Unlike most of the retail sector, grocery sales have been on a rampage since the coronavirus hit. The worst public health crisis to hit humanity in generations has led to governmental stay at home orders that has sent restaurant sales plunging and grocery sales surging.
The speed and magnitude of this change is unprecedented and worth a deeper look. As domain experts in analytics, customer loyalty, and business intelligence, we’ve spotted three key changes in customer behavior over the last few weeks that are worth highlighting:
- Center-Store Is Back from The Dead: Not surprisingly, grocery sales are up by 60%-80% in March compared to the same month last year. The largest gains have come from categories such as frozen food, ready-to-eat-cereal, powdered milk, noodles, soup, and canned vegetables. The grocery perimeter has seen some fresh categories sales decline by up to 30% as consumers focus on shelf stable options.
- More Visits and Bigger Baskets: Despite stay at home orders, grocery trips have increased by 10% compared to a year ago. Further, the average customer spends 45%-60% more on each trip they make. While there has not been much change in how people split their trips between weekdays vs. weekends, morning sales have significantly increased as people attempt to front-run any stock outs.
- Online Grocery Has Gone Mainstream: More than consumption changes for any product or category, it is the increase in grocery e-commerce that defines how customer behavior has changed. Shoppers of all ages have tried grocery e-commerce click, collect, and delivery for the first time, and many existing e-shoppers have increased their share of e-commerce orders.
These changes in customer behavior present opportunities for grocers that go beyond just delivering on the astronomical jump in short term demand. Three ideas to execute on to position for long term success include:
- Double Down on E-Commerce: Don’t assume that online grocery will lag behind the rest of the online retail sector forever. This crisis has forced many to try online grocery for the first time, and the value, speed, and convenience may lead many to permanently switch their behavior. Grocers that invest in their online channel with the same intensity as digital native will be well positioned to capitalize on this shift over the next several years.
- Don’t Mistake the Current Demand for Loyalty: With shortages of goods and the shift of demand, many grocery retailers are seeing new customers and increased basket size. Today, value goes well beyond price to include factors such as product availability, service, pick-up convenience, and hygiene practices. Retailers who can understand each customer’s behavioral drivers and communicate with them on an individualized basis stand to become stickier with those customers as their shopping patterns shift again.
- Relevant Communication: Whether it be a personalized email with offers to a loyalty member or a geo-targeted mailer to a new customer, grocers should highlight the assortment, prices, and practices they have that will be of most interest to each customer. The focus here should be on relevancy for the current situation with the knowledge that it will be changing in the future. Combine it with a message on expanded click, collect, and delivery options for maximum effect.
While Grocery has seen a steep spike in demand due to the coronavirus, it’s out-of-home counterpart, the restaurant industry, has taken a massive hit. To learn more about the changes in customer behavior we’ve spotted over the last few weeks with our restaurant clients click here.