guidance for 2016: time to put online grocery into context
TRANSCRIPT
Guidancefor2016
TimetoPutOnlineGroceryintoContextEmbraceablendedbusinessopportunityandlistentoshoppers
March2016ByBillBishop,ChiefArchitectBrickMeetsClick
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Overview
Movingforward,itwillbecrucialtoreinventthegroceryretailmodelbyleveragingallassets–digitalandphysical–andthismeansputtingonlinegrocerywithinthecontextofthetotalbusiness.
“Thewinnerswillbethosewhounderstandthattheirsuccessdependsontheblendedperformanceoftheironlineandofflineofferings,notonevs.theother.”BillBishopChiefArchitect,BrickMeetsClick
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ContentsTHEVIRTUOUSCYCLE>PAGE4
ThevirtuouscycleforonlinegroceryisinfulleffectConsumerengagementandretailerinvestment
WHAT’SNEXT>PAGE6
Whatcomesnextforonlinegrocery?Increasedspendingandfragmentation
WHATTODO>PAGE8
Strategicguidancefor2016Embracetheblendedexperienceandlistentoshoppers
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Thevirtuouscycleforonlinegroceryisinfulleffect.
Shopperexposureandinterestaredrivingretailerinvestmentandretailerinvestmentinturnisdrivingshopperengagementandadoption.
Part1:SHOPPERENGAGEMENT
>Onlinegroceryisnolongeranichebehavior.Morethan40%ofUShouseholdshavenowboughtgroceriesonline,1andtheseexperiencesarechangingthewayconsumersshop.Accesstoinformationandnewchoicesmakesthepathtopurchasemorepersonalandthetraditional“consumerdecisiontree”amuchlessusefulguideforpresentingproducts.
>Shopperneedsarebeingreshapedbydigitaloptions.Theneedsthatdrivegrocerytripmissionshaveevolvedasdigitalcapabilitieshavebecomeubiquitous.Today,meetingthoseshopperneedsandwinningthetripincreasinglyinvolvesofferingonlinetoolsthatmakethetripmoreefficientandletthecustomerstarttheirshopping/orderoutsideofthephysicalstore.12015BMCresearch,seeHowConsumersAreUsingOnlineGroceryandWhatItMeansforRetailersin2016
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Part2:RETAILERINVESTMENT
>Increasedinvestmentistakingplaceacrosstheboard.
TRADITIONALBIGPLAYERS
...likeKroger,Ahold,WholeFoodsandWalmartseeonlineservicesasincreasinglyessentialtoservingtheircustomers–andasoneofthekeystodrivingincreasedsales.
BIGDIGITALPLAYERS
...likeAmazonandGooglearedisruptingthemarketbyapproachingonlinegroceryasabuildingblockintheirbroaderbusinessstrategiesratherthanasabusinessthatmustbeprofitableonitsown.
REGIONALCHAINS&INDEPENDENTS
...likeHyVee,Weis,Woodman’sandDashesareusingonlineservicestoincreasetheirshareofcustomerspending.
SPECIALTYONLINERETAILERS
...likeDoor-to-DoorOrganicsarebringingmoreservicevaluetoconsumersbyaggregatingdesirableproducts.MealkitproviderslikeHelloFreshcompeteinthemealsolutionsniche,ofteninnewwayssuchaspartneringwithotherdisruptiveserviceslikeUber.
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Whatcomesnextforonlinegrocery?Theamountofonlinegroceryspendingwillincreasesignificantly,andthegrowinguseofdigitalshoppingtoolswillfurtherfragmentthemarket.
>Bigonlinespendingincreases.We’reapproachinganinflectionpointthatwillrapidlydriveuptheshareofonlinegroceryspending,asshoppersincreasetheiruseofdigital/onlinetoolsforfull-basketshoppingtrips.
• Marketaftermarketwillreachthatinflectionpointaslargetraditionalretailersrolloutonlineshoppingoptionsthatmakeitaloteasierforconsumerstogettheirbroadgroceryshoppingdoneatoneonlinelocation–especiallytoservethe“shopwhenIwant”and“sticktomylist/budget”tripmissions.
• Manyoftoday’s$25to$35,three-to-fiveitemordersforspecializeditemswillgrowtolarger$140to$170ringsashouseholdsexperiencetheconvenienceofshoppingmorebroadlyforgroceriesonline.
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>Morefragmentationandtouchpoints.Newplatforms,thegrowinguseofonlineshoppingtools,andincreasedcompetitiontoservethedigitalneedsexpressedintheupdatedtripmissionswillincreasecustomersatisfaction–butwillalsofurtherfragmentthemarketandacceleratechangesinhowpeopleshopforgroceries.
Newonlineplatformswilloffernewtouchpointsandimpacthowpurchasedecisionsaremade.• Amazon’sAskAlexa(viaEcho)andother
evolvingcommunicationchannelswilloffershoppingshortcutsforfindingandreplenishingproducts.
• Existingonlineplatformswillcontinuetomakeiteasierforshopperstomovedirectlyfrom,forexample,arecipetoanecommerceplatform.
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Strategicguidancefor2016
1.Putonlinegrocerywithinthecontextofthetotalbusiness.
Traditionalretailerswillrealizethatwhileit’scriticaltooffertheircustomersanonlineshoppingoption,theirultimatesuccesswillbedeterminedbythecombinedperformanceoftheironlineandofflineofferings,notoneortheother.Thismeansleveragingallassets–digitalandphysical(includingstores)–tocomeupwithmoremeaningfulanddifferentiatedwaysto:
• Becomethedestinationofchoicefortripmissionsthatareimportanttocorecustomers.• Createfunandengagingshopping(onlineandoffline)thatappealstofeelingsandemotions
inadditiontoprovidingaccesstoproducts.(Thisisn’tanewidea,butit’snowbecomemuchmoreimportant.)
• Fulfillordersinwaysthatfitcomfortablyintohowconsumerswanttolivetheirlives–withoutabigupchargeforthisservice.
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2.Listentolocalshoppers:Theywilltellyoualot2.aboutwhatyoushouldbedoing.
Headsup!Theapproachinginflectionpointthatwilldriveuptheshareofonlinespendingandtheincreasingmarketfragmentationwon'thappenuniformlyacrossthecountry.Itwilltakeplacemarketbymarket,drivenbythetoolsandservicesthatareavailableandinuse.Thislocaldynamicmakesitessentialforaretailertounderstandwhat’sgoingonamongtheshoppersintheirarea.Inotherwords,youcanlearnalotaboutwhatyouneedtobedoingbydevelopingagoodunderstandingofhowyourcustomersareusingthenewdigitalshoppingtools(particularlythoseofferedbythecompetition)andwheretheyareheadedintermsofmoreconvenientshopping.
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BrickMeetsClick
Wemakesenseoutofwhat'shappeningingroceryretail,andprovideguidanceonhowtomoveforward.Useourexpertiseto
>gainclarityaboutwhat’shappeninginyourmarket.>identifykeychangesandanticipatewhat’scoming.>evaluateyourcustomers’behavioronkeybenchmarks.
CheckoutourOfferingsatbrickmeetsclick.comorcontact:
SteveBishop,[email protected]
Findinggrowthopportunities
intoday’schangingretailenvironment.