‘Kings of convenience’
While old school ‘Shop in a box’ eCommerce as we know it (you know the drill - search, compare prices, choose a site, filter and select goods, find a delivery slot, payment, delivery or collection) is still alive and kicking, it is under threat. Poor experiences, hard to find goods and challenges paying, are all contributing to rising levels of poor customer experience…
In the past year, customer expectations of UK retailers rose by a staggering 23% (Brand Keys 2015) however 42% cited speed and user experience as key reasons for heading to a competitor (Dyn 2015), 45% claimed they were returning to physical stores because eCommerce sites offer too much choice (Rackspace 2014) and research has shown that retailers are losing as much as 42% of revenue at the payment stage (PPRO 2014).
Grocery shopping in the digital age
Whilst grocers can offer choice, assortment and competitive pricing, the nature of the grocery shopping experience as we know it doesn’t exactly lend itself to online shopping. You still have to navigate the aisles, it’s even harder to differentiate between goods in a digital context, a weekly shop can still take an hour to complete and there are no guarantees the stock you’ve ordered will arrive at your door. It is neither enjoyable nor inspiring when compared to some of the clean, aesthetic and emotive experiences seen in categories such as apparel and travel.
To give you two clear examples of this, let’s first look at Tesco. Tesco is a brand with lots of rules about what you have to spend to qualify for delivery and a ‘push’ rather than ‘pull’ model for the returning user (more ‘we’ve got this on special’ than ‘we know you’ll love this’ based on your shop last week).
Another example is Morrisons. Its site makes it tremendously hard to know where to start the shop given the sheer volume of options facing the user on the site, plus the user has to register BEFORE they know if a delivery slot is actually available.
Online grocery shopping, particularly for the repeat visitor, should be simpler but no one seems to have created a truly digital approach to it yet.
The paradox? Grocers should be in pole position. They enjoy access to a massive slew of customer data, they have loyalty schemes and they enjoy extremely high recency and frequency. According to Nielsen, just 27% of visitors on Grocery sites classify themselves as ‘intending to buy’ versus 46% in the apparel and footwear category. Clearly there is serious ground to be made in getting the sector to seduce and support users.
The threat to today’s grocer
Whilst eCommerce user experiences are evolving, this isn’t really where the change is taking place. Three forces are driving the change, mobility, the use of data to personalise and expedite shopping and finally, super-flexible fulfilment and delivery, which are focused on one thing: convenience.
While the major grocers are certainly moving in all three of these directions their models are still a long way from being user-centric.
This leaves each and every supermarket brand vulnerable to the new kings of convenience, digital intermediaries like Amazon, eBay, Instacart and in time, apps like Deliveroo that threaten to make every restaurant a take away, cannibalising another part of the grocery market too.
New darling of the digital grocery world, Instacart isn’t just responding passively to consumer expectations, it is creating completely new ones. Forbes is calling Instacart ‘America’s most promising company’. In January Instacart was valued at over $2 billion, just six months after it raised $44 million and is now in 15 cities. Whilst Instacart delivery costs are higher than the average big box grocer, the digital experience, face-to-face personal service and fact you can buy goods from more than one retailer in a single transaction are serious draws for the upper end of the market.
Amazon Fresh is soon to hit the UK and plans to take 2% of the market. As a brand they are likely to offer what matters most, a contextual and where appropriate, app-like experience (mobility), the ability to recommend products and quicken the experience (data), and, importantly, total flexibility when it comes to service and delivery under its Prime proposition (regarding fulfilment). These factors coupled with the fact that Amazon is reportedly planning to team-up with local bakeries and delis, poses a major threat to existing UK supermarkets, particularly those without a physical presence such as Ocado.
We’ve seen mass disintermediation in retail banking and insurance, the money supermarkets of food are just around the corner and are building a business case whilst everyone else is sleeping. The use of data feeds real-time pricing information, the ability to compare a range of flexible delivery and collection routes coupled with the inclusion of local and specialist produce would be all it would take to entice the savvier shoppers amongst us away from supermarkets we’ve relied on for decades.
Whilst grocers are of course here to stay I predict them starting to take second place behind marketplaces like Amazon and eBay and in time, a wider range of potentially local convenience apps for the upper-end of the market unless they radically re-think how to offer truly user-centric convenience.
The way forward for today’s grocer? Convenience 2.0
If the value proposition for convenience 1.0 was – easy to use, you collect or we deliver. Convenience 2.0 is quite simply, shop on YOUR terms.
To thrive in this new world grocers need to move beyond their comfort zone of offering standard shopping cart, delivery and click & collect services and adopt a convenience 2.0 mentality on and offline.
So, what does this look like?
Think about me as the customer. Understand the context of where I am in, online or offline. Offer me a service that matches the moment. This might mean radically speeding up the offline high-frequency convenience shop by offering a concierge service at the door, rearranging where the top 20 convenience goods are in the store to allow me to complete my shop in under 10 minutes or conversely, if I decide to make a bigger shop but am on foot, allow me to switch into a home delivery mode very quickly through my app or a conversation with staff.
In this parity market, supermarket brands need to start with the end result, fulfilment, and quickly reassure users that the most convenient options are available for them so they can start to shop with confidence on any device.
This means rethinking how arrival and homepage experiences are designed and helping the user act quickly, firstly determining their delivery or collection preference then quickly populating (or pre-populating for the repeat user with a consistent list) their basket through the use of behavioural, transactional or personal recommendations ending the analysis paralysis we see today. We already know that the average app users expects to be able to undertake just two or three key tasks, supermarkets need to service design for these journeys and in tandem create new fulfilment partnerships at a local level.
Orders of any size are expected, so need to be enabled through partnerships if the retailer cannot deliver. These partnerships should draw on a range of businesses, delivery specialists like Shutl on the one end and sharing economy services on the other. Tesco meets Task Rabbit - why not? If it means you can delivery faster, more personal delivery services that people are willing to pay for? And they shouldn't stop there, if Instacart and Amazon Fresh are teaming up to take a piece of the local produce market, why aren’t we seeing local produce market places on Tesco.com or through Sainsbury’s and Morrisons? (the Etsy of food coupled with best in class servicing?).
The future is there for the taking, the challenge for today’s supermarkets is to exceed user expectations, and explore the best ways of creating a brand new era of convenience. In the words of Peter Drucker, the best way to predict the future is to create it.
Jasper Bell is a Strategy Consultant at Amaze.