Going the Extra Mile Means “Last-Mile” and More

Sylvain Perrier, President and CEO of Mercatus

We live in a consumer-centric society driven by the on-demand economy. With a push of a button, we can stream our favorite movie or TV show, order an Uber, deliver food from our favorite restaurants, and now, even get groceries delivered as quickly and conveniently as possible. These experiences are fueling the current age of convenience and choice for consumers – factors that are driving a revolution in grocery retailing, as supermarkets move quickly to create advanced online shopping experiences for their customers.

Giving your customers options is critical to retailers’ success. According to Coresight Research, 23.1% of consumers bought groceries online in the past year, with 51% opting to pick up at the store and 45% choosing to have their groceries delivered. With split preferences among consumers, the ‘extra mile’ means offering a number of options to get groceries into the hands of your shoppers, whether it’s pick-up in store, curb-side collection or delivery to the consumer.

The stakes are high, too; Target and Walmart are making great strides to step up customer service with in-store fulfillment and last-mile delivery solutions, not to mention the Amazon-Whole Foods juggernaut. Many other grocery retailers are stepping up their omnichannel services as well, and the year over year growth is telling. For example, according to a survey in Progressive Grocer’s "85th Annual Report of the Grocery Industry” report, 30.8% of grocers now offer curbside delivery, a jump from 18.3% in 2017.

As consumer expectations evolve, retailers can gain a competitive advantage by elevating the last-mile delivery experience with a wide range of fulfillment options. Brick-and-mortar grocers can hold an advantage over pure-play online retailers, too. This is especially seen in European markets, where omnichannel retailers dominate, underscoring the fact that pure-play e-tailers don’t necessarily have the advantage. And as Coresight Research notes, omnichannel grocers hold the edge in overall share of wallet, with a number of data points suggesting that shoppers tend to not use Amazon for conventional, “full basket” grocery shopping.

Getting the Extra Mile Right

Whether it’s consumer delivery or click and collect, supermarkets must implement the right strategies and processes to ensure they execute flawlessly as they offer their customers an increased range of choices.  Here are four key things grocery retailers should keep in mind:

  1. Volume of order scaleAs noted before,grocery retailers should accommodate not only standard delivery, but also round out their fulfillment options, including curbside or in-store pick-up. These offerings will help enhance the online shopping experience with simple end-to-end fulfillment.
  2. In-store picking Quicker and faster in-store picking is a vital component to last-mile delivery. Whether it’s picking multiple orders at once or zone picking and enabling associates to specialize in certain departments, grocery retailers must find ways to make fulfillment as fast and efficient as possible.
  3. Progress notifications – Inbound communication with the customer is key to ensuring customer satisfaction. This means having the tools and systems in place to continuously notify customers where you are in the fulfillment process. Retailers can ask about substitutions and of course, let customers know when an order is on its way and how to track the package.
  4. Deliver on the promise – Last-mile delivery comes with operational challenges. How do you deal with delivering melted ice cream or spoiled meat? Retailers must delight the customer with quality products by having the right systems in place to prepare and route orders efficiently.

Building an Emotional Connection to Your Customers

Having these kinds of options available is a powerful way for grocery retailers to create stronger, more meaningful connections to their customers. But simply addressing the logistical hurdles in implementing online ordering and multiple fulfillment strategies is not enough. Grocers must become masters in marketing to their customers in a new, more personalized way, keeping in mind that their competitors – Amazon in particular – are experts in personalized, digital marketing. Sprouts Farmers Market and Whole Foods also stand out as examples of grocery retailers that are successful in understanding the power of inbound marketing and using digital channels to engage their customers.

Another reason grocery retailers should make omnichannel personalization a priority is because it can help differentiate their brand from competitors. These retailers will hold an advantage, too, since they have detailed, unique knowledge about their customers’ shopping habits and preferences. They can market to their shoppers with personalized offers and intelligent promotions and use digital channels to communicate the latest special events and themed shopping experiences. By doing this, retailers can create a consistent experience for customers, whether they engage with a grocery retailer in stores or online, adding value and emotional attachment to the brand.

Going the Extra Mile

The combination of new technology, evolving consumer expectations and new market entrants will continue to reshape and disrupt the grocery industry going forward. The rise in omnichannel is challenging the grocery industry to expand fulfillment options and make grocery as easy and convenient as possible at every touchpoint. Five to 10 years from now, the grocery industry will shift even more as generational influences impact consumer preferences and the shopping experience. As behaviors change among these generations, grocers will have to cater to these influences and find ways to meet these demands.

The right technology can help retailers meet consumer choice by offering greater customer service options. Grocery retailers must also build personalized connections with customers, all the way to the last-mile, to create strong brand loyalty in a competitive landscape. Now is the time to innovate and find ways to meet ongoing demands by going the extra mile for consumers.

The writer is President and CEO of Mercatus.