Supermarkets are thinking about how to get shoppers back in-store. But why?
Remember shopping in an actual store? You’d get in the car, drive there, find a place to park, and go inside to shop. It’s been nine months and somehow that activity seems so quaint from where we are today.
Online shopping has been growing since its inception. Amazon’s launch in 1994 was the inflection point that lead us to here. At that time we were all using Netscape to peruse the World Wide Web and buy books online.
The pandemic accelerated the online movement to light speed. The one retail industry that had mostly resisted that shift was grocery. Setting up a shopping list and having someone else pick out the tomatoes just felt like too much work. But Covid brought online grocery shopping from niche activity to the main course.
Grocery retailers for the most part were caught completely by surprise. Never mind that they ran out of toilet paper within three days. They had no idea how to effectively capture the needs of the online shopper. Sure, they all had sites for shopping. But those sites were designed for a couple of hundred shoppers per day. Now thousands – even tens of thousands – were trying to sign up, build a list, and get delivery by tomorrow.
Those systems couldn’t handle the influx of shoppers. Servers crashed, sites went down, and shoppers screamed. Nine months later – should you venture out to a store today – half the people pushing carts around are shopping by proxy. They work for Instacart, Door Dash, or even the retailer. But fewer and fewer are shopping for themselves. The real customers are at home.
Now that a vaccine is on the horizon and hopes for a return to normalcy are growing, retailers are starting to think about how to get people back into the store. Coupons? Faster checkout?
All projections show that online will continue to grow – including for grocery. In fact, Supermarket News reports that online shopping will continue its growth post-pandemic, doubling the current percentage by 2025.
This begs the question of why supermarkets want to get shoppers back to the store. Would they be better served by improving the online experience and kicking out Instacart to better serve their customers?
Sure, they have hundreds or thousands of stores, along with warehouses, distribution centers, and trucks. The assets abound. But keep in mind that Instacart – which owns no assets – has a valuation of $17B vs. Albertsons at $14B. What value do those assets bring to investors?
Maybe it’s time to close half the stores, turn half of the remaining stores dark, and put the effort into creating an outstanding online shopping experience. Add real-time inventory tracking, choice of curbside or delivery, and create a personal shopper program so customers get to know their shopper and the shopper gets to know their customers.
When the automobile came along, the horse and buggy was the standard. The country’s infrastructure was all designed to support that form of transportation. When the airplane came along, trains were the standard for long trips, with a deep supporting infrastructure as well.
E-commerce is here and the disruption is in full bloom. None of the existing assets and infrastructure will be able to block the growth that is coming. The customer will drive the market – not the retailer. The challenge for the retailer is whether they decide to lean into the future or try to hold onto the past.