What is wrong with supermarkets?
Everyone’s heard about the so-called “retail apocalypse”. And when it comes to the future of supermarkets, the media has been hyping it up as if it was a given that physical stores are becoming obsolete. Yet, many are questioning this theory and argue that the sector is simply evolving.
The “retail apocalypse” is the name given to the wave of thousands of established American retailers having to close their stores since the beginning of 2016. The reason? Although there are several factors involved, it is most commonly attributed to the rise of online competitors such as Amazon.
When it comes to supermarkets, traditional grocery chains are facing many burdens. They are struggling with new retail formats (e.g. home delivery services) from their e-commerce rivals, but also with excess square footage, low margins, and the expansion of low-price retailers like Lidl and Aldi.
There is no doubt that retail is oversaturated, but it is not going to die anytime soon. According to a Digital Commerce 360 report, by 2025 about 20% of grocery shopping will be made online – which means that the future of supermarkets involves a big majority of sales still coming from brick-and-mortar stores during the next few years.
Therefore, despite the rapid rise of online shopping and digital channels’ increasing influence on grocery retail, external forces like Amazon are not likely to lead to the demise of physical supermarkets – retailers have ways to control and prevent this.
In fact, the shift to digital is opening up a whole new range of opportunities that will transform the path to purchase.
The new grocery shopping experience
If stores want to keep shoppers coming in, they should start by looking at what kind of benefits digital touchpoints can offer and traditional physical retail does not.
Deloitte’s Grocery Digital Divide report takes a look at how consumers use digital touchpoints to improve their overall shopping experience, revealing that:
- 77% of consumers surveyed make use of digital touchpoints to find inspiration;
- 80% do so to browse and search for products;
- In 1 out of 5 occasions, digital is used to select and validate the products, which may in turn increase grocery spending;
- One-third of grocery shoppers trust online recommendations and reviews to determine their purchase.
To stay competitive in the grocery sector, companies must integrate all digital touchpoints that can make the shopper’s journey more efficient and appealing. Mobile technologies have the power to transform the grocery path-to-purchase and add value to the overall experience.
What features can supermarket apps integrate?
- Locator to find the nearest store
- Instant access to the online store or catalog to reach the full inventory or items out of stock at the specific location
- Special offers and deals
- Reviews and product recommendations
- Add items to shopping lists and monitor availability in-store
- Recipes and inspiration
- In-store navigation
- Gamified experiences
…These are just a few examples to start with.
Retailer apps help increase sales but also raise customer loyalty. For instance, think of an app that includes a game that rewards users with points as they shop and use these points to redeem discounts via the app – shoppers will likely keep returning.
Visual recognition technology can bridge the gap between online and offline, and turn every product (and marketing collaterals) into an interactive touchpoint. It generates excitement and engagement amongst customers, and it eliminates the hassle of having to search for a specific product in an app manually.
Users just need to open the app, scan the item they are interested in, and can instantly access the corresponding content for any stage of the path to purchase: reviews and comparisons, complementary products, inspiration about what to cook… The options are endless!
Let’s take a look at the future of supermarkets
Our first example is our personal favorite and the most recent. The Migros Discover app, developed by Y&R Switzerland, forms a new communication channel between the shopper and the store that starts with the product.
Chiquita Bananas campaign, developed by this banana brand in conjunction with FunMobility, made it possible for consumers to use their smartphones to scan Chiquita Banana stickers and trigger different kinds of digital content, including mobile postcards, sweepstakes, and several prizes. Materials were related to Minions film, that had been released during the summer of 2015. On average, visitors executed over 10 activities from this gamified digital content, which made it clear that it can be an essential tool that brands and supermarkets can use to better engage with their customers.
Tesco partnered with Engine Creative to launch an app called Tesco Discover. The goal of this app was to raise brand engagement with shoppers through their smartphones, encouraging them to ‘discover more’.
Shoppers can scan product labels, magazines, and in-store POS and find out more about the products, interact with editorial content and in-store experiences.
As the digital influence on grocery continues to grow, it is dividing retailers – those who do not embrace it are going to fall behind.
Mobile is driving shopper behavior and expectations. 83% of shoppers use their phone in-store to help them choose a brand or product during a shopping trip, and that creates a valuable opportunity for retailers, worth tapping into.