According to recent research mentioned in an inBlurbs story this week, grocery industry executives say that they will go from 12% usage of social media to 65% over the next 5 years. A key motivator is trying to stand out from their competitors, promoting deals and trying to gain loyalty. I covered a similar concept in my story in The Future Diaries.
This represents interesting challenges for the industry because grocery today is largely about moving mass product with low margins through their stores as quickly as possible. Effectively they want to achieve a stock turn of at least 12, meaning that they want to refresh their total in-store inventory value every month.
Supermarket chains are incredibly efficient when it comes to the Just In Time supply chain. Even in New Zealand, they often deal direct with farmers, fisheries and manufacturers around the world, right down to details of manufacture, shipping and distribution.
Grocery is a finely tuned science thanks in no small part to companies over the years like IBM, NCR, ICL, Datachecker and others, who effectively taught their customers how to manage their inventory and pricing in order to sell their systems. Together with strategies from companies like Arthur Anderson, they learned all about shopping psychology, shelf placement, companion marketing, dump bins, shelf talkers, routing and much more.
Scanner manufacturers developed technologies that became more ergonomic with side and bottom scanning, embedded scales and today the technology is so well trusted and understood that they continue to reduce their costs in very many stores by having customers do their own scanning. This means shorter queues, faster throughput and reduced staffing costs. They also significantly reduced costs because of EDI and sharing information with their suppliers, getting FMCG companies to manage shelf placements with their own merchandisers, in conjunction with applications like Apollo and Spaceman, and often even pay for the right to occupy specific strategic shelf placements in the stores.
Payment systems with EFTPOS and credit cards at the Point of Sale have also made a big difference, reducing cash handling costs, security risks and effectively having money banked before the customer leaves the store.
This is a little bit of a long winded way of saying that when it comes to movement of stock and customers, the grocery industry is the master of retailing. An average supermarket operator can make a very good income. One who works the systems that they were taught effectively can make outrageously good incomes. This makes it harder to motivate them to go beyond their traditional means of marketing, which are largely letterbox brochures, TV and Radio advertising.
Some, like Countdown in New Zealand have now developed mobile apps that allow you to scan the bar-codes on products as you consume them in the home to create shopping lists and will even navigate you through the aisles when you get to the store. It also allows you to order home delivery if you don’t want to go there yourself. It includes specials, recipes (and the ability to add the ingredients to your shopping list) and much more as this video shows.
One of the concepts they promote from a social perspective is the ability to send your shopping list to friend. You can share the app from within by sending a link to a friend via Email, Twitter or Facebook, but that’s as far as it goes for now in regard to social media.
So what could they do? Here are a few thoughts.
- Share the recipes with friends. Allow people to add their own recipes, perhaps in conjunction with Facebook. Run competitions for the best recipes.
- Add a check in feature which adds points to the loyalty card. (Do you think its funny that we always talk about the supermarket checkout, isn’t checking people in just as important. Getting them to stay only as long as they like, but making it interesting got them when they have time to stay longer?) More points the more often they go to the store. Add points for recommending the store and badges for achievements, like trying new products or buying healthy foods. Of course what they don’t want to do is remind people how much they have spent.
- Allow people to recommend the store from within the app, tell their friends about good deals they found, like a wine that is on special.
- Use hashtags and have a huge screen in-store that allows staff and customers to see what is being said about them. There may be some moderation required, which is pretty easy to do from a software perspective, but it could really make the store an exciting interactive environment. People in the store could be communicating with each other and with staff.
- What about the cafe? There was a trend a while ago for many supermarkets to have in-store cafes. This seems to have died down a bit, possibly because many operators didn’t want to own the cafes themselves and because they weren’t integrated into the business, contractors had to make them run profitably as a separate entity. Tie the cafe into the social media and make it a social place. Didn’t it used to be a normal thing for people to do their grocery shopping and meet their friends for coffee. Put it in the middle of the store so that they have their coffee halfway through completing their shopping, but before they get to the deli and frozens.
- Use location based services to allow people to see which of their friends are in the neighbourhood, or even plan a schedule so they can go shopping together.
- Use location based notifications to remind people that they have items on their shopping list that they haven’t purchased yet and that they are close to one of the chain’s stores. Offer them driving directions. With the loyalty points, one of the loyalty prizes could be a free copy of Metroview NZ City GPS Car Navigation, which has an API allowing you to say, navigate me to the nearest store. This would be great for people on holiday, or going to a party or BBQ and wanting a store close to their destination.
There is only so much you can do with grocery technology. It is all an evolution not a revolution and the improvements tend to be relatively minor today from an ROI perspective. Particularly as they tie to the capability of a very expensive POS investment every few years.
Location and Social Media offer on mobile and tablet offer some really exciting new opportunities. I don’t think it will be long before there are iPhone and tablet mounts on supermarket trolleys, hooked up to free WiFi in store. You will be able to scan your own products on your own device as you go through the store. You will have in-store navigation, offers based on location, season, context and profile.
Whilst grocers offer home delivery and it has its place, they do want you to go to the store and be exposed to new products, high margin items, get you to buy more than you would on delivery and as per the story I mentioned in The Future Diaries, the grocer actually does want you to feel like this is your store, that you have a personal relationship with them, just like they did 50 years ago.