Street talk: Digital drives shoppers to find best deals
Albert Heijn's Appie mobile app attracted 3m consumers in the Netherlands
The arrival of digital shopping in the FMCG marketplace has taken 15-20 years but is now firmly here and encroaching on the household routine of food shopping in a very significant way.
We are only glimpsing the start of its real significance but it is a fundamental one. Digital transactions separate information from the product but this provides an economically viable and rich stock of information and a repository for corporate and personal memory.
Although shoppers would not refer to their actions as multichannel shopping, they are starting to adopt it on an increasingly routine basis. In the process they are transforming the planning and execution of grocery shopping and the opportunities within it.
Economic pressures, by raising the ante on grocery economics for both retailers and shoppers, are simply acting as an accelerator for the many forms of digital technology that enable shoppers to switch the time and place of their shop to better match their needs.
According to our Shopping in Tough Times survey to be launched next month, 84% of Europeans say they will delay purchases (except food) in the coming year.
The type of pre-planning that often went into high ticket item purchases is now commonplace for grocery shopping. It is contributing to the fact that 62% of Europeans know which categories and brands they will buy before they enter a store. Consumers are adopting a semi-professional attitude to shopping to maximise their budgets and 40% of them say they are paying more attention to price than they were a year ago.
Digital is enabling this. The rapid growth of internet food shopping that can be seen in many markets is the tip of the digital iceberg and a familiar form of online shopping. Much more significant is the multichannel behaviour that can now be seen. Tesco's shopping kiosks in their Extra stores; Casino's in-store pick up points for internet shoppers; Albert Heijn's Appie mobile app; Kellogg's virtual store and the shopping walls of Carrefour in French train stations. We are on the edge of a significant transition in the way people shop.
Mobile technology has the potential to be a killer app not just for shopping preparation but also for shopping. Many chains provide a shopping list capability for mobiles. Wal-Mart Stores for example has offered a Grocery List Organiser free app for some time in the US. As web, mobile and in-store technologies converge, the possibilities for applications become a lot clearer. Albert Heijn's app has more than 3m users each month in the Netherlands who use it to compile lists, locate stores, confirm stock, flag promotions and reorder their shopping list to match the most sensible route around their local store. The impact for the shopper is clear - faster, easier shopping with fewer wasted trips because shelves are not stocked, less aggravation at missed promotions and the ability to take some of the pain out of generating meal plans and lists by virtue of the repository it feeds.
It provides the control that budget pressed shoppers demand. Lists help shoppers to maintain control enabling easier comparison of cheaper alternatives. They reduce impulse buys and wasted food and bring a more considered view of what shoppers really want to fulfil their underlying needs. In short they empower the shopper for value and convenience simultaneously.
But it is equally powerful for the retailer who getsa more complete record of where, when, how and what its customers shopped for; an ability to profile stores to better meet the locality; target offers by person, day of week and trip mission and to revolutionise the use of personalised marketing. It is perhaps this that is garnering the enthusiastic attention of Tesco's CEO, Philip Clarke, with all his recent talk about personalisation alongside multichannel.
What is certain is that the multichannel game will need layers of new capabilities that some food retailers are much better positioned to build than others. The result will be a very different retailer from the single format, large space and uniform model of the past (and in some cases current).
Instead we will see an infrastructure with more small, local stores, self-service with full-line kiosks and tills and sameday delivery to collection points, stores, home or work. Shoppers will be able to personalise their experience with recipes and shopping list apps that will configure for multiple ways to shop. For this new grocery landscape all aspects of the core retail processes will need to change – from supply chain and operations to merchandising and marketing.
It will put a premium on trust, agility and information management. Those retailers who garner and preserve trust will thrive. Those that abuse it will suffer - witness the pressure on Starbucks and Amazon who have recently been named and shamed over the failure to pay sufficient tax revenues in the UK.
Agility will also be key in this new world - not just for the retailer but for its supply network. Manufacturers and retailers will need to collaborate more closely to ensure the flexibility and transparency that will be needed to assure service standards across all channels.
Information management will be critical for operations and analysis. Retailers and manufacturers need to manage bigger more complex data sets - browsing, purchasing, choice movements, channel activity, purchase location and timing. These will become the bedrock for a deeper understanding of shoppers, for targeting communications and promotional campaigns and for managing inventory and stores.
We are just on the edge of this brave new world.
- Mondelez results and outlook - 7 things to learn
- Comment: Hain Celestial cognisant of US challenges
- Talking shop: Wal-Mart overhaul, Lidl's US charge
- Can Yildiz's new snacks unit match its ambitions?
- Why Lactalis swooped for Romanian dairy Albalact
- Mondelez continues to see margins up, sales mixed
- China eyes further infant formula restrictions
- Unilever launches dairy-free Ben & Jerry's in US
- Premier Foods launches "first" American wet sauces
- Unilever launches eggless Hellmann's mayo in US