Seven Major Themes
- Retail Media Networks (RMNs) won this conference
- RMN data provides opportunities to reduce product waste
- E-commerce profitability remains a major challenge
- Grocers are trimming the fat to combat economic pressures
- Sam’s Club is using technology to digitize the in-store experience
- Instacart is becoming a fearsome grocery competitor
- Emerging technologies, like metaverse, haven’t gone mainstream
GroceryShop 2022 drew grocery industry leaders to Las Vegas, Nevada to talk inflation, customer data, e-commerce and more. As grocers are modernizing and adjusting to a post-COVID landscape, they’re rolling out a set of new technologies, products and ways of working that are changing the market.
From the rich and diverse workshops, sessions, case studies and panels, these are the biggest industry themes we saw, and what retailers and CPGs should take away this year.
1. Retail Media Networks (RMNs) won this conference
One of the most significant trends this year was the development and expansion of revenue-generating advertising businesses to large and medium sized grocers. Retail media networks (RMNs) are systems that allow consumer products (CP) firms to advertise their products on specific properties on the retailer's website, emails, mobile and even in-store displays. This year, we saw numerous private rooms for Walmart Connect, Instacart and other top RMNs.
The major topic of conversation was how retailers are able to build $100m worth of high-profit revenue from these businesses.
How retailers can maximize RMN success: Building a self-service platform for CPs is critical, as is thinking through endemic vs. non-endemic product mix, and how to drive traffic back to primary sites from 3rd party locations. Also, investing in in-store digital displays adds value and optionality for CP advertisers, as well as omnichannel first-party data.
2. RMN data provides opportunities to reduce product waste
Many top retailers already have RMNs, but using these platforms to build out as much detail as possible in customer data is the north star. RMN competition and access to never-before-seen data is leading companies to re-evaluate their loyalty programs, personalization, media strategies and supply chain.
Developing an activation strategy centered around personalized ads and offers will deliver higher engagement with these captive audiences. Premium loyalty and subscription models will further strengthen the connection between customers and the brand.
How retailers can decrease costs with RMN data: Walmart cited the shifting trend for getting ahead of supply chain challenges by pulling holiday deliveries ahead—their Halloween and Christmas items really did hit shelves earlier this year. Retailers are also pausing media buys on out-of-stock items to counteract supply chain challenges and optimize media spend. Using data to look for waste and opportunities should provide valuable insights to optimize on all fronts.
3. E-commerce profitability remains a major challenge
Enhancing profitability emerged as a key conversation area and focus. With ~80% of grocery retailers dissatisfied with their e-commerce profitability, firms are zeroing in on data-driven insights, emphasizing “retail is detail.” Multiple sessions covered this topic, including Insider Intelligence, a large grocer and several large CPG firms.
Publicis Sapient recently completed research that highlighted similar patterns. Our research revealed four successful methods to increase grocery profitability.
How retailers can increase e-commerce profitability:
Invest in Customer Experience: Use first-party data to personalize pricing and promotions for optimal customer satisfaction, and invest in mobile sales associate customer tools.
Optimize E-Commerce: Look for opportunities to promote high-margin assortments, increase basket size, and explore premium loyalty and subscription programs for highest-value customers. Offer unique customer experiences and products that can’t be found in-person.
Upgrade the Supply Chain: Develop a digital twin of your supply chain to predict operational issues, and implement cognitive order management to determine optimal shipping rates and balance capacities across stores.
Modernize IT Stack: Enterprise technologies are shifting from closed, centralized platforms to more open, cloud-based and federated systems and services. Shifting to the cloud, adopting the latest product-mindset and development practices, and embracing microservices and headless architectures are allowing retailers to do more with less. Furthermore, consolidation, simplification and optimization of IT platforms is also an emerging trend.
4. Grocers are trimming the fat to combat economic pressures
Economic inflation is a growing problem for retailers, and they are looking for ways to save on costs. We had multiple conversations about cloud optimization, and how RMNs remain a major play to improve revenue.
E-commerce platform consolidation is also critical—one company cited going from over 100 separate commerce platforms and related martech technology down to just 20. On the supply chain front, boosting supply chain resilience is critical, followed by supply chain strategy and digitizing supply chain operations, which was discussed by Walmart Connect executives. Finally, more retailers are looking to consolidate vendors, especially for commoditized support and monitoring work.
How retailers can cut costs to combat inflation: Retailers can reduce cloud usage by shutting down test environments during non-office hours and holidays, bolster RMN solutions to increase value for CPGs, consolidate e-commerce platforms and vendors, as well as digitize supply chain operations.
5. Sam’s Club is using technology to digitize the in-store experience
An executive from this membership-only retail warehouse explained how they’re driving loyalty through in-store experience supported by technology, a growing industry trend.
What makes them a leader in this space? Sam’s Club stores are highly focused on the membership experience. By sending free samples, they keep members part of the development process of their “Members Mark” private brand. They’ve also invested in front and back end technology, including self-checkout, scan-and-go, and in-store app experiences.
All of these investments have led to amazing customer reviews, social media engagement and high NPS scores for each stage of their journey.
How retailers can bolster sales associates experience: Retailers should treat store experience like hospitality, and sales associates like hospitality workers. Focusing on sales associate experience can simultaneously improve customer experience. For example, investing in mobile technology for sales associates enables more personalized support for customers. Walmart’s all-in-one associate app, “Me@Walmart,” consolidates their employees’ experience into one singular location to offer features such as scheduling, mobile clock in/out, and push-to-talk amongst users.
6. Instacart is becoming a fearsome grocery competitor
This grocery delivery and pick-up service is quickly preparing to IPO, and they have not seen demand soften even as COVID-19 restrictions are lifted. CEO Fidji Simo explained they’re positioning themselves as a mainstream product and service through a variety of new strategies:
- Dark stores as a retailer service
- A connected store program
- Customer membership program
- Acquisition of Eversite pricing tool
- Very substantial RMN
- Curated food items by influencers ‘The List’
How retailers can compete with Instacart: Just as QSRs have integrated third-party delivery technologies into their core service offerings, grocers should prepare to optimize for third-party grocery delivery partners. Providing a seamless, branded and omnichannel delivery experience will be key for success in partnering with Instacart or other third-party technology companies.
7. Emerging technologies, like metaverse, haven’t gone mainstream
Emerging technologies took center stage, but most retailers are still in the beta testing stage and haven’t taken them mainstream.
Live Streaming: Live streaming efforts in grocery are less mature than other retail sectors such as beauty, but some companies are making progress. Several grocers like Albertsons and The Fresh Market have partnered with technology company Firework to publish short-form recipe and food videos on their e-commerce websites.
VR/AR: 2 in 3 grocery shoppers say mobile is their number-one influencer while shopping. Walmart’s new VR clothing try-on in the mobile Walmart app is making waves.
Metaverse: NFTs have cracked the retail industry, with Starbucks leading the way. Starbucks is creating a Web 3.0 experience called “Starbucks Odyssey” that allows members to play games to earn NFT rewards or purchase and trade them with other members. These rewards can unlock experiences like virtual espresso martini–making classes or even trips to Starbucks Reserves.
How retailers should strategize for new technology: The biggest first step for emerging technology is hiring tech talent and bringing new leaders on board. Rather than diving into metaverse activations, retailers can think of the metaverse as part of an evolved omnichannel strategy and enter with a carefully planned multi-year roadmap. Retailers also have a big opportunity to implement AR/VR into their apps to bolster in-store and e-commerce experiences.