Customer-Centricity in the Grocery Business

Stephen DeAngelis

August 14, 2019

When we think of life’s necessities, one of the things immediately springing to mind is the food we eat. Food and drink choices are matters of personal preferences and grocers must be attuned to those preferences if they are going to serve their customers well. Boston Consulting Group (BCG) analysts, Gavin Parker, Thomas Jensen, Pascale Morillon, Bill Urda, and Stephanie Halgren, write, “For grocery retailers, customer-­centricity is a bit like personal virtue: everyone agrees that it’s a good thing, and no one can possibly argue against it, but actually achieving it is a challenge.”[1] According to Steven MacDonald, “Customer centric is a way of doing business with your customer in a way that provides a positive customer experience before and after the sale in order to drive repeat business, customer loyalty and profits. … Customer centricity is not just about offering great customer service, it means offering a great experience from the awareness stage, through the purchasing process and finally through the post-purchase process. It’s a strategy that’s based on putting your customer first, and at the core of your business.”[2] The BCG analysts indicate grocery executives understand the concept; but, implementation is not straight forward. “Most grocery executives understand that they need to put their customers first,” they write, “and many have initiatives in place to do so. Yet in most cases, these efforts result in marginal programs that don’t fundamentally improve the customer experience. Consequently, large grocers in markets around the world are struggling as they face more competitive threats than ever, from a wider array of players.”

Customer-centricity is all about the experience

Bill Bishop (@BrickMeetsClick), Chief Architect and Co-founder of Brick Meets Click, writes, “Supermarkets have a lot competition these days — both online and offline. A certain amount of churn is inevitable (people do move, after all), but when customers leave because they’ve found a place to shop that gives them a better experience, that’s a wake-up call.”[3] MacDonald suggests there are four best practices organizations can use to enhance their customer-centric strategies. They are:

1. Be passionate about customers. MacDonald writes, “Brands that are committed to customer centricity are passionate, and truly believe the customer comes first. They believe that without the customer, they cannot succeed in business (which is true) and want to see the world through the customer’s eyes. Marketers inside customer-centric organizations understand what customers want, and use customer data to capture customer insights and share this across the organization.” Organizations are now using cognitive solutions, like the Enterra Shopper Marketing and Consumer Insights Intelligence System™, to leverage all types of consumer data to obtain high-dimensional consumer, retailer, and marketing insights. BCG analysts note, “Understanding customers’ expectations entails understanding their emotional, functional, and experiential needs. Analytics can give companies deep insights into these aspects of their customers.”

2. Focus on customer wants and needs. According to MacDonald, “Brands that are committed to customer centricity focus on what the customer wants and needs, and develop products and services around that.” Grocers must understand local food preferences if they are going to provide their customers with the best shopping experience possible.

3. Build relationships. MacDonald asserts, “Brands that are committed to customer centricity focus on building relationships designed to maximize the customer’s product and service experience.” One way grocers have been building relationships is through loyalty programs. Loyalty programs strengthen relationships because they help grocers better understand customer preferences and provide a way for grocers to reward their most loyal customers. Another way grocers are strengthening relationships is by providing better in-store experiences. Jeff Wells (@JeffWellsWH) reports grocers are doing things like providing service counters in the meat and produce departments, providing in-store dining areas, featuring local produce, and offering cooking demonstrations.

4. Have a strategy. MacDonald insists, “Brands that are committed to customer centricity analyze, plan and implement a carefully formulated customer strategy that focuses on creating and keeping profitable and loyal customer.”

According to the BCG analysts it takes real effort to make customer experiences stand out. “Almost all grocery executives tell us that they are customer-centric,” they write. “And yet the customer experience in most grocery stores is bland and interchangeable.” Bland experiences won’t cut the mustard into today’s grocery environment. BCG analysts observe, “Customers today are less brand-­loyal and more empowered by technology to compare prices and shop around, often by smartphone, and younger people are more willing to visit multiple stores. Consumers want to be able to quickly find exactly what they’re looking for, and they’ll seek elsewhere if a store fails to meet their expectations.”

Don’t forget the supply chain

When it comes to food, having the right products on limited shelf space is critical. That’s where the supply chain plays a critical role. Matt Butler writes, “Effective management of inventory procurement and replenishment … will increasingly influence the consumer experience. Intraday planning will be required to strike the delicate balance between preventing disappointed customers facing out of stocks and congested aisles resulting in a diminished shopping experience. Optimal positioning of product to ensure availability with appropriate levels of freshness will affect consumer experience, on line order fulfillment and the ability to optimize ingredients to be used for prepared foods.”[5] To achieve the results about which Butler is writing, grocers must again turn to cognitive solutions, like the Enterra Category Management Intelligence System™, that can improve profitability by helping create a superior balance between product mix, price and features.

Gerard “Gerry” Szatvanyi, Founder, President & CEO of OSF Commerce, writes, “Retailers are only going to have more data coming in as shopping experiences evolve and new technologies are implemented. Now is the time for organizations to ensure they have a firm grasp on their data and that they have appropriate solutions in place to make the most of it. AI and machine learning solutions are practical considerations. They empower employees to make data-backed decisions, focus less on mundane tasks or analyzing complex reports and focus more on responsibilities that are going to have a more significant impact. Consumer expectations are going to continue evolving at a rapid pace. Grocers that can cater to those expectations with speed and agility will ultimately win.”[6] According to the BCG analysts, putting customers first is, in fact, a winning strategy. “As the term itself suggests,” they write, “customer-­centricity entails putting the customer at the heart of everything a company does. Yet most grocers don’t operate that way. Instead, they tend to separate their customer insights into a few isolated functions, while focusing far more on their financial performance and on the moves their competitors make. The situation opens a real opportunity for companies to create a sustainable competitive advantage by taking deliberate steps to better understand customers and by considering how every decision the company makes will ultimately affect them.”

Footnotes
[1] Gavin Parker, Thomas Jensen, Pascale Morillon, Bill Urda, and Stephanie Halgren, “How to Become a Customer-Centric Grocer,” Boston Consulting Group, 6 April 2017.
[2] Steven MacDonald, “How to Create a Customer Centric Strategy For Your Business,” SuperOffice, 8 July 2019.
[3] Bill Bishop, “How supermarkets can do a better job of keeping their current customers,” Brick Meets Click, 9 July 201.
[4] Jeff Wells, “5 ways grocers are elevating the store experience,” Food Dive, 17 September 2018.
[5] Matt Butler, “Delivering a Consumer Centric Supply Chain for Grocers – Part 4 of 4,” jda, 28 August 2017.
[6] Gerard Szatvanyi, “5 trends shaping the grocery store of the future,” Grocery Dive, 3 July 2019.