Like other companies in various market sectors, the grocery industry is the next collapsing domino. Every day there is news about the grocery industry; the demise of Whole Foods, a new kind of food store, Amazon-Go, and the fast growing online grocery shopping. It’s not too late for the industry leaders to take steps to secure their customer base. All retailers, grocery and otherwise, need to “wake up” and think about what they can do to drive customer loyalty and set an action plan to create human-to-human connections, whether goods are sold in brick & mortar or online.
Pricing, delivery options, and selection can all be easily replicated. What can’t be copied is the relationship that a customer has with one store or online associate.
In 2010 there was a story about a boy named Johnny. Johnny had Down syndrome and worked at a grocery store packing bags. He would include a note in each bag, with his “thought for the day.” The lines at his register were three times longer than any other. Customers were eager to wait just to see their favorite bagger and receive their special note. That story is not about a bagger, but about Johnny and his human connection. I guarantee that if another grocery store opened in town complete with the latest technology, competitive prices and selections, none of Johnny’s customers would ever consider going elsewhere.
Grocery stores, which by their very nature require customers to visit frequently, have the greatest opportunity to use the human interaction to their advantage to create and build customer loyalty. When customers interact with an associate who knows their name, buying preferences, kid’s schools, etc. they won’t be as tempted to drive to a competitor who offers the fastest and most reliable self-service check-out. While I can’t guarantee that the most personable cashier is going to stop online purchasing or trying a new store in town, I know that if your business doesn’t start with the human-connection and work backwards, there will be significantly less repeat business.
According to a report by the Food Marketing Institute (FMI) and Nielsen, which looked at the digital transformation of the U.S. retail food landscape, “online grocery shopping could grow five-fold over the next decade, with American consumers spending upwards of $100 billion on food-at-home items by 2025.”
Those companies that sell their products online without infusing the human connection will turn their entire company into a commodity where shoppers will only purchase based on price and delivery options.
In recent blogs I have described how retailers became shortsighted when online shopping became an option. Retailers set up e-commerce as a separate entity, with no coordination between the physical store and online shopper. No attempt was made to make it easy for customers to interact with a specific company associate who could build loyalty one customer at a time. In preparing to write this blog I checked out the online sites of Trader Joes, Whole Foods, and Publix. All three companies have the customer service or contact us tab buried in the site, making it difficult to communicate with a person from the company. That doesn’t make sense. Customers seeking advice or asking questions online is an opportunity that must be taken advantage of to create a human-to-human connection. Don’t substitute a bot for a human. Just think of Johnny, the bagger. A Johnny can also create customer loyalty for online shoppers, as well.
Besides online competition, the grocery industry is now competing with the elephant in the room, Amazon-Go. Most of the publicity surrounding the Go stores has been about customers eliminating the need to checkout. The push is towards no human interaction but that appears to not be true. Go stores have a staff of anywhere from three to ten employees per shift. Some associates might be stocking shelves, others guest services, including signing up customers for Amazon’s Fresh Grocery Service Delivery and overseeing drive-in windows.
It’s interesting to note that Amazon says that the ultimate goal is to cut down on labor costs and further remove unnecessary human interaction from the physical shopping experience. The key word is “unnecessary.” Knowing how customer-centric Amazon is, I can’t imagine that the staff “necessary” to interact with customers for certain transactions will not participate in training to be customer friendly and taught the importance of building a human-to-human connection with all customers in the store who require assistance.
I recently read about Whole Foods’ plans for turnaround. The company has lost half its value since peaking in 2013. Whole Foods is trying to retain customers. In 2014, a pilot customer loyalty program began in Dallas and the intention to expand it nationally. My advice for Whole Foods: Loyalty Programs Don’t Work unless they are coupled with the human-to-human connection.
Although this blog is primarily focused on the fast-changing grocery industry, all retailers, online, brick & mortar, and any combination, need to “wake-up.” In the 1980’s, companies revised their organization charts putting the customer on top of the pyramid. I believe that thinking must be further refined placing the human connection on top of the chart. Those companies that couple the latest technology in order to create effortless interactions with a human-connection caring about people/customers will have a winning and competitive strategy. Technology alone is not a cure all. Johnny placed each of his “thought of the day” notes in the bag himself. Using a robotic arm might have been faster, but his customer never would have been as eager to shop in his store or stand on his line.
Everyone loves to self-serve until the technology doesn’t work or the customer doesn’t understand how to use it. When that happens, customers want to interact with a human. At that point, make sure that the human/associate they communicate with understands the value of turning that interaction into an opportunity to create a lifetime customer.