, work, entertainment, or shopping. Online shopping for food and groceries, in particular, has become increasingly important. Many people creating new digital habits will maintain them after the crisis recedes. Right now, people are shopping wherever they can, but over time, they will choose the options where they can get the best products and experiences. Although our motivations for grocery shopping online may have changed, the mandate to create a compelling experience has not.

With these thoughts in mind, we're publishing a 5-part series on the digital grocery experience. We’d love to hear your thoughts and ideas.

We’re back with the fourth installment of the “You Need More Than Luck, You Need a Better Omnichannel CX” blog post series. Earlier this week, we discussed the opportunity to address the growing trend of shopping for others with new account management and social shopping features. Today we explore how grocers can meet the needs of customers seeking food that they can purchase and consume within a 1-2 hours.

Customer Experience Opportunity #4 of 5: Hangry and I Want Food Now

What is the opportunity? 

Before the COVID-19 crisis, restaurant and grocery sales had been growing YoY at similar rates (4% and 3% respectively) (1) Driven by convenience, the off-premise market (carryout, drive-through, delivery, etc.) had been gaining share, with customers consuming one-third of restaurant meals at home. Grocers responded to this trend by offering meal kits and more prepared food items as we witnessed the rise of the “Grocerant”—the pairing of grocery stores with in-house restaurants. Now, the eat-at-home trend is even more pronounced as people practice social distancing. At the same time, the grocery run is often the only connection people have to the outside world. Additionally, fears of recession and unemployment have made shoppers more budget conscious. All this has led to a return to reliance on the local grocer as the most convenient, reliable, and budget-friendly option.  

Grocers can better serve customers now and in the future with the right assortment of prepared food products and a compelling ordering experience through which customers can access them. While grocery store meal assortments and online offerings have been changing to reflect customer needs, there is still a disconnect with the ordering process. Ordering a simple meal from a grocery store often requires customers to hop from category to category on the website to find available items. Similarly, customers often must purchase full-sized entrees, rather than easily combining serving-size entrees, side items, and beverages into a complete meal. Conceptually, grocers should provide the same offerings and tools as restaurants including order ahead for pickup and meal delivery options. 

Note that at the moment some customers are returning to cooking meals at home as a form of entertaining themselves while homebound and keeping costs down. However, since online ordering is already designed for buying ingredients, we will not focus on that current trend.

Why is enabling online ordering of ready-to-eat meals important for grocers? 

For decades, Americans’ cooking behaviors have shifted in response to more women joining the workforce and having less time for traditional domestic responsibilities. Coupled with increased commute times, this factor creates a need for quick, yet nourishing meals.

Half of Americans now say they hate cooking (2) and view it as a chore, with the average time spent preparing dinner cut in half. Additionally, as the average marriage age increases, people in the US eat alone much more frequently than ever before. For people eating alone, the process of food prep, cooking, and clean-up may not feel worth the effort.

Simply put: our eating habits have changed. Over the last two decades, only 60% (2) of the meals that people eat at home are even cooked at home. While the percentage of disposable income that an average family allocates toward their food budget remains unchanged, the grocery vs. dining out split is converging, meaning more Americans are increasing restaurant spending while decreasing grocery spending (3). Note that it is possible that this shift will be less pronounced as more people grow accustomed to purchasing groceries and cooking at home during the pandemic or as people carefully manage their budgets. Still, these trends have been developing and intensifying over decades. Yet, few grocery retailers have truly invested in online experiences to make it easy to order and receive prepared meals.

What are the next steps? 

Retailers should assess their ordering experience around prepared foods from the perspective of the customers. For example:

·     Is there an online menu that highlights short-term eating options, including meal kits, items from the deli, hot bar, salad bar, etc.?

·     Do product and navigation options reflect how people buy a single meal, including serving sizes, price bundling, or dynamic recommendations; or just how they buy ingredients/stand-alone products?

·     Can meals be customized for individuals and groups?

·     Are ordering options available for those who wish to order meals in advance as well as those seeking immediate pickup or delivery?

·     Are customers confined to traditional grocery delivery and pickup windows or do fulfillment windows reflect the more immediate needs of meals that will be consumed within 1-2 hours?

·     Can customers add a meal or meals to their regular grocery order in the same way that they could if they stopped in for lunch or after work?

How can IBM help?

Implementing a strategy focused on meals to capture the lucrative grocerant customer will likely require operational changes in addition to enabling technologies and experiences. IBM (https://www.ibm.com/services/business) helps grocers develop strategies that take into account the people, processes, and technologies necessary to bring omnichannel customer experience initiatives to life.

What do you think?

We’d love to hear from you in the comments. For grocers, how does your brand cater to grocerant customers? For all you hangry shoppers out there, which grocers would you like to see provide this feature? 

Come back on April 7 for the final post of this series, in which we explore an emerging need to shop for diverse diet requirements and preferences.

Authors

Nirupama Raghavan, Kamaria Campbell, Ruchi Fruitwala

Digital Strategy Consultants, IBM

Check out our previous posts:

Customer Experience Opportunity #1 of 5: Too Many Apps for That…

Customer Experience Opportunity #2 of 5: Wisdom of the Crowd

Customer Experience Opportunity #3 of 5: All in the Family

References:

1) https://www.cnbc.com/2019/08/19/americans-putting-more-of-their-budget-toward-eating-out.html

2) https://pos.toasttab.com/blog/why-more-people-are-choosing-to-eat-out

3) https://www.creditdonkey.com/grocery-shopping-statistics.html