We have chosen to analyze barriers in the grocery store industry and how information technology can aid in reducing these barriers of commerce. The grocery store industry has been around in the United States since the early 1900’s. Information technology has been a part of the growth of the grocery store retail industry over the last 100 years but not to the extent that it could be. Currently, the biggest obstacle that is in the way for grocery stores is the penetration of e-commerce. According to Online Grocery Shopper Report by the Hartman Group, 86% of consumers still make their purchases in the store and only 14% purchase online. The market has great room for growth but grocery stores have not successfully been able to increase purchases online. The obvious pros of effectively promoting e-commerce for the grocery industry is the incremental number of end consumers, but unfortunately the road to reaching the consumer has increased costs as well.
The e-commerce route for the grocery industry is a target
that all the big players, like Kroger or Wholefoods, will continue to try to
reach. Although the grocery store industry is still learning how to utilize
e-commerce to its advantage, there have been other evolutions in technology and
information systems that grocery stores are adopting. One of these ways is the
e-coupon. Since the economic downturn in
2008, customers have been finding ways to save money on groceries. Coupons have become a popular method that has
allowed grocery stores to develop e-coupons for select products. In order to claim and redeem the coupons,
customers have to go onto the grocery store’s website and select the desired
coupons. Once at the store, the customer
can redeem their coupons that have been loaded onto their loyalty customer
number/card. According to the Food
Marketing Institute, in 2012, 32% of consumers used online coupons indicating
that shoppers are preplanning their shopping listsand researching which grocery
stores allow them to save the most money.
Another area of the grocery store industry that has been
progressing through time is the ability to predict store activity. Kroger has
been using infrared cameras to identify the number of shoppers that will be at
a store on a certain day and time and having the staffing to help them. The
issue that was being addressed was the long lines and wait times for customers
to make their purchases. As the competition increases for the chain grocery
stores, there has been more of a push to have a more pleasant experience in the
grocery store and eliminate the lines.
An alternative to the infrared cameras is wireless paging.
Wireless paging is being tested at different grocery stores as an option to
better meet the needs of the consumers. For a common clean up that is required
somewhere throughout the store, the wireless pager is expected to create a more
pleasant experience for the consumer and eliminate the need for them to hear
internal communications. A similar option to wireless paging is the push-button
paging. This option is focused on the specialty areas of a grocery store such
as the deli, the butcher counter, and the deli. A con of changes in technology is that consumers have to
adjust to it. Consumers sometimes do not
like the increasing loss of personal interaction in grocery stores. They had to
adjust scanning products for themselves and now may have a problem with other
forms of innovation that occur. An advantage of the changes is speed. Consumers can come in and out very
quickly. They can also ensure that they
get goods that are of good quality and the goods are available as needed
lowering the need for rain checks. As the grocery industry continues to evolve with e-commerce
and other innovations, it will be interesting to see who is able to reach the
market and retain a large enough customer base to force the competition to do
the same.
References:
“How Technology Can Significantly Improve Your Trip To The
Grocery Store.” Business Insider.
N.p., n.d. Web. 3 May 2013.
<http://www.businessinsider.com/technology-in-the-grocery-storye-2013-5>.
“How Technology is Improving the Grocery Store Experience.” LRS. N.p., n.d. Web. 1 April 2014.
<http://lrsus.com/blog/technology-improving-grocery-store-experience/>.
“Smart tags change color when food goes bad.” CBSNEWS. N.p., n.d. Web. 17 March 2014.
<http://www.cbsnews.com/news/smart-tags-change-color-when-food-gets-spoiled/>.
“The Online Grocery Shopper 2013.” Hartman Group, Inc. Web. N.p.
2013.
“US Grocery Shopper Trends 2012 Executive Summary.” Food
Marketing Institute. Web. N.p. 2012.
<http://www.icn-net.com/docs/12086_FMIN_Trends2012_v5.pdf>.
Very informative post. It seems that grocery stores have much more time to adapt to changing IT than most other industries due to a fact you pointed out; customers still enjoy that face-to-face interaction. Therefore, they are much slower about adopting new technology. But there are definitely ways that grocery stores can incorporate e-commerce without losing their customers. One avenue of interest is grocery store apps that not only help you create a shopping list, but also tell you whether a particular item is available at your favorite store, and where it is located. You could possibly even have your items reserved, then come to the store to pay. That would save customers a lot of time, and enhance their shopping experience.
ReplyDelete-Group 9
Your analysis was interesting. The grocery retail industry is a unique one, in that there is always demand from consumers for groceries and consumers generally cannot wait long for that demand to be met. People have to eat, and unless those people are completely self-sufficient, they are visiting a grocery store on a regular basis. E-commerce is definitely a struggle for the grocery industry because of the “need it now” demand for groceries. Unless a retailer is willing to accept electronic customer orders, as you all mentioned in your post, there isn’t much the retailer can do for their e-commerce. A customer could order things from a retailer to be shipped to them, but he would have to be willing to wait for them and worry about other issues if the goods were perishable.
ReplyDeleteYou mentioned stores trying to predict activity. According to an article by Amy Fontinelle on Investopedia.com, retailers are using the customer loyalty cards to track consumer buying behaviors; including the days and times they visit the store, how much they spend, if they only buy products on sale, and if they use coupons (Investopedia, 2011). How many of us have begun receiving coupons mailers from retailers like Winn Dixie that are tailored to our shopping habits? The loyalty card is a great way for retailers to track and research customers’ buying behaviors and it is also less expensive for the company because, for example, they are not wasting marketing efforts on mailing out diaper coupons to every household in a zip code (Ivestopedia, 2011).
Reference:
Fontinelle, A. (2011, September 29). Why Do Companies Print Coupons?. Investopedia. Retrieved June 12, 2014, from http://www.investopedia.com/financial-edge/0911/why-do-companies-print-coupons.aspx
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