What’s Cooking in the World of Grocery?

With Groceryshop 2024 fast approaching, we gathered three industry heavyweights to dish on the latest trends in grocery. Scott Benedict, former Walmart and Sam’s Club executive, Jeanette Barlow, ex-Instacart and IBM, and Das Pattathil, a pioneer behind Walmart’s online grocery and now a co-founder and product head at Nextuple, weighed in on what’s driving the grocery industry forward.

Whose Got the Cart to Take the Crown in the Grocery Game?

Walmart may be the current frontrunner, but it wasn't always in the grocery business. Inflation, supply chain hiccups, and evolving consumer demands have catapulted Walmart into a major player in the sector. Their ability to negotiate lower prices with manufacturers and introduce private-label products has kept prices down, unlike traditional grocers who often pass price increases directly to consumers. This savvy strategy has attracted a horde of cost-conscious shoppers, solidifying Walmart's place as a grocery powerhouse.

But hold your “carts”—Walmart isn’t the only player on the field. Retail giants like Target, Sam’s Club, Costco, and BJ’s have jumped into the grocery ring, taking a healthy bite out of the market share that used to belong to traditional grocers.

"Affordability isn’t just a buzzword anymore; it’s a necessity," says Scott, highlighting the role these retailers play in today’s grocery landscape. Walmart’s ongoing investments in delivery and omnichannel capabilities make it a formidable competitor.

The big question remains: Can others carve out a niche in this fast-paced market, or has Walmart's lead become insurmountable? The consensus is clear—there’s still ample opportunity for all players.

Why Did Online Grocery Take So Long to Take Off?

For years, grocery chains in the U.S. were skeptical about online grocery shopping. Unlike the world of general merchandise, grocery shopping was viewed as an emotional and tactile experience. Who doesn’t want to squeeze that avocado or check the freshness of the meat? The notion of having someone else select those items felt as strange as ordering sushi from a gas station.

Many grocers feared that the convenience of clicking and buying from home would discourage store visits and eliminate impulse buys. Who could resist tossing an extra bag of chips into the cart while strolling the aisles?

This skepticism slowed the adoption of digital strategies as traditional grocers clung to their in-store experiences. However, it soon became evident that engaging customers across multiple channels—online, in-store, or both—wasn't a negative-sum game. Shoppers who explored both avenues turned out to be more loyal, increasing customer lifetime value (CLV) and enhancing metrics like average order value (AOV), frequency, and retention.

The pandemic accelerated this shift, but the momentum was already building. The introduction of various payment options like Apple Pay, EBT, and SNAP benefits made online grocery shopping more accessible. Platforms like Instacart provided a lifeline, enabling retailers without tech expertise to easily establish eCommerce platforms.

Forward-thinking grocers seized these opportunities, refining shopping experiences through personalization and flexible fulfillment options. By offering services like click-and-collect or home delivery, they learned to meet customer preferences effectively. This customer-first approach is becoming essential; omni-channel strategies are now crucial for survival rather than optional enhancements.

Key Capabilities to Enable Omnichannel Success

To crush the omnichannel game, grocers must focus on inventory visibility capabilities. Jeanette shared a juicy tidbit about a grocery store famous for its rotisserie chicken. To avoid frustrating online customers by showing the product as available when their beloved bird wasn't in-store, the grocer opted to mark it as unavailable during certain times. While this may have seemed smart, it ultimately led to significant sales losses. Yikes!

This illustrates the need for a scalable, accurate inventory catalog that can be updated in real-time. The right technology can help grocers maintain a near-real-time view of inventory, ensuring customers find what they need whether shopping online or in-store. Predictive models can enhance availability promises, boosting customer confidence. For perishables, affordable technologies like sensors can automate inventory updates, improving accuracy.

Advanced analytics enable retailers to dynamically predict in-store demand. By reserving inventory for in-store shoppers, retailers can avoid empty shelves and enhance the shopping experience, maintaining higher sales across all channels.

Given the multiple demand signals at play, grocers need sophisticated solutions like a scalable Order Management System (OMS) to manage inventory complexities across channels.

How can Smaller Grocers go Omnichannel?

Smaller grocers often partner with platforms like Instacart or DoorDash for last-mile delivery and order management. As Scott notes, “It’s a quick way to enter the game.” These platforms allow smaller players to participate in the economy of scale in delivery and operations, also providing basic OMS capabilities.

However, relying solely on third-party platforms can diminish control over branding and customer experience. “You look like everybody else,” warns Jeanette. To truly own customer relationships, grocers must build their systems or partner with tech providers to create a unique shopping experience.

While leveraging partners like Instacart is an excellent first step, grocers should consider finding an OMS provider who understands the unique grocery landscape as they progress. You don’t want to blend in with the crowd!

We Understand Grocery - Join Us at Groceryshop 2024!

The grocery sector faces distinct challenges requiring specialized capabilities within order management systems (OMS). Here are some common use cases:

• Amendment Times: Customers frequently adjust orders before delivery or pickup, necessitating real-time updates and rapid processing.
• Price Adjustments Based on Weights: Many grocery items are sold by weight, requiring accurate price calculations during transactions.
• Substitutions: An effective OMS must manage substitution rules and offer alternatives based on customer preferences.
• Higher Number of Order Lines: Grocery orders often contain more items than general merchandise, necessitating a scalable OMS to efficiently process larger volumes.
  
  

The grocery landscape is shifting rapidly—don’t get left behind! Get “onboard” and see how we can help you “turnip” the competition!

Watch the full conversation with Jeanette, Scott and Das below.

If you're interested in talking to Jeanette, Scott and Das or Nextuple - please send us a request.