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Local Grocery Stores Facing Disruption Online And Off

by Andrea Schreiber

published on 2017-04-21 05:41:00

Weirdest Factoid-Of-The-Day

Online sales of frozen bacon and sausage grew 24% last year. It turns out that breakfast foods of all stripes are popular online purchases, according to mywebgrocer.com. Cold cereal, for example, made it into nearly a third of all online grocery shopping carts.

Older, affluent millennials are the most likely group to buy groceries online (and presumably account for all that bacon and cereal), and they do it frequently: two-thirds of millennials buying their groceries online do so at least once a month, mostly via Amazon Prime. 

2017 might be the year online grocery shopping takes off with everyone else, now that familiar local retailers are providing the service. Major grocery chains Kroger, Meijer and Walmart and popular local retailers like Busch’s, Plum and Papa Joe have all launched online ordering programs in metro Detroit with either in-store pick-up or home-delivery or both.

Kroger launched ClickList, a shop online and curbside pick-up program, at two Detroit-area stores in early 2016 and expanded the program to nearly two dozen of its 98 local stores by year end. Walmart offers a similar program at three (of 30) metro Detroit stores. Last month Meijer, who has online ordering with curbside pick-up at 13 of its 43 Detroit-area stores, announced a partnership with Shipt to offer same-day home delivery, too. A six-month pilot program in metro Detroit resulted in nearly 65,000 online orders for Meijer. Moreover, it did not seem to affect in-store purchasing. 
That’s critical. 


The Competition

Brick-and-mortar grocery stores are fighting multiple fronts besides Amazon: mass merchandisers like Walmart and Target have taken big bites out of the grocery business and new regional players like Fresh Thyme and Lucky’s are selling affordable healthy, organic and local in the space once occupied only by Whole Foods. Local chains like Busch’s and Plum are picking off high-end shoppers. Online subscription meal kits like Blue Apron, HelloFresh and Plated (among others) deliver a box of fresh ingredients for specific meals once a week. Only about 12% of all US internet users have ever bought a meal kit online but more than twice as many millennials subscribe.

Who Is Buying Groceries Online?

Millennials may be leading the way with online grocery shopping but time-starved families and home bound seniors are embracing the new services, too. Working moms in particular appreciate being able to submit their weekly shopping list online, pull up to the store on the way home and have bags loaded into their cars without having to wrestle children in and out of car seats and shopping carts. For them it’s easier than being home to receive a delivery. Seniors, on the other hand, might appreciate that high-end grocer Papa Joe will not only deliver the groceries but empty out the refrigerator, too.

Grocerants

Offline, grocers are beefing up their in-store customer experience. Some are developing hybrids of grocery stores and restaurants dubbed “grocerants” to go after dining-out dollars. Meijer will spend $375 million upgrading half a dozen Michigan stores this year. By year-end Kroger will have five “Marketplace” stores in metro Detroit with expanded fresh and prepared foods and a wine bar as well as kitchen and home goods, clothing, baby items, shoes, toys and electronics. Ann Arbor-based grocer Busch’s 16th metro Detroit store will stock wine, liquor and 24 Michigan-made beers on tap at the in-store bar (complete with a happy hour). German-owned and visually no-nonsense retailer Aldi is adding six Detroit-area stores in 2017 that will sport a fresh new look and more fresh food.

Ultimately, grocery stores are finding they need to "engage our customers the way they choose to be engaged," says Kroger. Or as a Meijer spokesman noted, “It used to be just facing off against new competitors and now it's about adapting to the different ways customers shop."

Marketing Strategies

This has marketing implications for grocers. Messaging must engage customers where they choose to be engaged, too. Print—in the form of circulars and coupons—is still the primary way US grocery buyers find deals, but retailer sites, digital coupons, email, digital versions of print circulars, apps and social media all play a role, too. Kroger says that while 40% of their shoppers will download a digital coupon before they shop, around half still consult the weekly print ad. Consumers are averaging 2.5 website sessions prior to checking out their online shopping cart, and they use a variety of tools to gather product information in the meantime.

How To Compete

This is where Michigan.com comes in. We deliver news, recipes, reviews and deals to grocery shoppers however they want it too, delivering it across platform—smartphone and tablet, desktop and print; and format—stories and photo galleries, email, video, social media, even events.

Let’s talk about how we can align your brand with Michigan’s largest and most engaged audience. We’ll share examples of integrated solutions we’ve built that combine content marketing, social media, mobile geo-fencing and high-impact digital ads to meet our clients’ business objectives.  Call us at 313-222-2775 or contact us online!

Posted by Andrea Schreiber, Sr. Client Strategy Manager, Michigan.com