Student whitepaper - Hyper-relevant groceries : creating active engagement

Posted by Jenni Armstrong on 05 November 2015

The final module of Squared Online sees Squares work in groups to create a whitepaper that sells their ideas on how a major digital trend will affect a specific industry.

From the whitepapers submitted, three outstanding groups are identified through a peer marking process and invited to present their projects in an upcoming live class. Students then vote on which overall whitepaper is the most viable, persuasive and creative.

They're great examples of how Squared Online grads combine an in-depth understanding of the digital landscape, the ability to identifty emerging trends and the creativity and strategic knowledge to make valuable, forward-looking recommendations that drive innovation and strategy in their organisations.

Read a recent top-voted whitepaper about hyper-relevant marketing strategies in the supermarket retail industry in full below.

Executive Summary

  • The implementation of hyper-relevant marketing strategies for contextual personalisation of the shopping experience can improve profits by as much as 15.6%(1).
  •  Implementing methods to gather data in-store, such as beacons, is key to providing insights into the customer journey that can be leveraged for real-time contextual shopper engagement.
  • Online shopping is currently locked out of the 61% of total Grocery spend on in-store top-up shops. Fulfilling orders quickly and convenient collection points, such as lockers and drive-throughs, are key to this £108 billion(2) annual spend in the UK.

Digital: The fastest growing channel of the UK grocery market

With the number of internet users in the United Kingdom increasing from 85% to almost 90% in five years(3), our expectation of the way we can work, live, communicate and shop evolves. The penetration of online grocery shopping continues to grow, according to the Institute of Grocery Distribution (IGD), over a quarter (26%) of all British grocery shoppers say they shopped online for their groceries in January 2015, which is a rise from just a fifth of shoppers four years ago.(4) Furthermore they see a year-on-year increase in the number of shoppers claiming to buy most of their grocery shopping online – 11% now, compared to 6% in 2011. More than a third of those who claim they are online grocery shoppers are therefore using the channel to meet the majority of their needs. The IGD forecasts that online will be the fastest growing part of the UK grocery market, more than doubling in value to £17bn by 2019. It will be worth 8%(5) of the market over the same period, boosted by a surge in usage of not only home delivery, but also click and collect services.

Loyalty

The UK recession has taught shoppers to shop around for a bargain, and even though the economy is improving this habit has stuck. Traditionally supermarkets have offered ‘base’ loyalty schemes, rewarding customers for spend, however these schemes are starting to change. Jans-Pieter Lips, president of Aimia who operates Sainsbury’s reward scheme, recently stated that “Nectar can be used in a more targeted and personalised way” and that the emphasis of the scheme is “shifting from base reward on spend to reward for active engagement”.(6)

Customer loyalty now has to be earned by delivering personalized, immersive shopping experiences to your always-connected customers. Getting them in store no longer means you’re closer to a sale. According to Google’s Consumer Barometer smartphones are now used across all age groups and 14% of users use them to compare prices and products in-store.

Retailers have responded with digital innovations across a selection of channels to personalise the shopping experience (see Table 1); but for customers personalization does not necessarily equate to a better shopping experience or brand loyalty. They don’t want offers sent to them that they don’t need, they want hyper-relevance. That means a seamless experience across all channels, with interactions that are specific to them so they receive what they want, when they want and how they want it.

Context and insight are essential components when building a personalised experience. Research by Cisco Consulting Services indicates that the reward for investing in a hyper relevant approach is an estimated 15.6% improvement in profit.(7) It declares that ‘consumer insight is the currency’.

Recent Innovations

Retailers have responded to the digital consumer by trialing technology based innovations designed to personalize the shopping experience and make it more efficient.

Table 1

A service that enables a shopper to scan their shopping on a smartphone, pack their purchases as they go and keep a running total of spendings and savings. Payment can be made through a dedicated area in store; either paying on their smartphone or

paying in the normal way through a self checkout. 

This innovative technology will allow users the flexibility and choice over what to buy and when. 

Not unlike existing digital signage services, a small LCD or LED screen attached to the handle of a trolley can project to the ‘driver’ a streamed video, a digital image or digital media/animation. This enables promotions, advertisement and cross selling opportunities to be presented in real time, at optimal locations and can be triggered by various types of proximity sensor. 

Waitrose and Tesco’s have invested in trials of beacon technology. Beacons facilitate location-sensitive notifications and offers to be served to shoppers via their smartphone in-store. 

This enables the collection of data about customer shopping habits, providing the opportunity for retailers to send segmented, personalised messages to customers at the right time in the right location.

A race for convenience

Supermarket discount chain Aldi is outrunning its competition in expansion plans, even though it only stocks 2,000 items compared to 30,000 or more from its rivals. When examined with a hyper-relevant perspective in mind it is possible to see where the differences are and suggest a strategy to close the gap. What is it about the Aldi experience that makes it so successful? 

The lack of choice at Aldi means that stores are small and simply laidout. This means that cost reductions down the line can be passed on to their customers in real savings. For the customer the value lies is in a more efficient shopping experience and the cost savings. The lack of choice makes for easy purchase decisions, for example Tesco ranges 228 different types of air freshener and 28 types of ketchup, Aldi stocks 1(8). In terms of what consumers want a recent Cisco study revealed that 39%(9) percent of respondents identified greater efficiency in the shopping process as second after price. It’s clear that Aldi delivers on both. So, is it possible for a much larger supermarket to offer a similar experience that it’s customers will value? Yes. By developing a hyper-relevant marketing strategy.

Gaps and Opportunities

Hyper-relevance implies delivering value - whether this is greater efficiency, savings or engagement throughout the shopping experience, be that online or in-store, in real-time.

Lack of Online – Offline Convergence
● In-store experiences don’t match the
convenience of online shopping. Stores are large
and time consuming to navigate, in-store it can
be difficult to compare prices and check
customer reviews.
● Online grocery shopping experiences lean
to larger weekly shops and don’t consistently
extend to in-between shops. This leaves the
customer relying on a number of retail
experiences to fulfil their household requirements.
Opportunity: Make top-up shopping more
convenient to increase loyalty.

 

Lack of contextual shopping experiences
● Online and offline shopping experiences
present customers with overwhelming choice,
there is room to personalise and curate product
choices to an individual based on their behaviour
online and instore.
● Existing app or loyalty rewards scheme are
personalised however, offers are not sent in
context with the real-time needs of the customer.
Coupons are often paper-based, easy to lose, and
price matching is offered as future-discounts.
Opportunity: Leverage data for relevant
instore and online offers to reward engagement.

 

Lack of recognition
● Data is available to analyse the customer
journey online, but there is a lack of dynamic data
to recognise the customer in-store from sensors,
beacons, smartphones, watches and even
wearables.
Opportunity: Hyper-relevance requires an
analytics-driven approach across the complete
customer journey, leveraging this big-data will
assist the customer to make decisions and the
retailer provide smarter supply chains.

 

Improving checkout and distribution
● Customers expectations are growing
faster than retailers are currently transforming
grocery payment, delivery and collection.
● Checkout queue lengths are
unpredictable, online delivery generally has to be
scheduled > 24 hours ahead and have large >£50
minimum spends and often incur premium
charges.
Opportunity: Provide wider choice of
delivery options for all spends & faster payment.


Strategy - A multi-channel approach

Executed properly, the customer may not even be aware of a hyper relevance. Touchpoints are converged and focussed on providing a contextual, seamless and personalised shopping journey.

 

A win-win relationship founded on trust

A hyper-relevant strategy can create tangible benefit to the customer beyond price, a relationship defined by mutual trust and rewarded with loyalty. The largest benefit goes straight to the bottom line with anestimated 15.6% improvement in profit. (10) Hyper-relevance creates mutual value, underpinned by trust.

Risks and Challenges

Earning and retaining trust in a hyper-connected digital world presents a number of risks and challenges:

  1. Automation Vs Personalisation. Using real-time customer data in the right context is key to hyperpersonalization; business-centric maintenance of content and logic is critical.
  2. Intelligent Information Management. Personalised and contextually relevant shopping experiences rely on customers willing to share their information. Transparency about what information is collected, how it is used, and the benefit to the consumer is critical to winning customer trust.
  3. Operational Data Security will require appropriate protection for systems and information assets, and a clear plan for responding to breaches.
  4. Competitors. The largest risk, by far, is to not be hyper relevant, whilst your competitors are.

Recommendations

  1. Get to know your customer. Collecting data is the key to understanding customer habits. Improving the customer online web and mobile experiences will encourage loyalty and greater data sharing. Implement: The use of customer IDs it will enable the customer to be guided through their buying journey.
  2. Enhance convenience. Analyse the customer stories available and track the routes that are typically taken. Implement: The use of ibeacons for a streamlined and efficient shopping experience without irrelevant distractions.
  3. Put customer history to effective use. The average household typically only cooks 9 recipes(11), engineer the shopping experience around speed and convenience. Implement: special offers through apps, digital signs and beacons to guide the customer journey.
  4. Unlocking the top-up shop. 61%(12) of grocery spend is through small top up shops, an area online shopping is currently locked out of due to lack of fulfilling orders quickly and convenient collection points. Implement: Refrigerated lockers in public spaces, drive through collection points and 1 hour collection times.

Conclusion

From the customer’s point of view, eCommerce and brick-and-mortar businesses are no longer discrete. In the past digital grocery channels have been considered as separate or distinct business, with retailers online shopping offering a very different experience to in store. Increasingly, digital is fundamental to the entire business and the whole shopping experience, both in and out of the store. As this new reality begins to have a greater impact, retailers should change dramatically the way they think and invest in digital to meet their customers’ needs and wants via efficient digital solutions.

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 Footnotes

  1.  http://www.theguardian.com/business/2015/jan/30/tescocutsrangeproducts
  2.  http://www.igd.com/Research/Retail/retail-outlook/3371/UK-Grocery-Retailing/
  3. http://www.internetlivestats.com/internet-users/united-kingdom/
  4. https://www.igd.com/Research/Shopper-Insight/Channels-and-In-store/25717/The-rise-and-rise-of-online-grocery-shopping/
  5. https://www.igd.com/Research/Shopper-Insight/Channels-and-In-store/25717/The-rise-and-rise-of-online-grocery-shopping/
  6. http://www.thegrocer.co.uk/channels/supermarkets/sainsburys/sainsburys-to-cut-nectar-rewards-by-half/372537.article
  7. http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=1570996
  8. http://www.theguardian.com/business/2015/jan/30/tescocutsrangeproducts
  9. http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=1570996
  10. http://www.theguardian.com/business/2015/jan/30/tescocutsrangeproducts
  11. http://www.mirror.co.uk/news/uknews/howmanymealscanyou5238872
  12. Kantar World Panel The Great Grocery Revolution

Topics: Expert comment, Digital marketing, Whitepaper