The Future of Grocery: Unlocking Potential from New Initiatives

By Alonso Vargas, Senior Vice President of Product, Flybuy

The grocery industry has undergone substantial transformation over the past few years. The concept of curbside pickup and grocery delivery existed pre-pandemic; however, its full potential, both for consumers (efficiency and ease) and grocers (more revenue from larger basket sizes), was not realized until the pandemic increased demand.

In response, grocery stores worldwide are investing in advanced technology to streamline operations and create effortless shopping experiences. When evaluating strategic technology partners, grocers aim to assess the potential for (1) enhancing their customer base, (2) fostering customer loyalty and repeat business and (3) driving revenue growth.

The grocery industry is poised to face many innovations, trends, and new initiatives in 2023.

Grocery retailers have previously explored lockers, but encountered challenges with ID verification, food spoilage, theft, and overflow. This leads to the need for human assistance, which contradicts the purpose of self-service lockers.

Introducing location technology to locker solutions is key to facilitating efficient and effective locker management by associates. It will enable them to fill lockers based on precise arrival times, ensuring food freshness and provide customers with the corresponding pin number upon arrival, guaranteeing the correct items are picked up. Furthermore, associates will receive automatic notifications upon customer arrival to assist with an ID check or overflow items.

Self-service Lockers

The grocery industry is poised to face many innovations, trends, and new initiatives in 2023. Grocers need to stay abreast of emerging technologies and innovations that maximize associates’ time and improve the customer experience.

Loyalty and Personalization

Shifting from Delivery to Pickup

Impulse Purchases in eCommerce

Many grocers are investing in loyalty programs to increase their customer base and foster brand loyalty.

Leveraging privacy focused location intelligence can effectively boost loyalty redemption, drive foot traffic, and promote specific purchasing behavior. Personalizing the shopping experience based on the customer’s physical location increases the likelihood to act on a desired behavior.

Grocers have faced challenges with personalizing the white-glove shopping experience for both eCommerce and in-store customers. However, Lowes Foods has successfully cracked the code. Associates who pick groceries are in constant communication with customers, offering complimentary items tailored to their order, and providing a personalized greeting curbside. Adopting such a highly personalized and meticulous approach results in transforming first-time customers into lifetime customers.

High third-party fees are eating into margins for both grocery stores and customers. Encouraging eCommerce customers to opt for pickup instead of delivery is an essential way to reduce margins while growing revenue. Recently, Target enhanced its Drive Up service by adding Starbucks orders to its curbside pickup offering, thereby attracting an increased number of customers. In line with this approach, other grocers are investing in strategies to encourage customers to opt for curbside pickup instead of delivery.

The rise of eCommerce has also impacted consumer behavior including a decrease in impulse purchases. With the shift away from physical checkouts, customers are no longer able to make impulse buys to grab a last minute pack of gum, magazine, or soda. Consumer packaged goods companies are taking a hit, prompting grocery retailers to explore innovative solutions that incorporate location data to drive impulse purchases during the customer pickup journey.

Utilizing technology to drive up basket size with impulse purchases is gaining traction. With impulse buys, “right place, right time” is crucial. After a customer has placed their order, reminding them to add to their order prior to pickup, is key.

In summary, staying abreast of emerging technologies and innovations that maximize associates’ time and improve the customer experience is a priority. Implementing multi-channel strategies will drive more top line revenue, while streamlining processes for customers and staff will lead to tangible cost savings and an improved customer experience.

The State of the GROCERY INDUSTRY 2023

FEB 2023