How Enhanced Grocery Personalization Provides The Profitable Growth Grocers Need Right Now
Customer service, convenient locations, and community connections.
For decades, these three elements formed the basis of the traditional grocer-to-customer loyalty strategy.
However, the post-pandemic rise of Mass Merchants and persistent cross-shopping numbers are revealing a shift in consumer behavior away from traditional loyalty drivers, toward value and convenience.
This change has been abrupt for many grocers, whose core value proposition still centers on in-store, high-touch customer service. That’s not to suggest that grocers need to completely reset a service model that has served them well for decades, but rather to modernize it with adaptation and adoption:
- Adapt the personal approach of their traditional service model to the digital experience; and
- Adopt value and convenience as part of the core value proposition offered to customers.
By strategically merging the old with the new, grocers can leverage their inherent strengths to meet modern consumer drivers — and bring their traditional service model into the digital experience.
The Operational Driver for Growth Grocery Retailers Need
Recognizing the need for change is the first step, but implementing the right technology to address these new consumer preferences is where the real challenge begins.
As we know from industry research, most grocers are keenly aware of the challenges they face; and they unanimously agree that the answer to overcoming those challenges is increasing their use of technology.
However, concerns over cost, worries over integration of new technology, and potential disruptions to operations are the primary hurdles to implementing technological solutions.
What grocers need to compete in today’s grocery retail market is a solution that can keep up with changing consumer behavior at scale — allow them to adapt and adopt — without requiring heavy investments in staff, overhauling technology stacks, or burdening current operational workflows. And they need a technology partner that will help them customize this solution to the specific needs of their business.
This article examines how next-level personalization through contextualized commerce meets these needs by:
- Delivering targeted promotions (value) that match a customer’s interest and purchase cycle (convenience) through personal, one-to-one communications (traditional loyalty strategy for grocers); and
- Ensuring each customer receives the right message, with the right offer, at the right time — all aligned to their individual preferences and shopping habits; while also
- Integrating easily into a grocer’s existing operations without complex coding or development.
Contextualized commerce at scale is the means by which grocers can compete with bigger retailers in today’s market. It is the operational driver for growth — boosting active users, increasing average order values, and ultimately expanding your market share — that grocery retailers need right now.
Why Are Modern Consumers Driven by Convenience and Value?
But before we dive into how contextualized commerce levels the playing field for grocers, it’s important to understand how and why the modern consumer is increasingly driven by convenience and value — and why these elements must be integrated into the core value proposition of grocery retailers.
The Convenience Factor
The 2024 Brick Meets Click U.S. eGrocery 5-Year Sales Forecast suggests that following the explosive growth of online shopping during the pandemic, eGrocery has secured a large and stabilized segment of the market, marking a fundamental change to how American households purchase and receive their groceries.
This shows that grocery customers have quickly grown accustomed to the convenience of digital shopping experiences, and there’s no going back:
- Total eGrocery sales are projected to reach $120 billion annually by the end of 2028, accounting for 12.7% of all U.S. grocery sales.
- This growth is projected to be more than three times faster than in-store sales increases (4.5% vs. 1.3%) during that same period.
- The online customer base will expand to 55% of the overall market, with a 5-year growth rate of 1.2% to total more than 74-million American households.
The Value Imperative
Despite displaying a willingness to pay for the convenience of digital offerings, consumers have also been heavily impacted by worldwide inflation and uncertain economic outlooks.
Every month, in our analysis of theBrick Meets Click/Mercatus Grocery Shopping Survey, grocers are confronted with the increasing market share being taken by Mass Merchants.
Nearing the end of last year, larger retailers overtook supermarkets as the grocery shopping destination of choice among U.S. households — both online and in-store. This has been primarily driven by the pronounced flight-to-value being taken by consumers.
The Brick Meets Click U.S. eGrocery 5-Year Sales Forecast confirms this outlook, revealing that comparable baskets of goods at a store like Walmart are at least 10% less expensive than at traditional supermarket banners. The report predicts that as long as economic conditions remain as they are, value will continue to be a key driver of consumer behavior.
How Did We Get Here?
What we’re ultimately describing above is a series of causes and effects in the grocery industry:
- Pandemic leads to surge in eGrocery sales.
- Consumers quickly grow accustomed to the convenience of ordering online for Delivery and Pickup.
- Post-pandemic economic factors — inflation, general uncertainty, etc. — create an enhanced need for value.
- Mass Merchants leverage their ability to answer this need for value and provide the newfound desire for convenience through i) an emphasis on lower prices due to economies of scale, ii) extensive product ranges, iii) robust supply chains, and iv) seamless omnichannel shopping experiences.
- Consumers respond favorably to these efforts, resulting in mass merchants attaining a 45% eGrocery market share by end of 2023; and a third of supermarket shoppers regularly making a grocery purchase from a large retailer each month.
What happens next depends on how grocers leverage their own inherent strengths and respond to current consumer drivers — which brings us back to the adapt and adopt approach we introduced at the beginning of this article.
Just as Mass Merchants leaned into their existing advantages, regional grocers and independents must extend their inherently stronger service model into the digital experience.
And just as the bigger retailers like Walmart honed their advantages to match consumer drivers, so should grocers adopt value and convenience as part of their core value proposition.
Contextualized Commerce
What we’re talking about here is contextualized commerce: the seamless integration of digital and physical retail experiences to provide personalized, high-touch service.
It uses first-party data, operational insights, and advanced personalization techniques to engage customers from initial impression to transaction, both online and in-store, ensuring a connected and relevant experience across all channels.
Contextualized commerce is the exact means by which grocers can adapt the personal approach of their traditional service model to the digital experience; and adopt the value and convenience drivers into the core value proposition they offer customers.
How Contextualized Commerce Provides Greater Value to Customers
Where does that begin? By integrating contextualized commerce to provide true value to consumers beyond nominal transactional savings.
The type of contextualized commerce we’re talking about here leverages targeted savings and custom-built loyalty programs to significantly enhance the value offered to consumers, saving them money.
Targeted Savings
By harnessing the power of machine learning, grocers can unify their customer data to programmatically deliver targeted savings that are directly relevant to individual shopping behaviors.
Data from past purchases and browsing history is analyzed by algorithms that identify products a customer frequently buys. Then, promotions are automatically timed to when shoppers are most likely to use them. This provides the customer with significant, frequent, and relevant offers — all designed to provide the value they seek.
If a customer typically buys a particular brand of coffee every month, the personalization system in place ensures they receive a promotional offer for that brand right as their next purchase approaches.
Customizable Loyalty Programs
Similarly, loyalty programs can also be tailored to individual preferences and behaviors to provide enhanced value for customers.
Instead of a one-size-fits-all approach — “Thank you for shopping with us. Enjoy 5% off your next purchase of $150 or more.” — these programs offer easy-to-redeem rewards and incentives, all based on the customer’s shopping patterns.
Unlike the default, static rewards programs currently being used throughout the industry, an enhanced loyalty program is dynamic. It leverages individual data insights and operational capabilities to offer money-saving value to customers and consolidated shopping carts to retailers.
Predictive Personalization
As you can tell by the two examples above, the real power of contextualized commerce is in its predictive personalization capabilities.
If grocers offer targeted savings that align with the customer’s purchasing cycle — whether that cycle is every 7, 21, or 28 days — and predictively deliver valuable offers right before an expected visit, they significantly increase the likelihood of being chosen for that customer’s next shopping trip.
The predictive models and algorithms under the hood of an advanced personalization solution are not just about understanding current consumer behavior but anticipating future actions. This is what allows the grocer to provide customers with increased value, and also use that value to create a habit-forming shopping routine for the customer.
How Contextualized Commerce Provides Customers With Greater Convenience
Part of the reason why this type of customer experience is so habit-forming is because, in addition to repeatedly providing value, it’s also providing an enhanced level of personal convenience.
Think of it from the customer’s perspective: When personalized product recommendations, targeted offers and one-to-one communications are timed to purchase cycles, the grocer is essentially preparing your shopping list for you.
In fact, there’s an argument to be made that predictive personalization prepares a more accurate list than most customers create for themselves. That’s because it’s capable of prompting the customer to buy their “usual items,” and reminding them not to leave behind any “forgotten items.”
This next level of personalization allows grocers to further enhance the convenience they offer customers through:
- Event-based triggers for campaigns that target specific segments such as New Customers, Loyal Customers, Lost or Lapsed Customers, etc.; and
- Dynamically targeted content blocks on web and mobile that present customers with personalized coupons, ads, recipes, and loyalty rewards.
Giving Customers What They Want
It’s important to distinguish the role of contextualized commerce in this regard, and clarify that even though habit-forming shopping trips are the preferred outcome, it’s not about manipulating customers into purchasing items they don’t need or want.
Rather, it’s about facilitating access to the products they already prefer, making it easier and quicker for them to complete their purchases. That is the true convenience that contextualized commerce provides, and the true customer connection it creates.
In the past, retailers sometimes relied on “breakage” — the portion of promotional value or rewards that go unclaimed by customers.
However, in today’s retail market, the focus has shifted. The importance of customer lifetime value is now properly recognized. That’s why the goal is to build genuine, lasting relationships with customers by offering real value and convenience through personalized, contextualized commerce.
How Personalization Extends a Grocer’s Personal Touch to Online Grocery Shopping
By bridging the gap between offline and online experiences, contextualized commerce ensures that the inherent values of regional grocers are amplified, making their digital channels as compelling and as customer-centric as their physical stores.
Deepening Personal Connections to Increase Customer Loyalty
The enhanced customer engagement provided by personalization taps directly into the traditional strengths of regional grocers: the ability to form personal connections with customers.
When a customer receives recommendations that are perfectly aligned with their preferences or is greeted with offers that seem tailor-made for their lifestyle, it reinforces a sense of being valued and understood, further contributing to customer loyalty.
This level of personal engagement goes beyond simple transactional interactions — it builds customer loyalty in the same way grocers have traditionally built relationships with their customers. But it’s not just theoretical. In fact, it only works on this theoretical level because of its practical applications:
Leveraging Convenient Locations
Regional grocers typically boast networks of conveniently located stores, a significant advantage over larger mass merchants. Personalization amplifies this benefit by matching online shopping conveniences with physical store locations near customers, enhancing service with faster Delivery times or easier Pickup options. This strategic use of digital tools bolsters the inherent geographical strengths of regional grocers, providing a seamless shopping experience that large retailers struggle to match.
Strengthening Community Connections
Regional grocers have traditionally leaned into their ability to connect with the community through tailored product assortments that reflect local tastes and needs — another capability large retailers can’t replicate. By integrating personalized recommendations that highlight local products and preferences, grocers not only enhance customer satisfaction but also reinforce the community bonds that are core to their business model.
Enhancing Customer Service
The precision of personalized shopper engagement extends naturally to customer service. With deep insights into each customer’s shopping habits, past purchases, and preferences, online customer service can become more proactive and responsive than ever before. This digital enhancement of customer service is a direct expansion of the high-touch, personalized service that regional grocers are known for, further distinguishing them from their larger competitors.
Technology That Connects Grocery Retail Tradition with Today’s Customer Needs
As we established at the beginning of this article, today’s customers demand value and convenience in their grocery retail experience. They expect grocery shopping to be seamless and “made for me.” And they want to feel valued and heard, beyond simple transactional interactions.
To keep these customers returning, grocers have to provide a shopping experience that engages them on a personal level.
That means personalized product recommendations, sale items, coupons, recipes, and loyalty offers — all based on their specific shopping habits and browsing data, timed to their purchasing cycles.
Only a short time ago, that level of contextualized commerce would’ve been the stuff of fantasy. But with the all-new AisleOne, from Mercatus, grocers can create a synergy between traditional customer service strengths and modern consumer needs to win back their market share from big retailers.
How Does AisleOne Work?
AisleOne seamlessly integrates all of your customer data and provides you with the capability to launch personalized campaigns that reach every single one of your unique customers on a personal level — with the right message and the right offer at the right time.
In the past, grocers had to deal with disconnected data sources, multiple first- and third-party integrations, and loyalty programs that didn’t connect between online and in-store.
But with AisleOne, you can create a holistic view of your customers and their journey with automated tracking of individual digital, transactional, and promotional activity data. From there, you can segment your customers, analyze their behaviors, and activate targeted campaigns based on those insights to deliver measurable results.
And when we say measurable results, we mean measurable results.
In addition to more active users and higher customer satisfaction scores, retailers have generated up to a 14:1 return on their digital engagement investment through AisleOne’s targeted promotions, personalized offers, automated marketing campaigns, and loyalty program activation.
Easy to Integrate, Simple to Use
Not only does AisleOne streamline the technical challenges that stopped grocers from offering a personalized shopping experience in the past, it also eases the burden on marketing and technology teams.
Your marketing team will love how easily AisleOne customizes the look and feel of your digital brand experience with flexible content containers for mobile and web.
Meanwhile, your technology team will appreciate how simple it is to integrate AisleOne. Without the need for additional coding or development, and no in-house technical expertise required, they can focus on strategic initiatives rather than implementation and operational maintenance.
Activate, Convert, and Retain Your Customers with AisleOne
AisleOne is the solution that grocery retailers need right now. It’s been created specifically for this moment in time, to drive profitable growth for regional grocers in the face of increased competition from Mass Merchants.
Reach out to us today to see how AisleOne can increase your active users, average order values and customer lifetime values, while making your grocery business more data-driven, more customer-centric, and more profitable.
