Accelerating cases of COVID-19, pleas from public-health officials not to travel and a country on edge after a contentious presidential election gave a decidedly subdued tone to the 2020 holiday season. The season was marked, too, by smaller gatherings—if gathering in person happened at all—and heightened use of online ordering from grocers and mass merchandisers.
This year, consumers have shown they're eager to get back into stores and embrace in-person gatherings with family and friends. As of this spring, more than 40% of consumers were expecting to spend the holidays with more people than they did last year, according to an 84.51° survey, and Walmart's leadership team alluded in May to strong expectations for a robust holiday season as vaccinations allow more Americans to resume in-person holiday celebrations.
But the delta variant in the past several weeks has created new unknowns for retailers, and rising prices are a growing concern for consumers, too. So how could this year look different, and how must grocers reinforce their value proposition heading into fall and winter holidays? Michael McGowan, SVP of commercial insights and loyalty for 84.51°, Kroger's data analytics and personalized marketing subsidiary, talked with Winsight Grocery Business about what he sees.
Christine LaFave Grace: How does the delta variant, and/or any other variant to emerge in the next few months, change the calculus for the holiday season?
Michael McGowan: Certainly a lot of unknowns are still out there, and the delta variant is a big one. Recent trends have not seen a lot of shift yet, but I think we’re eyes-wide-open as back-to-school kicks in and as we get into more of a cold and flu season and the unknowns that exist there.
I think as it relates to that hybrid shopper, we’re going to continue to see a really strong mix of hybrid behavior. We’re going to continue to see digital engagement, and also, depending on the variant, I think recent trends have seen more folks in store than at this time of year last year.
How have you seen the curbside offering evolve? How does it do a better job of meeting consumer needs now than it did even a year ago?
I think the evolution of curbside pickup has been really good in terms of the fulfillment. I think retailers have gotten much better in terms of making that experience really good for customers—everything from you check in for your pickup to the way that substitutions and potential out-of-stocks are handled, and then the pickup experience in general. The customer’s experience, even though you’re not in the store, is still really a critical aspect of how the customer evaluates the benefit of that e-commerce curbside pickup offering.
How must retailers continue to evolve their online offerings?
I think it goes back to a couple of things. We see that customers’ needs have got great utility whether it’s online or in-store. You want your properties to be very shoppable online; you want your customers to be able to find the products that they want and need quickly, and you want them to be able to easily associate the value and price paid.
Customers also want great products, especially fresh products—they want to trust and have high-quality experiences there. They want great customer service, whether that be through your digital app, your pickup associates putting groceries in their car or in-store to the folks checking them out or helping them find items.
It was interesting to see in 84.51's report on "the new normal" the mention of how important impulse buys are especially at the holidays. What do you see as the opportunity and challenge for those this holiday season in an omnichannel shopping environment?
It varies, but I think online or in-store. I think part of the benefit that we believe that really sophisticated retailers can provide is a really personalized experience for customers. And a personalized experience certainly can create really good impulse opportunities for purchase in these spaces. You think about a digital experience where you might have everything you need for a recipe except for one key item, and you’ve bought that recipe three other times this year—the ability for a retailer that can recognize that and provide a personalized recommendation to you certainly could be very valuable.
And then in-store, I think it’s about making sure you figure out the right path to do a few things. Make sure you’ve got the right products on display; make sure you’re selecting the right locations for those displays, and then making sure you’re able to fulfill and stay in stock on key items.
Last holiday season, the story was really small, intimate holiday gatherings as a lot of folks didn’t travel or scaled back their typical plans. With the eagerness this year to get back out there and resume traditional gatherings with family and friends, how does that affect the store offer?
It certainly could impact some of the pack-size considerations, family-size offerings, things along those lines. We would expect recipes that are more for larger families if the trend continues to more socialization.
A June survey of grocery shoppers found that 56% said they’re somewhat concerned about rising food prices, and 28% said they’re very concerned. Against that backdrop, what do grocery retailers need to do to reinforce that value proposition to consumers, so that a customer can say, “I know that prices are going up, but this is still whom I trust to deliver the best value”?
The words you use there, best value, is where we anchor on. We want to make sure that even in inflationary times that we provide great value for customers. Obviously, that can occur with managing base costs, but it can also occur in a diverse set of ways for both retailers and, quite frankly, brands, too, to add value to customers—still strong promotional plans in place to add value on key items during key holiday seasons, hopefully an influx of coupon offerings. The emergence of cash-back offerings in the market has been a rising trend, and then other levels. In our space, fuel space has been one that resonates strongly with customers. I think that it’s making sure that you’re really intentional about driving a good value proposition for customers. Fuel’s been a great currency and adds a lot of value for a lot of customers.
Was there anything in the data that surprised you?
I think the thing that stood out to me was just the acknowledgement from our research that pickup and delivery is here to stay. That hybrid shopper is not just a pandemic-oriented shopper; that is going to be the way of the future. Roughly 80% of shoppers that have used pickup in the past plan to use it as much or more into the future, and nearly 70% of delivery folks claim the same. E-commerce is here to stay, and the evolution of it will be really important as it relates to meeting customer needs and making sure that they can create experiences of value from engaging with us.