Data, analytics and a single-customer view fuel grocery in 2017

Guy Amisano Sr., founder and CEO of Salient Management Company, has tips to help smaller grocers compete with the supermarket giants.

Salient Management Company's Guy Amisano Sr. offers tips for competing with supermarket giants

There's no question that competition in the supermarket industry is fierce. And grocery giants such as Kroger are experimenting with digitally enabled shelves and other forward-thinking technologies in order to win market share. Enhancements such as these will no doubt help Kroger better meet consumers' product and pricing needs as the supermarket of 2020 begins to take shape.

But what about the little guys?

FierceRetail spoke with Guy Amisano Sr., the founder and CEO of Salient Management Company—a provider of performance management solutions with experience developing industry-specific strategies for businesses in retail and wholesale distribution markets—to learn how smaller grocers that do not have the capital to invest in this type of technology can better compete with the supermarket giants.

What do you think digitally enabling shelves and other technology is doing for grocers like Kroger and for the industry in general?

For Kroger and other brick-and-mortar grocers, it's all about trying to get ahead in the age of Amazon. With the introduction of AmazonFresh, busy shoppers now have an easy option for satisfying their grocery needs on the go. Amazon customers feel like they have found the “shortcut” to grocery shopping, but also that they are still acknowledged as a person, and a customer.

Implementing digitally enabled shelves allows Kroger to redefine what in-store personalization may look like for their customers. Previously, many customers didn’t think about having a customizable grocery trip. Instead, it was  a self-directed experience that required the customer to be proactive in order to find what they needed and get the best deal. With these new capabilities, however, Kroger is able to, like Amazon, relieve a common pain-point of shopping: finding the items you need and ensuring it's at the best price possible.

Beyond this, digitally enabled shelves can allow Kroger to collect additional data on their customers' weekly grocery choices through their mobile app. This enables them to better grasp who their customers are and how their stock and price points affect sales.

Is there technology that you think will be a "must-have" for grocers of all sizes in 2017?

In 2017, retail-customer relationships are fueled by data analytics. Part of the success of Amazon and other ecommerce sites is their ability to easily capture data from every step of the customer interaction, analyze it and let the results support better engagement practices and helpful product offerings. While brick-and-mortar stores may be unable to capture data from every second of a customer's experience, multiple data resources are already being collected by grocers that can easily translate into insights on customer habits, needs and frustrations.

The key here is to leverage new solutions that enable grocers to connect disparate sources of data and create a single view of their customers to better understand who they are and how to better service their needs. This creates a resource that grocers can easy access and review in real time to best understand the continuous performance of their business. Customer needs can change everyday; therefore grocers need to be monitoring their performance everyday too.

When we talk about the power of data, what data should grocers be collecting?

The most common pieces of data collected are daily in-store traffic and daily sales. While these two pieces of information are critical to monitoring the success of a business, multiple other factors can help to influence these numbers. This can include:
    •    The flow of products into and out of the store, as well as their relation to shelving strategy
    •    Insights on staffing, including not just how many people are on the floor, but in what roles and with what levels of experience
    •    Customer insights leveraged from an in-store loyalty program
    •    Specific trends regarding the types of products purchased together, as well as the average total spent in one shopping experience
    •    Measures of store productivity for every square foot of floor space, enabling the retailer to discover any and all inefficiencies.

Beyond just identifying what other types of resources grocers already have on hand, it's important for these stores to rethink access to their internal data and analytics tools. To create a truly successful data-driven business, managers at the local level need to have the opportunity to review and interpret data insights as they relate to their shop. Most often, data insights are captured at the top level of a business and the strategies determined from those results are passed down to a local store. However, grocers and all retailers need to remember that no two stores are alike—meaning that the insights captured for the whole chain may not be representative of that particular location or need to be interpreted differently based on the needs of that community. Empowering those who are closest to the customer every day to access insights that relate to their unique business better ensures that the strategies implemented will make a specific impact on that store.

What are some of the tactics that smaller grocery chains can use to stand out from the big brands?

Looking to emulate a similar experience for consumers without needing to invest in digital shelves, small and regional grocers should instead leverage data analytics to do the following:
1.    Understand How Outside Factors Influence Your Customers: When and how customers choose to shop is not just based on the store itself but rather a variety of outside factors that can influence decisions. If you are looking to stock up before a blizzard, you may opt for canned items, milk and eggs, knowing that those are the items that have been most frequently sold during similar events in the past. While grocers can’t predict exactly how each customer thinks, incorporating third-party data such as weather patterns, local traffic patterns or even census data can enable them to make smarter conclusions about when customers may decide to come into a store and what they will most likely be looking for.

2.      Implement and/or Leverage a Loyalty Program: One of the big successes of Kroger’s new digital shelves will be its ability to encourage customers to download the grocer’s mobile application. This means Kroger will now have access to specific demographic insights and shopper preferences, enabling them to create a more personalized experience. In the same way, grocers that develop and leverage an in-store loyalty program have the opportunity to collect the same type of data from customers. While this may not lead to personalized engagement with shelves in the store, it can enable these retailers to provide targeted deals and discounts based on common purchases. It also creates another opportunity for that shopper to be recognized for their continued patronage through a rewards campaign.

3.     Rethink Your Shelving Strategy Based on What Products are Actually Purchased Together: The other big benefit of Kroger’s digital shelves is their ability to make the shopping experience a little more effortless for the customer, even going as far as to highlight items on their digital shopping list when they enter an aisle. While all grocers may not be able to guide a customer through their grocery list, it is possible to examine internal data resources in order to identify when items are most likely to be purchased together in order to create a more fluid shelving strategy. Understanding this, grocers in different areas can create a store layout that better meets how their customers look to navigate through their shopping lists.

Is there any smaller grocer that you think is a good example of using data creatively and successfully?

One client we have seen continued success with since launching with them in 2006 is Holiday Market, a regional grocer in Northern California. Holiday Market initially came to us because they had found that as their business grew, it was becoming more daunting for them to get a complete understanding of their business, specifically as it relates to the performance of their products and changing consumer demands. In many cases they were relying on their distributors for much of the information, which was not timely and risked being inaccurate for their business needs.

Working together for about 10 years, we have been able to expedite the process of analyzing and combining their data resources into one cohesive picture. This has enabled them to become more agile in the way they make business decisions and enabled them to look deeper into product performance, specifically looking to better understand how customers' choices correlate to one another.

What else can grocers do to prepare for the future of omnichannel supermarkets?

Beyond the data resources they are collecting in store about their customers, grocers should look to better collect and share data with distributors and suppliers in order to create a more seamless supply chain. In the same way integrating third-party data can help grocers better understand their customers, integrating internal data with partners can help to create a more transparent end-to-end process for everyone involved, creating opportunities to improve efficiencies, reduce costs and avoid potential issues.

Additionally, as the grocery industry looks to meet the needs of increasingly digital consumers, it's important not only to have an online presence but also to use it to better understand how and where consumers are gathering their information on potential purchasing decisions. By analyzing data on web traffic and referrals, grocers can understand the types of digital support they also need to provide to ensure a customer’s experience is as easy as possible.

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