It’s been a huge year for eCommerce innovation in the grocery industry. Digital-native online grocers have been expanding, while leading national and international supermarket chains have been rolling out new digital features, reinventing themselves and beginning to establish the omnichannel experience of the industry’s future.
In only paying attention to digital leaders and industry giants, however, it is easy to miss the experience of the regional chains that make up a large share of U.S. consumers’ grocery spending. For these chains, the most important eCommerce questions are not how to implement Internet of Things (IoT)-enabled carts or create celebrity-hosted branded content. They are how to provide consumers with the options necessary to quickly, safely and conveniently get the groceries they need.
“eCommerce was a fairly small percentage of our sales up until this time last year,” noted Katie MacDonald, senior director of marketing, loyalty, eCommerce and digital strategy for New Seasons Market, a grocery chain with locations in Portland, Oregon; Vancouver, Washington; and San Jose, California. “We saw the business grow 5x nearly overnight. We worked quickly to scale both delivery and pickup options with our partner Instacart, and within a month, we tripled our eCommerce pickup locations.”
The B Corporation-certified chain operates 19 locations with two scheduled to open in the next few years, and it describes itself as “a neighborhood grocery store since day one.”
Changing To Meet Changing Needs
The chain has had to adapt in the last 12 months to meet both the new logistical challenges and the changing expectations of consumers. While many of these changes were already in the works, the pandemic accelerated the process. “A key challenge [during the last year] was balancing our investment in eCommerce, as it was difficult to predict the trajectory of the growth,” said MacDonald. “While this is still a challenge, it is clear we need to invest, and the new challenge has become where to invest and how fast we can move.”
“One of the most important technological changes was ensuring proper and strong Wi-Fi connectivity across our stores so that pickers can shop and capture orders without Wi-Fi disruptions,” she noted. This move was essential to the success of the chain’s partnership with Instacart, making it possible for Instacart’s employees to touch base with shoppers at home, avoiding miscommunications and unpleasant surprises.
“From an operational standpoint, we have made many adjustments, though picking efficiency is our biggest focus,” MacDonald added. “Efficient picking allows us to serve the increased volume of orders while getting our customers their orders as fast as possible.”
The Urgency Of The Digital Shift
Historically, much of the grocery industry has been slow to adopt new technologies. For many supermarkets and grocery stores, the in-store journey didn’t look all that different in 2019 than it did in, say, 1980. However, with the fear of in-person shopping and contact-heavy experiences that emerged in the last year, this slowness became a luxury the industry could no longer afford.
“The surge in grocery eCommerce is here to stay, and will likely continue to see steady growth over the next several years,” said MacDonald. “It is no longer a possibility to watch at the sidelines or dip a toe in the grocery eCommerce waters. If grocery retailers are going to remain competitive, it is now a must-have offering.”
Now that New Seasons Market has added digital channels across stores, the next step is to make the economics work in the stores’ favor — delivery is notoriously expensive, and the margins can be unforgiving. “I would say a new goal is also looking at how we can offer this service in a financially sustainable way, so that we can run a profitable business that continues to support our communities and regional food economy,” said MacDonald.
The Next Changes On The Horizon
While the technological challenges facing a regional chain like New Seasons Market might be different than those facing, say, Ahold Delhaize, there is a universal need to find digital solutions to make operations run as efficiently as possible.
“With this growth, there are a lot of new technologies taking off, with daily announcements around automated fulfillment and AI to improve picking and labor efficiencies,” MacDonald noted. “We’re most excited about the ability to improve our overall customer experience using digital technology and omnichannel customer insight.” She added that these kinds of CX improvements and insight-driven enhancements “will be imperative to offering an efficient and intuitive experience for customers in this channel.”
These are exactly the kinds of changes that are necessary to make it possible for a locally-minded chain like New Seasons Market to hold its own, especially given consumers’ desire for this kind of grocery experience. As John Ross, president and CEO of the Independent Grocers Alliance (IGA), told Karen Webster in a recent interview, smaller grocers need to think, “All of a sudden, my shoppers want something new for me. I better figure out a way to deliver it because … our relationship with the shopper is a competitive advantage versus a national chain, and so if that service expectation grows, we better figure out a way to fulfill it.”
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