Meijer, Lowes Sprinting Toward Omni-Commerce Future

While traditional food retailers are dealing with a plethora of challenges as the e-commerce derby intensifies, executives from Meijer and Lowes Foods shared insights about how their companies are evolving to address changing shopper behavior with data analytics during a panel discussion at the recent GMA Executive Conference at the Broadmoor in Colorado Springs, Colo.

Tim Lowe, president of Winston-Salem, N.C.-based Lowes Foods, and Peter Whitsett, EVP of merchandising and marketing for Meijer, shared observations relating to a range of developments about how their organizations’ merchandising, marketing, operations and supply chain strategies are shifting to help them stay competitive and capture omni-commerce success.

Craig Rosenblum, senior director, business development, for Inmar, moderated the session, during which he said that the $46 billion of food sales generated by e-commerce in 2017 has seen a 26% increase alongside projections of $100 billion, or 20% per year on groceries through online channels, by 2020. Yet while the anticipated robust growth of e-commerce is promising, Rosenblum said, “It’s also expensive, with retailers losing up to 20% per online transactions. As online sales increase, grocers’ profits decrease,” it’s imperative for trading partners to understand how to drive e-commerce profits going forward, he said.

Related:Meijer Brings Store-to-Door Delivery to Chicago and Rockford

Tim Lowe set the stage during the panel discussion by noting, “We’ve been through disruption before, but not in the form of e-commerce.” Further, while the center store has been hardest hit, Lowe believes it will continue to play an important, albeit changed, role in grocery's future. “Innovation is key,” he said, referencing the rebranding of his company's 100 stores, which began four years ago and which is not limited only to its fresh departments.

“Center store continues to play an important role, and when folks shop for brands, they go to those they trust,” which Lowe said is increasingly  becoming retailers’ private label lines. As such, he said Lowes is angling to “redefine what normal is and make sure we’re not running too far in front of our customers but instead bring them along with us.”

Whitsett said Meijer is also looking “at the disruption that’s happening as an opportunity to get better. We need to be constantly changing,” foremost to which is Meijer’s chief information officer, Terry Ledbetter, who joined the retailer in 2015 and whose role Whitsett said has since “changed drastically” as more of a strategic “business partner.”

While discussing how Meijer is using data analytics to craft new merchandising strategies to enhance profitability, including via personalized in-store and online product selection, improved on-shelf position, reduced out-of-stocks and improved supply chain efficiencies, Whitsett said the chain “now puts software to use in 10-week sprints. We used to have a lockdown [between intervals] but now it’s continuous.”

Lowes’ evolving strategies are also based on continuous learning and improvement to ensure “we don’t run away from the future; we are running to it, by engaging e-commerce consumers to become omni-commerce consumers. Online shoppers continue to become in-store shoppers for the experience,” Lowe said. “Amazon bought Whole Foods for constant contact, but we have what Amazon purchased: brick-and-mortar physical plants.”

“We see e-commerce migrating to omni-commerce as a loyalty play to use and turn loyalty on its head in the future,” said Lowe, adding that from an e-commerce perspective, “like anything else, it’s about turns. The total baskets go up and the total yield goes up, so we’re very pleased.”

Lowes is currently conducting a weekly incremental loyalty test program with 17 “super-user” customers, who are invited to send text messages to “tell us what they want” via “ a concierge service,” which Lowe said is not only providing Lowes with great insights, but is also allowing the super-user shoppers to be heroes at home by seamlessly fulfilling last-minute needs and requests.

Speaking about Meijer’s curbside and home delivery service with Shipt, Whitsett said the platforms have enabled the company to take the learnings and apply them to larger projects, particularly with in-stocks and predictive data. Meijer’s alliance with Shipt for its home delivery, he added, has “opened up incremental business where never seen before. We really like the ability to serve customers in different ways,” including with providing “access for new eyeballs on different brands.”

When asked about the most important lessons learned to date from its e-commerce platform, Lowe said, “We think of it like the casting of a shadow that provides our brand with a halo.” Although a central mission of Lowes’ overall strategy aims to provide an exceptional in-store experience, “We want our online customers to have the same look and feel that they have in our in-store environment,” said Lowe. “We’re about service, so we’re not just looking at it as a way to buy groceries, but a true concierge experience, which, by the way, also sells groceries.”