Tag: retailer

Grocery shopping is a giant business, accounting for nearly $800 billion in annual spending in the United States alone. But it’s also a notoriously tricky business, with price-sensitive customers and the dance of inflation further complicating the landscape.

Retail leaders across categories are intent on leveraging the powerful capabilities of emerging technologies to revolutionize their organizations and improve margins. They aim to keep current customers happy while successfully expanding to include new ones.

As game-changing technology like generative AI, robotics, drones, and more sweep our culture, food retailers are looking to optimize how they sell groceries online and in person. Baked into this technology is the ability to automate processes, collect, manage, and analyze data, glean deeper insights, connect more authentically with customers, and offer more tailored customer experiences.

It’s the dawn of a new age in how we shop for food, and it’s shaping up to be a fascinating ride for the everyday consumer. Here are some trends and ways technology will revolutionize the in-store and online grocery shopping experience — and how companies may choose to evolve in response.

Online Grocery Shopping Trends and Technology Adoption

Let’s start with what’s happening online. Consumers today still shop for most of their groceries in brick-and-mortar stores, which account for 83% of US grocery sales, but online grocery shopping is fast gaining steam. According to NielsenIQ, online grocery shopping outperformed in-store sales by nearly 300% in 2024 compared to 2023.

Value-First Shopping

Inflation remains high, and customers continue to feel the impact. Some 70% of shoppers cited food prices as a top concern, according to a February 2024 report by FMI, The Food Industry Association. Cost has emerged as a top decision-making criterion for customers deciding whether to try new products when shopping for groceries.

Younger shoppers with tighter budgets are also more cost-conscious. Gen Z shoppers are the likeliest to compare unit prices at the same store (79%) as compared to Gen X shoppers (69%) or baby boomers (72%). Grocery stores have responded by augmenting private-label offerings. Sales of private label goods represented 19% of total grocery revenue in 2019, a 5% jump year over year. Digital native shoppers increasingly use online shopping sites to compare prices, helping consumers maximize value. This “flight-to-value” behavior in grocery shopping has benefited mass merchants like Walmart, expanding its market share by 6.2% since 2021, ending 2023 with a whopping 45% of grocery online sales.

Increase in E-commerce Grocery Shopping

Grocery e-commerce is expected to lift overall grocery sales more than in-store purchasing — and it’s predicted to grow at a compound annual rate of 4.5% over the next five years. That’s more than 3x faster than the 1.3% rate forecast for in-store grocery sales. Total grocery e-commerce sales are forecast to hit nearly $120 billion by the end of 2028, which is about 12.7% of total grocery sales in the US, with pick-up expected to lead the charge as the most popular e-commerce method.

Increase in Online Grocery Shopping Platforms

Grocery delivery sales in the US are expected to surpass $257 billion in 2024 and $422 billion in 2028, according to Statista. While Walmart leads the pack with more than 25% of the grocery delivery market, other grocery e-tailers like Amazon Fresh, Costco, Target, Kroger, Albertsons, and more are in hot pursuit of market dominance. Smaller online brands like Vitacost and Thrive Market, which specialize in natural foods, are also gaining traction — a trend sure to continue as more people lean into digital grocery shopping experiences.

Grocery Shopping Apps on the Rise

25% of consumers today use grocery shopping apps, which store shopping lists, offer digital coupons, display store maps, and integrate with rewards and loyalty programs. These apps provide online and in-store benefits enhanced by technology. For example, at some stores, deli and bakery items can be preordered online to save shoppers from standing in line holding a paper order number. In addition, digital kiosks advertising the latest deals are becoming more popular.

How Tech Innovation Will Shape the In-Store Grocery Experience

Consumers today still buy most of their groceries in physical stores — in fact, 83%. For this reason, some of the most fascinating tech innovations in the grocery retail space are being dreamed up to meteorically uplevel the customer experience and keep people who enjoy more hands-on grocery shopping happy.

Enhancing the In-Store Shopping Experience

As grocery shopping increasingly migrates online, brick-and-mortar stores must innovate the in-store experience by transforming it into a pleasurable lifestyle activity. We’re talking superior fresh food offerings, gastronomic areas, food courts, cooking classes, and possibly even movie nights or lectures. To fund these capital-intensive endeavors, stores will need to double-down on automation technology that can free up staff from more mundane, routine operations so that energies can be focused on upleveling the customer experience. Adopting advanced tech like AI-powered smart carts can handle scanning and payment, further optimizing the experience.

AI-enabled Hyper-relevant Recommendations

While retailers have been gathering data about their shoppers to serve them better, they have often needed help to focus disparate data streams into clear, concise, and coherent insights. The advent of generative AI is helping retailers unlock the ability to make hyper-relevant grocery recommendations in the moment — adding immense value to the in-store grocery shopping experience. Brand-customized AI apps can guide shoppers in-store, proactively recommending products and services based on each person’s unique profile, shopping history, and particular in-the-moment needs. Planning a garden baby shower? Great. Bachelorette party at the beach? AI has got you covered.

Upleveled Customer Engagement

Generative AI excels at answering questions and summarizing complex information in a natural, conversation-like manner, which certainly comes in handy in this case. Improved grocery shopping experiences will feature anything from product recommendations and explanations to details about ingredients to in-depth answers to nutritional questions, offering shoppers specific recommendations tailored to their particular needs or preferences.

Enhanced Day-to-day Retail Operations

Traditional methods of designing optimal shelf layouts for grocery products leave much to be desired. They are time-consuming, errors abound, and creating and following these plans can be labor-intensive to say the least. Leveraging the power of generative AI for optimized planogram creation and demand forecasting means staff can be alerted to shortages and empty shelves instantly, and staff can then monitor planogram compliance for quick remedies as needed. Machine-learning algorithms can suggest highly optimized store layouts and product placements based on individual store data. Forecasting and ordering decisions will eventually be fully automated by machine learning algorithms that can monitor real-time out-of-stock alerts.

Leveraging “Dwell” and “Gaze” Time

AI can measure a shopper’s “dwell” time — how long someone spends standing in front of a product — and “gaze” time — how long a person looks at a particular item. Grocery retailers can better understand what their customers want by tracking “dwell” and “gaze” times, meaning more meaningful CX engagements and better sales conversion rates. Individual stores can even tailor their offerings to their location, offering more personalized products and services more effectively tailored to people’s wants and needs.

The Merging of Online and In-Store Experiences Will Increase

Grocery stores will continue to blend their online and in-store experiences in what is often referred to as “seamless omnichannel experiences.” Stores can personalize offers to shoppers, which can be redeemed at their next in-store visit. On the other end, shoppers can order specialty products online or in-app for pickup in-store, saving time and inviting additional purchases. Brand-customized AI apps can even guide shoppers around the store, actively recommending products and services based on each person’s unique profile and shopping history.

Where the Market’s Heading

The grocery retail space is abuzz with anticipation for how technology will grow and expand the in-person and online food shopping landscape. For retail organizations, it’s a time to try and test what marketing technology can be of most benefit, from efficiency gains to cost savings.

What does this mean for brands? When considering leaning into a digital-first strategy or focusing energy into reinvigorating the in-store customer experience, marketers should remember finding ways to meld the online and in person experience will have the greatest impact. Technology is a fast-evolving force that is reshaping how retailers operate and engage with customers, and keeping up with it means adapting creative strategy to meet consumers soaring expectations. The future of grocery shopping is almost in season — let’s hope it’s a tasty one.

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Bottomline

We are at the beginning of the tech revolution 3.0, primarily driven by the power of generative AI, which will change how grocery retailers, both online and in-store, do business. As tech evolves and improves, the retail landscape will be increasingly infused with optimizations based on geo-specific demographic data sets, transforming what is sold, how things are displayed (in person and online), and where the actual value lies for each store, app, and online platform. Industry leaders are in a discovery phase, testing and learning which technological advances will benefit and impact their businesses most.

Do you know what tech innovations will have the most impact on your bottom line? If you’re looking to tailor marketing technology solutions for your retail brand, Creative Circle can consult on your needs to craft a bespoke plan that meets you where you’re at. We can help you get the right marketing talent in place to implement and optimize the right technology, ensuring your team stays at the forefront of change in the industry.

Private label brands continue to go from room to room, and it looks like they might take over more than half the house. In fact, more than 50 percent of grocery shoppers have bought more private brands over the past year, and almost half of surveyed shoppers plan to buy more private brands this year and beyond.

“Private label” refers to products produced by a third-party manufacturer and sold under a retailer’s brand, where the retailer manages the product’s specifications, advertising, marketing, packaging, pricing, and store placement. These brands are also a significant contributor to e-commerce, driving online sales for big box retailers like Costco, Target, Trader Joe’s, Walmart, and Whole Foods.

But how does private labelling work? Macy’s, for example, sells hundreds of well-known and much-loved brands, both in-store and online. If you’re a Macy’s shopper and you’re wearing something from Club Room or I.N.C., you are attired in one of the store’s more than 25 private labels.

Increasing Competition for Popular Brands

Macy’s and other retailers’ private labels provide customers with high-quality branded goods at lower price points. Macy’s Club Room, for example, competes with well-known brands such as Lacoste, Ralph Lauren Polo, and Tommy Bahama, while their I.N.C. line’s all-around prêt-à-porter clothing is sold alongside popular labels like Aldo, DKNY, and Lucky (among many, many others). About 16 percent of Macy’s fiscal 2022 sales of $25.4B came from private brands, and Macy’s continues to examine its private brand portfolio to identify underserved aesthetic and customer profile gaps.

The benefit for Macy’s and other retailers is obvious: by offering well-made, less-expensive alternatives to established brands, the store retains customers whose budgets might not permit them to purchase more expensive brands, such as Brooks Brothers and Dolce & Gabbana, providing them with similar, well-made yet more affordable items. Shoppers are inclined to trust these private labels, since they’re sold by a renowned retailer. Plus, every private label product Macy’s sells means the store doesn’t have to split sales with a national or international brand.

At supermarkets and big box retailers with in-store groceries, too, private label is the new key to the kingdom. Driven by increased food prices and growing sustainability concerns, more shoppers than ever are finding their way to private label brands on supermarket shelves. Private label products actually accounted for 20.7% of U.S. grocery industry unit sales in 2023, a record level, gaining significant ground on established national brands in terms of units sold.

Trader Joe’s has long been the dominant business model for sales of private label products, with Target and Walmart looking to compete with the grocery chain’s iconic brands like “Trader Giotto” beloved by consumers for their internationally inspired dishes with private labels of their own. Target’s private label food brands include Good & Gather and Market Pantry, while Walmart recently announced the launch of bettergoods, their private label brand that aims to make “quality, trend-forward, and chef-inspired food approachable and affordable.” bettergoods is Walmart’s biggest private label brand launch in two decades, which means investment in this area is only growing.

Top-shelf Attraction

Beyond lower prices, how do private labels compete with national brands that already have an established customer base? These brands have to get creative to capture consumer attention, both in-store and online, in order to draw shoppers away from the legacy brands they’ve likely known and purchased for years. Essentially, private label brands face the complex challenge of remaining adjacent to their parent retailer’s overall brand identity while establishing a niche of their own to compete with the vast array of products in their particular category. It’s a battle for digital and physical shelf space that requires careful consideration.

Marketing and creative strategy is what truly determines the success of leading private label brands at the end of the day, especially when it comes to customer acquisition. Advertising, branding, campaigns, consumer insights, coupon design, e-commerce activation, and packaging design are all make-or-break opportunities in this arena, but packaging can often be the foot-in-the-door any private label needs.

Eyes on the Prize

Up and down the supermarket aisle, packaging is everything, and retailers need to create packaging that literally stands out — both in-person and on-screen. Private-label packages historically mimicked the look and feel of their competitors, but retailers today are looking to brand these products in a new way that captures the attention of customers while simultaneously communicating the benefits and quality of the brand. This is an especially important driver of brand reputation in clothing and grocery where customers are looking beyond price alone to the quality of ingredients and materials and their sustainability, encompassing everything from fair trade sourcing and ethical manufacturing to the use of recycled materials.

This means packaging designers are now tasked with label copy that dovetails with package visuals — a creative problem-solver’s dream. It’s true shoppers are still drawn to singular packaging, especially when it comes to color and design, but once the package is in their hands today’s consumer is looking for facts and figures that convince them to bring the product to checkout. Designing the perfect package for a private label product, then putting it all together and getting the product into stores, requires precise planning. The same of course also applies to e-commerce initiatives to market and sell private labels via digital channels, meaning the competition is fierce both in-store and online.

Launching in Style

Once a private label product is ready to roll, how do industry leaders effectively roll it out? Best-in-class private label brands need to tell a product story that concisely conveys their products’ unique value to the everyday consumer. Digital go-to-market strategies can leverage channels like product landing pages, press releases, blog articles, paid and organic social media campaigns, and so much more. Leading companies in the space even work with production teams to create content for more traditional commercial ads to drive awareness.

The old adage, you never get a second chance to make a first impression, is certainly a truism when it comes to new launches. Beyond native content, retailers looking to promote private labels, particularly when it comes to clothing and food, often work with influencers. Getting a pair of private label boots on the feet of a celebrity attending Coachella or an array of products on the kitchen island of a cooking show goes a long way to building a brand – and selling it. It’s an entirely customer-centric process, and it has to be done right.

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Bottomline

Private labels continue to fill the room, and the door is wide open. One might even say it’s getting mighty crowded, as customers come to expect the exact same things from private label brands they expect from legacy brands. These brands have to take customers on the same journey their legacy competitors do, both in brick-and-mortar and virtual settings, which means launching and managing a private label brand and its products requires heavy creative support.

That’s where Creative Circle comes in. We are a talent-driven organization that provides our clients with the right creative and marketing solutions to support your branding, packaging, and marketing projects. Whether you need project management, content creation, copywriting and editing, design, or art direction (including 3D, animation, and videography), we have the right talent to help you achieve your goals and take your brand to new heights. We are more than just a staffing agency; we are a transformative partner who can drive meaningful results for your private label brand. Let us help you get your products out the door — and onto the top shelves.