Spurred on by changing consumer shopping habits, West Michigan grocery retailers want to make the task of shopping less of a “chore” by leveraging new technology-driven initiatives.
Large grocery retailers, academics and startups all tout a future in which shopping will be a mix of in-store experiences and online ordering. While the retail landscape continues to evolve, the industry changes are leading to a flurry of experimentation and investment among the various companies.
Byron Center-based food distributor and grocery retailer SpartanNash Co. (Nasdaq: SPTN) is investing in updating its various grocery brands to better align with consumers’ demands for fresh, healthy options available on the go, while also bringing about new ways to get those products to buyers.
The company has expanded its proprietary “Fast Lane” program in which personal shoppers gather customers’ orders — placed online or via a mobile app — for in-store pickup or delivery.
SpartanNash also further solidified its relationship with third-party grocery delivery firm Instacart Inc., which last week began delivering items from the company’s stores around West Michigan.
Grocery retail experts note the changes come as part of an ongoing trend of retailers needing to invest in their stores and in new tech-driven methods of selling, known as omni-channeling.
“I think customers now, they have always kind of looked at grocery shopping … as a chore and we’ve had to find ways to make it a little bit simpler for them,” said Brian Holt, vice president of marketing at SpartanNash. “I think (Fast Lane) was a direct response to these requests from our (customers) of wanting to expedite that service and be able to get the best products selected by our personal shoppers in the store.”
SpartanNash and other grocery retailers locally have ramped up their grocery delivery options in recent years. That includes Walker-based supercenter retailer Meijer Inc., which contracts with Shipt, a third-party delivery service owned by Minneapolis-based Target Corp.
Recent research shows there’s good reason for retailers to invest in delivery and curbside pick-up options. A joint study released in January by the Food Marketing Institute and market research firm Nielsen estimated that 70 percent of grocery consumers will shop online by 2024.
“The grocery industry is currently in the age of digital experimentation, where the roadmap on how to navigate and achieve real and profitable growth continues to evolve,” Chris Morley, U.S. president for retail and fast moving consumer goods at Nielsen, said in a statement. “While analytics will continue to be critical for retailers and manufacturers to understand the digitally engaged food shopper on a deeper level, a collaborative approach to balancing physical and digital sales strategies is the key to unlocking omnichannel success.”
Academics who closely monitor the changing nature of grocery retail acknowledge that e-commerce sales still make up a relatively small portion of overall sales. However, sources said companies need to invest aggressively in the technology now to ensure they have repeat future business.
“Meijer with Shipt and SpartanNash with (Instacart), they’ve basically all followed suit,” said Marcel Zondag, an associate professor of marketing at Western Michigan University’s Haworth School of Business in Kalamazoo. “Walmarts have also expanded and gotten into that. This trend has now started and it’s basically almost a requirement for business. It’s not necessarily representing a very large part of sales — most of the sales are still very traditional through the store — but it’s (about) that whole package.”
Zondag, whose work focuses primarily on marketing and supply chain research of shopper marketing, said recent studies he’s conducted with colleagues show that customer engagement throughout the shopping experience — before entering the store, during time in the store and after the store — leads to a close relationship between consumers, brands and retailers, which drives repeat business.
Grocery executives take that research to heart, acknowledging that even as more consumers will likely adopt home delivery in the coming years, their stores still must create great experiences for shoppers.
“We want to make things more personalized in the store from an experience standpoint,” SpartanNash’s Holt said. “We’re trying to really ramp up the experiential piece of shopping in our stores. For all the consumers that do want to come in the store and do the shopping themselves, (determining) how we provide them a better in-store experience is so big.”
As grocery chains like Meijer and SpartanNash work to blend the customer experience between in-store sales and e-commerce, one local startup also is leveraging those efforts for business growth.
Grand Rapids-based MessageWrap LLC began testing fixed grocery checkout line conveyor belts laden with advertising in 2013. The company, which employs nine people, has installed 14,200 belting systems so far this year, according to co-founder and CEO Nathan VanderPloeg.
The company’s belting systems, manufactured by Grand Rapids-based conveyor manufacturer Mol Belting Systems Inc., have been installed in numerous grocery chains around North America, as well as locally at certain Target and SpartanNash stores, VanderPloeg said.
When the company first began testing the systems, VanderPloeg said he imagined consumer brands in the stores would account for most of the advertising space on the belts. Instead, about 90 percent has been geared toward retailers’ “most valuable” marketing initiatives, such as customer loyalty and e-commerce programs, he said.
Citing the aforementioned Nielsen and FMI study, VanderPloeg views changing the “blank canvas” of the checkout stand as further validation that grocery customers want more than solely online or in-store options. Rather, customers desire a healthy mix of the two options that also provides them with an experience.
“(Grocers) see MessageWrap as the perfect place to bridge the stores with online,” he said. “I think that the stores are not going away. It’s just changing. It’s more important than ever before to find the best ways to bridge the in-store experience with the online experience.”