Explore the all-new AisleOne personalization solution.
Platform

Top Shelf Spotlight: Is This The End Of One-Stop Grocery Shopping? 

Grocery Shopping Is Being Redefined

The traditional grocery shopping model is changing rapidly as consumers, battered by inflation and uncertain economic circumstances, are visiting multiple retailers to maximize savings and stretch their dollars further.

This is the finding of Rachel Wolfe’s recent Wall Street Journal article titled, “The Era of One-Stop Grocery Shopping Is Over.” And this significant shift in consumer behavior is also the focus of our latest episode of TopShelf Spotlight.

In this edition, Mark Fairhurst, Chief Growth Officer at Mercatus, shares his insights on Wolfe’s highly discussed story, and connects his takeaways with the latest grocery shopping sales data to outline strategies for combating the cross-shopping trend. This analysis provides a roadmap for supermarkets and traditional grocers looking to understand the shift in consumer behavior and respond with targeted strategies.

Keep reading to learn more about how grocery shopping is changing, what it means for retailers, and how they can respond.

The Rise of Multi-Stop Shopping

As inflation impacts household budgets, American consumers are diversifying their grocery shopping by visiting more stores and actively seeking out better deals. This has resulted in a 23% increase in the number of different retailers households shop from compared to four years ago.

In addition to visiting an average of 20.7 different retailers for groceries over the last 12 months, shoppers are managing rising grocery costs (which now takes up the largest portion of household budgets in the last 30 years) in several different ways. These strategies include advanced meal planning and taking advantage of coupons, promotions and loyalty programs.

In response, retailers are focusing on differentiation and competitive pricing, particularly with private label products and the introduction of additional store brands. While this has led to higher sales for store brands, it hasn’t impacted the high cross-shopping numbers.

The findings of the Wall Street Journal article are confirmed by the numbers coming out from Brick Meets Click’s monthly eGrocery sales data. Their latest figures provide more evidence of a flight to value with the percentage of consumers using supermarkets for online shopping decreasing to 30%, while those shopping at mass merchants like Walmart have increased to 51%.

The cross-shopping trend outlined by the Wall Street Journal is also confirmed by Brick Meets Click’s April 2024 numbers. Their data reveals an increase in grocery shoppers who also buy from Mass Merchants, with the percentage of cross-shoppers rising to almost 34% last month.

Three Strategic Recommendations

Many grocery retailers will read the Wall Street Journal’s article, compare it to Brick Meets Click’s monthly sales figures, and ask themselves if consumer behavior will ever return to “normal.”

While there are answers to that question to be found in The 2024 Brick Meets Click U.S. eGrocery 5-Year Sales Forecast (sponsored by Mercatus), grocers ultimately have to take control of their own destiny. That means employing the necessary strategies to counteract this shift in behavior before it becomes permanent.

1. Enhance Personalization & Loyalty Programs

Grocers should leverage the vast amount of customer data they possess to offer highly personalized shopping experiences that go beyond what Mass Merchants are able to replicate.

This involves developing robust loyalty programs that reward frequent shoppers with personalized discounts, exclusive offers, and early access to new products. These initiatives should utilize customer purchase history to send targeted promotions and personalized product recommendations through various communication channels such as web, mobile apps, SMS, and email.

The importance of this strategy in providing grocers the means to compete with larger retailers is exactly why we developed and introduced the all-new AisleOne earlier this year. Retailers are driving profitable growth for their grocery business by generating up to a 14:1 return on their digital engagement investment through AisleOne’s targeted promotions, personalized offers, and automated marketing campaigns.

2. Focus on Differentiation

Regional grocers and independents should differentiate themselves from competitors by expanding their range of locally sourced and artisanal products. This strategy includes creating dedicated sections for these items both in-store and online, and promoting them through customized content that highlights their local origin, high quality, and exclusivity.

Engaging with local producers to host events or tastings can also enhance this effort, transforming shopping from a routine chore to a community-centric experience.

3. Improve Customer Experience — Online and In-Store

The customer experience being delivered through online shopping platforms needs to be more user-friendly and efficient. This primarily means streamlining the process between browsing and checkout while making the receiving aspect as easy as possible. Implementing services like curbside pickup and variable service fees based on pickup times is an easy way to provide customers with an appealing level of convenience.

Additionally, integrating online and in-store activities through mobile apps, such as navigation aids and instant coupon redemption, can help smooth the customer journey and link digital impressions to transactional moments.

10 Action Steps to Fight Cross-Shopping:

  1. Utilize customer data to personalize shopping experiences based on individual purchase histories and preferences.
  2. Upgrade loyalty programs to offer personalized discounts, exclusive offers, and early access to new products.
  3. Enhance the online shopping experience for better usability, effective product recommendations, and streamlined checkout processes.
  4. Increase the range of locally sourced and specialty products not available at larger retailers to differentiate product assortments.
  5. Create dedicated sections for these items both in-store and online, and enhance their appeal through bespoke marketing that emphasizes their origin, quality, and exclusivity.
  6. Integrate online and in-store activities through mobile apps to provide navigation aids for better product location assistance and instant coupon redemption that ensures superior customer service.
  7. Implement advanced inventory management systems to reduce out-of-stocks and ensure availability of popular and promotional items.
  8. Organize community and in-store events such as local food tastings and cooking demonstrations to enhance the shopping experience.
  9. Ensure seamless integration between online and in-store experiences with services like click-and-collect and curbside pickup.
  10. Deploy targeted marketing campaigns that emphasize the benefits of shopping loyalty, such as cumulative savings and exclusive member benefits.

Final Thoughts

As inflation and financial concerns influence consumer behavior, grocers must adapt quickly to find a competitive advantage in this situation while working to ensure the current cross-shopping trend doesn’t become standard customer practice after inflation has settled.

By focusing on personalization, differentiation, and customer experience, grocers can compete with Mass Merchants now and ensure better customer retention for the future.

To learn more about implementing the action steps listed above — as well as a more fulsome analysis of the Wall Street Journal article and the latest eGrocery sales data that connects to it — watch the full episode of this month’s Top Shelf Spotlight.

If you have any questions related to the shifting consumer behavior identified in this installment, don’t hesitate to reach out to us. We’re always eager to discuss where the grocery industry is and where it’s headed.

As such, we’ll be back soon with more analysis, insights and actionable advice.

Speakers

Mark Fairhurst Headshot

Mark Fairhurst

Chief Growth Officer, Mercatus