Sponsored By

Study: Store pickup, small formats have a lot to offer

Consumers seek a personalized shopping experience, says Brick Meets Click

Russell Redman

May 28, 2019

4 Min Read
StopShop_Peapod_store_pickup_sign-1.png
Russell Redman

Adding online grocery pickup and learning from innovative small-format stores can help food retailers tailor the omnichannel shopping experience to their customers, according to an analysis from Brick Meet Click.

Shoppers’ demand for new offerings that meet their personal lifestyles continues to fragment the mass market in terms of distribution and retail channels as well as in products and communication, Brick Meets Click said in its report “Capitalize on the Growing Appetite for Customization and Personalized Shopping Options,” released last week.

“Grocers and suppliers who fail to respond to this growing demand for products and services that are customized to satisfy the personal preferences of shoppers can get left behind,” noted Steve Bishop, managing partner of the Barrington, Ill.-based strategic advisory firm.

In online grocery, that means retailers should offer store pickup service along with delivery to ensure they are meeting a broader range of customer preferences. Many shoppers prefer pickup over home delivery, and pickup brings retailers key benefits in cost, incremental sales and customer relationships, the report said.

“Pickup service doesn’t just cost the customer less than delivery, it also costs the retailer less to operate,” according to Brick Meets Click. “From the customer’s point of view, pickup service fees are typically half that of delivery and, occasionally, there’s no fee. From the retailer’s point of view, variable expenses to operate a pickup service are lower and easier to manage than delivery. So customers spend less on explicit fees and retailers make more profit with pickup as compared to delivery.”

Related:As grocery e-commerce sales grow, the online shopper evolves

About one-quarter to one-third of grocery shoppers who buy online and pick up at the store make added purchases in the store during the same visit, Brick Meets Click research finds.

“If a customer wants to choose their own produce or needs a prescription, hot prepared foods, a gift card or even alcohol in certain markets, then a pickup option works better for satisfying this broader range of grocery-related needs,” the report said.

Store pickup, too, helps brick-and-mortar grocers reinforce the personal connection with their customers — a key advantage over pure-play online grocery services, Brick Meets Click pointed out. “Otherwise, when customers choose delivery, especially when the grocer partners with a third-party provider, the digital experience and independent contractors define the customer relationship to a much greater degree,” noted the report.

Related:Survey: Grocery stores need to ‘enter the modern age’

In an analysis of transactional sales data from about a dozen retail grocery banners offering both online delivery and pickup, Brick Meets Click found that an average of a quarter of online grocery customers used pickup only, a majority used delivery only and a small group used both.

“This clearly shows that grocers need to offer both options to reach their entire potential online market,” the report said. And to maximize the sales potential of store pickup, retailers should seek ways to improve the pickup experience, such as by reducing the wait time between the customer’s arrival and the delivery of the order to their car.

Raleys_Market_5-ONE-5_store_format_Sacramento.png

Raley's Market 5-ONE-5 store in Sacramento focuses on store focuses on helping customers make more informed and healthier food choices.

On the brick-and-mortar side, Brick Meets Click noted that small formats are indicating where consumers are leading retailers — and where grocery retailing may be headed. The report cited such examples as Raley’s Market 5-ONE-5, Hy-Vee Health Market, a new Whole Foods “bodega-style” shop in Manhattan attached to one of its full-service stores and a new Aldi urban store concept launched in England called Aldi Local.

“These stores aren’t just smaller; they are built to serve specific shopping occasions and to test new business models that are fundamentally different from traditional grocery stores,” Brick Meets Click observed. “These small stores will create a next generation of retail that uses new technologies to achieve more efficient use of labor, inventory and selling area.”

Smaller retail concepts also can help retailers enhance proximity to their customers by penetrating densely populated areas, even if it’s just a few city blocks.

“This isn’t how grocers have historically thought about the business, but it is the way chain drugstores develop in urban markets,” explained Brick Meets Click. “And we should use this model to think about what’s happening since it’s enabled drugstores to generate much higher sales from a given market area by leveraging the value of the network. Proximity is clearly the game Amazon is working on as well.”

Improved web search optimization also has become pivotal for grocery retailers, Brick Meets Click added. The report said suppliers are adding hundreds of online attributes to their products to help consumers find what they want more easily. Attributes range from full lists of ingredients and nutritional claims to how the products were made and packaged.

“To date, some retailers have been slow to add attributes because it hasn’t always been clear how they add value to the business. But leveraging product attributes is becoming essential for being a nimble competitor and satisfying shoppers’ needs,” Brick Meets Click said. “Grocers who can quickly identify where product sales are increasing faster than the category will be able move first with products trending ahead of the market and, therefore, deliver a better customer experience that will capture more spending.”

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like