Omnichannel shoppers often are among a grocery retailer's biggest fans, spending more than either online-only or in-store-only customers. But their expectations for the online experience—and their motivations for shopping online—are evolving, and retailers need to evolve their online offerings as well, says Barbara Connors, VP of commercial insights for Kroger-owned data and media company 84.51°. In a recent 84.51° omnichannel shopper survey, 85% of current online grocery shoppers said they planned to maintain or increase their e-commerce use in 20221. Connors, in her latest conversation with WGB, talks about the need to move beyond a strictly category-based shopping experience and opportunities to better connect with price-sensitive shoppers online.
Christine LaFave Grace: You've referred to a spectrum of omnichannel shoppers, from digital dabblers to digital champs—how is that weighted right now, two years after the start of the pandemic?
Barbara Connors: In terms of overall growth, what we have seen is that compared to prepandemic, the rate of hybrid shoppers—the people who are using both e-commerce and in-store within the same month—is two times higher than it was before. So we’ve seen more people moving online, and as they’re moving online, they’re still shopping in-store, as well.
We asked customers who say they go in the store the same day that they place an e-commerce order: “Why do you go in? Is it premeditated, or not?” And it is not. The No. 1 reason someone goes in the store the same day they get a pickup order is because they forgot something on their list.
The No. 2 reason why people go in stores is they are looking for something special or on promotion. The special piece, maybe I want to browse; I’m not sure exactly what I want, but I want to go and be inspired. In that case there’s an opportunity for e-commerce to provide more inspiration so that you can do that exploration online.
With promotion, we see this come up in a couple of ways. On the low end of the e-commerce adoption curve, it skews toward customers who are more price-sensitive, and as people are completing their orders online, price-sensitive shoppers take longer to complete their order. This makes sense, because price-sensitive shoppers are the ones who are doing more research; they’re comparison-shopping to make sure they’re getting the best deal.
There is an opportunity for e-commerce to say, “How can we make it easier for shoppers to compare? How can we make it easier for them to make smarter shopping decisions?” In thinking about helping customers complete their order quickly and confidently—the ability to provide price comparisons is critical, especially in helping move those price-sensitive shoppers up the loyalty ladder.
The other thing is helping people avoid forgetting items. The whole point of using e-commerce, the No. 1 driving factor for choosing e-commerce today, is convenience.
What do consumers expect now from the online shopping experience that they didn’t expect at the start of the pandemic?
When we saw the influx of people to e-commerce at the beginning of the pandemic, it was overwhelmingly prompted by health concerns. It has now morphed or evolved into convenience being that main driver.
One of the most interesting things that we’re seeing come out in terms of convenience is that when we asked consumers, “Tell me more about why you’re going online,” they want to go online because it streamlines their shopping trip and helps them avoid items that they didn’t want to buy—it helps them avoid impulse shopping. My cart becomes my list. I can save money and time because I’m not buying things I didn’t intend to.
It becomes even more important then for brands and retailers that are evolving the space to figure out, “How can we balance these two things?” People maybe want to go in store and experience this discovery and inspiration, but they say that one of the benefits of going online is that it streamlines their purchases. How do you provide discovery and inspiration online in a way that it doesn’t take away from the convenience that people go online for? I think that’s going to be the real hook—once we figure that out, that’s going to be a tipping point.
In the store, because you were limited to the physical layout of the store, your impulse purchases often were in the checkout lane, and they were disproportionately immediate-consumption items. Because we aren’t limited to that online, you have a broader set of categories that you could be viewing as impulse buys based on the customer’s state of mind. And it’s different because it’s not something for immediate consumption—it will be delayed gratification, something to enjoy later.
We’re able to track the order that items were added to your online cart, and we are able to isolate which are the items that were added last. And the items most likely to be added last fall into the category of social indulgence—alcohol, beauty and general merchandise. It opens the door for a broader definition of impulse that goes beyond immediate consumption.
When we’re thinking about “inspiring” shoppers, is there an opportunity for retailers to approach customers online with something like, “What occasion are you shopping for?”
Yes, absolutely! The traditional way that the e-commerce is structured is based on categories and hierarchies, and that may be how you shop sometimes, but other times you go in with a different mindset.
To be successful, you need to have both options. One thing that we are seeing that is pretty interesting is that we’re developing clear preferences about what kind of shopping trips we want to go online for and what kinds of shopping trips we want to go in the store for. When we asked—and this was in January—for these different types of trips, which do you prefer, shopping in-store, pickup or delivery? For the main grocery shopping trip, the No. 1 preferred method is pickup. This is a pretty big tipping point. We aren’t to the point yet where the majority of main grocery trips are happening in e-commerce, but this signals that that’s where it’s going. Because when we ask people, “How would you prefer to do it?” they’re saying, not in-store.
And we also see this playing out in the types of baskets that are happening online. We’re able to look at the size of trips that happen in store and online, and in-store, you have a pretty even distribution of small baskets—one to three quick pickup items—medium, and large. And with pickup, 70% of orders are those large stock-ups.
Only 1% of pickup orders today are those small baskets of one to three items. We talk about e-commerce as being a really strong delivery mechanism for convenience, but you still also look to in-store for hyper-convenience when you need something ASAP or you have a really small trip. As much as we talk about the promise of very quick delivery, if you need just one to three items, for the most part people are still running in-store to grab them.
On the point of super-fast delivery, do you see interest in that varying based on market? Is 30- or 15-minute delivery more compelling in a crowded urban center where it might be more of a pain to run out to a store? What are consumers willing to pay extra for now, and what’s table stakes as far as delivery?
Overall, when we asked our customers, if you are placing a delivery order, what is the preferred (delivery) time period that you’re looking for, it’s within four hours. We aren’t seeing a tipping point yet where consumers are saying, “I need it now,” from the grocery space.