CLICKS AND BRICKS Why the marriage between digital and physical retail

By Kristin Laird

THE UPTICK in online grocery shopping driven by COVID -19 is here to stay. But expectations around the level of service e-grocery provides and how that intersects with brick-and-mortar retail is quickly evolving. We recently chatted with Jason Goldberg, chief commerce strategy officer with Publicis Groupe—a multinational advertising and public relations company—about creating the optimal omnichannel experience, the importance of personalization and what grocers should pay attention to when it comes to digital. The interview has been edited for clarity and length.

COVID-19 accelerated e-commerce. How has this surge in demand and adoption impacted the grocery industry?

It had a lot of impact. E-commerce grocery exploded during the pandemic, as with all other e-commerce. A lot of other categories regressed to pre-pandemic levels, but grocery is one of the outliers that mostly did not. We’re continuing to see elevated levels of e-commerce purchases in North America for groceries, and that has a pretty profound effect on the ecosystem. When a shopper buys groceries online, impulse purchases become a lot harder. We don’t stand at the cash and stare at the gum or grab a cold drink, we don’t walk by the cookie aisle on the way to the milk. There’s a lot less discovery happening when shopping online. Also, e-commerce grocery is more expensive to the retailer than in-store grocery shopping because they usually have to provide the labour to pick the goods off the shelf, whereas in the old model the consumer did it. The margins and the profitability are more challenging in digital grocery. You’re seeing a lot of changes to bolster that profitability as a higher percentage of sales are happening online.

You mentioned low margins and profitability. How can grocers maximize the value of each online shopping trip?

The easiest way to improve margins is through better suggestive selling, through better personalization, through better discovery experiences. But, there are also ways to reduce the cost of fulfilling that order and those things are being tackled. The downside of some of those initiatives is they can be capital intensive. You start looking at things like more efficient picking with a micro-fulfilment centre or more efficient software for human pickers that can help reduce the cost of each order, but they’re expensive to acquire and set up.

How can grocers hold onto the digital customers they acquired during the pandemic?

In-store sales are increasing, but we’re not seeing a significant decline in online sales. It turns out those aren’t two different cohorts. It’s the same customer that wants to go in-store sometimes and online other times. The most important thing to hold onto that customer is to have a seamless experience across both platforms. When I’m shopping online and you’re recommending products to me based on what I bought in the past, you better not just recommend things to me based on what I bought online. You better recommend things to me based on what I bought in your store. Grocers need to mirror the data from both channels to give the customer a better experience.

When customers were forced to use digital during the pandemic, grocers could get away with imperfect shopping experiences. Every online shopper will tell you horror stories of bad product substitutions, but if the alternative to those bad substitutions was risking my life to go to a grocery store, I’m going to live with those bad substitutions. Today, if I get bad substitutions, I’m firing that retailer and trying another retailer—customers are less sticky.

What should grocers pay attention to when it comes to digital?

The two most important things are removing friction—making it easier for an increasingly time-starved family— and, as we move into 2023, providing the best possible value and making customers feel like they’re stretching their grocery budget as far as possible. The grocers that are likely to win in 2023 are the ones that are good at doing both of those things digitally, even when a customer wants to shop in an omnichannel way. CG