Year: 2018

It’s expected that by 2022, 20% of all grocery sales will come from online shoppers. And with 70% of consumers purchasing some of their groceries on the web, I’m definitely in the minority, having never ordered groceries online myself.

I’m not opposed to online shopping or curbside delivery. They’re great options for those with kids, those who have lost their patience dealing with always-full parking lots, or those without access to reliable transportation. We could all benefit from wider aisles and shorter checkout lines. Time is an important resource, and most of us feel like we don’t have enough of it.

Call me a traditionalist, but I like going to the grocery store. It makes more sense for me, whether I’m grabbing a few things or doing a week’s worth of pantry stocking. With brick-and-mortar, I can also avoid navigating the world of memberships and high delivery costs. While I make my shopping list in advance, the endless products I see as I browse the aisles can serve as meal inspiration. The unmissable “sale” stickers help, too. Also, like many others who shy away from online delivery, I like to pick out my own produce. Fifty-nine percent of complaints against online grocery services revolve around receiving undesirable or mishandled produce.

The art of the grocery store

While many grocery stores still have room for improvement, a massive amount of psychology and planning goes into getting consumers to spend more, from the store’s scent to the sugary cereals. Everything’s been thought out and tested by science, like the fact that supermarkets make it hard to find a clock or a window, so you lose track of time and keep shopping. We’re still debating what is the ideal soundtrack for grocery shopping, and if there’s an ideal genre we can all agree on.

Did you know that spraying water on produce serves only to make it look fresher? The most expensive items are at eye-level, and products geared toward children are placed lower. Dairy products are kept as far from the entrance as possible, so shoppers have to pass by more items on their way to essentials. Supermarkets have been so strategically planned to keep shoppers within their doors and spending more that it’s almost a shame not to be the subject of their mind games.

A changing industry

For those who haven’t stepped foot in a grocery store lately, it might be time for a visit. With the use of a mobile phone, it’s easier for shoppers to look up where items are, or receive promotional items as they walk down a specific aisle. In addition to location-based benefits, mobile devices have also helped with checkout, which has served as a major pain point for decades. A 2015 study found that 88% of consumers want retail checkout to be faster, and with self-scanning technology, it’s now becoming common to avoid the checkout process altogether. Hopefully, hands-free shopping carts will be the next mainstream innovation. Clunky carts with one rusty wheel are so 20^th century.

I’m fiercely loyal to shopping at my grocery store (America’s third favorite), and it helps that they’re starting to address the pain points that made consumers turn to online shopping in the first place. But more than just addressing current issues, brick-and-mortar grocery stores should also offer their own unique in-store benefits, to ensure shoppers like me are visiting. It all goes back to how we all want our time to be spent efficiently, and grocery retailers should strive to ensure that brick-and-mortar shopping is worth it.

Almost two weeks have passed since Amazon’s most successful Prime Day yet, and between then and now, you’ve likely seen a good deal (no pun intended) of recaps. The purpose of writing this blog is not to provide another analysis of the retail event, but rather to share my Amazon perspective as a new mom.

But before I jump in, here are some highlights from Prime Day:

• A record-setting 100 million products were sold for an estimated $4.2 billion. (Chain Store Age)
• Early website difficulties cost the retailer an estimated $72 million in potential sales. (Internet Retailer)
• Retail Leader breaks down all the numbers you could ever hope to know about Amazon Prime Day here.
• I enjoyed Retail Dive’s discussion on their podcast, “Conversational Commerce.” Have a listen: Amazon Prime Day cues up the holidays.

Our Amazon spending analysis 

Did you know you can download a report of your complete Amazon spending history? Caution: it may be eye-opening! I spotted the tip in an article and was curious to know just how much money we’ve spent over the years.

My husband and I jumped on the Prime bandwagon early in our marriage, lured by the free shipping. In 2015, we placed a mere 13 orders from Amazon – probably just breaking “even” if you compare the average cost of shipping against the annual membership price. By the next year, that number jumped to 76, as we used e-commerce more and more to fulfill our personal and household needs.

Drumroll please… in 2017, my husband and I spent more than $3,500 on Amazon. Seeing a dollar amount that included a comma was a bit shocking, but I felt more at ease when I evaluated the nature of these purchases: we weren’t just buying impulsively when we saw a good deal. The 124 orders made last year for the Reeds will tell you a lot about our stage of life. In addition to pantry staples, toiletries, and dog food, we also bought: everything to “complete” our Amazon baby registry; gifts for Christmas and birthdays; and a significant amount of diapers and wipes.

Another status check

We’re more than halfway through 2018, and the Reed family is on track to surpass the number of orders placed on Amazon last year – 79 so far! And I’ll tell you what – not much has changed.

• After my maternity leave, I splurged for a robot vacuum cleaner to make keeping up with chores easier on this working mama.
• As our daughter became more mobile, our shopping cart was full of baby gates to try and items to “baby proof” our home.
• When we threw our daughter’s first birthday party last month, I turned to Amazon for everything from her outfit to balloons.
• What’s that? My daughter needs a Disney-themed outfit for a dress-up day at daycare? Thanks, Amazon! And clothes for me too, please. I don’t have time to shop in-store, and Amazon returns are just so dang easy.

I would be lying if I said our Amazon purchasing habits aren’t instinctual. It’s a habit now – we have a need, and we turn to Amazon first. We even purchased Dash Buttons for laundry detergent and dog treats. Amazon deliveries grace our doorstep weekly. We ‘Prime Now’ – is that a verb? – groceries when we’re in a pinch. We’ve taken advantage of the expanded streaming benefits, most recently binging “Downton Abbey” on Prime Video. As our family grows, and the demands on our time do too, I can’t imagine our Amazon activity slowing down.

I’m in good company

After my deep dive into the spreadsheet of our spending, I was curious to know how my Amazon lifestyle compared to friends. So, I created a simple Survey Monkey questionnaire, shared the link via Facebook, and watched the responses roll in…

“I tend to purchase on Amazon out of convenience, even if an item is more expensive.”

“I set up Amazon subscriptions for things I want to or tend to forget about – toothbrushes, air vent filters… I know when they are delivered, it’s time for me to change them out.”

“I use Amazon even more now that they have same-day, one-day and Prime Now shipping speeds.”

“I buy as much as I can online to save myself from making trips to the store.” 

“Amazon makes my life easier!”

Other insights:

• More than 50 friends participated, and all but two said that the price increase ($99/year to $119) would not affect their decision to renew their Prime Membership. Yes, it was a large jump, percentage-wise, but the pros of “being Prime” still outweighed the cons.
• The amount of money my friends spent in 2017 varied greatly, ranging from $400 to as much as $8,000.
• Most friends were on-track in 2018 to spend the same as they did last year or more.

As much as I love a good bargain… 

You may be thinking, “So Amanda, what did you buy on Prime Day?” And the answer, my friends? Coincidentally, not a thing. I love Amazon as much as my friends do, apparently, but I’m more excited about the day-to-day convenience and experience than I am about a 36-hour promotional event.

Pop-ups are everywhere these days. What once started as an occasional, opportunistic trend has blown up to become an extremely POPular (nice one, Greg) industry worth billions of dollars that seemingly every brand and celebrity wants a piece of.

Just within the past few weeks, some interesting pop-ups have been announced:

• Abercrombie & Fitchhas partnered with SBE Entertainment Group, a lifestyle hospitality company, for a series of co-branded events and pop-up shops at select SBE properties over the upcoming months.
• Nordstrom, as part of its Pop-In@Nordstrom program, has teamed up with Casper Mattresses to launch its Sleep-In at Nordstrom collection until August 26^th at select locations.
• Sephora will host an interactive beauty “house” in Los Angeles that will bring technology, products, and industry experts together for two days in October.
• Plenty of brands will be present in the Hamptons for another highly anticipated summer of retail pop-ups.

Who’s Popping Up?

While iterations of pop-up shops have existed throughout history, Target is credited with launching one of the first contemporary pop-up shops in 2002 when it designed a Christmas-themed store on a boat on New York’s East River. Since then, we’ve seen a litany of pop-up shops by high profile players – from general consumer brands like Adidas to luxury brands like Tiffany & Co, to celebrity brands, such as Kylie Jenner’s Kylie Cosmetics and Gwyneth Paltrow’s pseudo-medicine lifestyle brand, goop, and more.

The music industry has taken a special interest in pop-ups. One of the most effective is Kanye West, who since his Yeezus album, has launched pop-up merchandise shops coinciding with his album releases that have fans lining up for the exclusive products. The most recent were his #ProjectWyoming merch bonfires for his latest album, Ye, where fans gathered around bonfires, listened to the album and purchased merchandise. Other artists have followed suit, ranging from Rihanna to Kendrick Lamar to Justin Timberlake, whose most recent album spurred a “Man of the Woods” shop in New York with Levi’s and other brands.

The Key to Successful Pop-Ups

While pop-ups obviously sell merchandise and products, more importantly, they sell an experience. In an era where long-term retail space can be expensive, e-commerce grows stronger, and customers want to be entertained, pop-ups are the perfect way to offer a completely unique experience, anywhere.

A great way to reach people is to figure out where they congregate and go to them. Nordstrom, for example, launched pop-up pods at SXSW and other music festivals across the country in 2016 to offer their shopping experience to thousands of festival-goers. They undoubtedly did their research to make sure these attendees were their target audience, and reached thousands of relevant music-lovers who were probably in a (possibly alcohol-induced) spending mindset.

Whether it’s at a festival or on a street corner, brands are seeing the benefits in the unique and flexible experiences that pop-up shops offer. As physical retail becomes more digital, pop-up shops will undoubtedly become even more unique and prevalent. With the right approach, they will allow any brand to reach new customers, bring a sense of exclusivity, or just simply engage their core audience in a new and exciting way for years to come.

I have retail in my blood, so it may not be too surprising that I’ve spent much of my career focused on retail, grocery and CPG technology. Mom retired from the Sears credit department back when Sears was a healthy, viable company that was well-respected in the industry. Dad spent his career at the U.S. Postal Service but always had a part-time job in a grocery store or meat market for as long as I can remember.

They’d both be fascinated by the rapid changes in retail and grocery, especially Dad, who was intrigued by Jeff Bezos way back when Amazon was merely an online bookseller. So, with Father’s Day just around the corner, it seems only appropriate to focus on the huge changes in the grocery industry that Dad always had his foot in.

The Rise of Online Grocery

Here’s a sampling of some recent data points that underscore the magnitude of those changes:

• Online grocery sales will reach 20% of total grocery retail by 2025, climbing to $100 billion in consumer sales, according to a study by the Food Marketing Institute, conducted by Nielsen. Amazon is the clear leader here, with 18% percent market share and $2 billion annually in online food and beverage sales. Dad would, no doubt, be surprised that the online bookseller, now the giant of online retail, is Disruptor #1 in today’s grocery industry.
• The same report notes that 1 in 4 U.S. consumers are buying some of their groceries online, and more than 70 percent will participate in online grocery shopping within 10 years. Click and collect numbers are higher, according to Nielsen Homescan data, although frequency is low, which Nielsen believes makes sense, since it’s a new service.
• Of those shoppers buying online, Coresight Research notes that 51% opted to pick up at the store through click and collect, while the rest chose to have their groceries delivered.
• Online shopping isn’t just about small orders, either. Fung Global Research notes that online grocery will increasingly capture larger orders. (As I write, our office just received a “pantry loading” Instacart order with snacks, breakfast foods and more Amy’s frozen dinners than you can count, ensuring that KG’ers don’t go hungry.)
• Brick-and-mortar grocery isn’t being left behind, either. Our client, Symphony RetailAI, pinpointed some of the trends that are reshaping traditional grocers in its Supermarket 2020 findings: displacing center-aisle items with prepared foods, where shoppers spend 3X-4X more than other areas; farmer’s markets in every store, featuring local produce; reducing the number of aisles in each store and focusing on highly curated items, with an endless aisle available online; and a higher proportion of private label goods.

Back to Basics

Would Dad recognize today’s fast-changing supermarket? I think he would – after all, these changes are all about offering shoppers an increasing array of choices for where, when and how they purchase groceries and other essentials. Ketner Group is fortunate to work with a number of clients that are helping shape the modern grocery industry, including Mercatus, GK Software, Symphony RetailAI, Displaydata and others. It’s one of the most fascinating, and fast-changing, segments in retail today.

In a sense, I believe that all the advancements in technology are helping bring grocery stores around full circle, to a day when grocers knew their local customers and catered to them. Who needed Instacart in the ‘60s? Several of my family’s local grocers in Wichita Falls offered home delivery to customers – you’d simply phone in your order, then pay your tab at the end of the month. Credit checks? No need for them; Kouri’s Grocery, for example, knew its best customers by name.

Today’s new grocery technologies are helping bring back an era of greater personal service. Of course, it’s impossible for regional grocers to know every customer by name. But online shopping, personalization and mobile apps help create a deeper level of customer knowledge, along with offers that can be fine-tuned to each shopper. These technologies are also helping regional grocery chains compete against the likes of Amazon and Walmart, helping ensure that they stay relevant. I think Dad would approve.