Digital transformation a reality for grocery brands, retailers
John D'Anna of Brookshire Grocery Company, right, tells moderator Pat Walsh grocery consumers are more educated about products than ever, raising the bar for retailer/brand partnerships.
Supermarkets recognize that consumer shopping habits are changing, and they're working overtime to restructure themselves to meet the new demand for e-commerce. A panel discussion, at the recent ShopTalk conference at the Sands Expo Center in Las Vegas, offered an inside look at how some leading brands and retailers are adapting to this change.
While e-commerce presents new challenges for both retailers and brands, the transformation portends significant growth as e-commerce sales continue to expand.
|Heather Kang of Mars Wrigley Confectionery tells Pat Walsh it's important for brands and retailers to share data.|
"This is space where there's a ton of untapped potential," said Heather Kang, global vice president for digital commerce at Mars Wrigley Confectionery, who noted the digital opportunity has already delivered significant growth for her company in the last three to four years.
E-commerce is arriving at a time when consumers are more knowledgeable than ever about products, observed John D'Anna, executive vice president and chief strategic officer at Brookshire Grocery Company, a chain with 17 stores across Texas, Arkansas and Louisiana. This makes it all the more important for retailers and brands to share data.
Fortunately, the parties have recognized they must collaborate if they want to be able to forecast sales and be able to provide a shopper the product information he or she is seeking, he observed.
Both consumer brand manufacturers on the panel — Kang of Mars Wrigley Confectionery and Omar Haque, vice president, general manager and head of e-commerce for Grupo Bimbo — agreed.
Because Mars Wrigley Confectionery is heavily invested in impulse products, it is important for the company to have the data needed to provide market insights related to those products, Kang explained. In order to sufficiently understand consumer needs, the company has to work with its retailer partners closely.
D'Anna said retailers and brands share the need to become omnichannel marketers in order to maintain customer loyalty and enhance customer relationships.
Retailers remain invested in physical stores
Retailers, however, also remain invested in their physical stores, D'Anna said. The investment in physical infrastructure and physical retail supply chains is a reality retailers are not willing to ignore.
D'Anna said he wants to engage the consumer in a way that will get them to continue to visit the stores. One way to do this is to make the shopping experience faster, which some companies are accomplishing with robotic inventory management. Another technology being deployed (notably by Amazon) is cashierless checkout.
"We've got to engage the consumer in the store," D'Anna said. The marketing department has to do more than engage via traditional advertising methods and must engage the consumer digitally while they are in the store.
The panelists noted the various actions they are taking to address the digital transformation.
|Omar Haque of Grupo Bimbo, right, notes there are good failures and bad failures of digital initiatives.|
D'Anna, who observed that his biggest concern today is the level of competition he faces from non-traditional grocers, said the company's in-store digital initiatives require having store employees who are knowledgeable about digital technology.
Mars Wrigley Confectionery is similarly focused on building the digital capabilities of all of its associates, said Kang. She said digital competence is now part of her company's training programs.
"It's a full-scale transformation in terms of our organizational capabilities," she said. "Globally, more consumers own cell phones than tooth brushes." Most major brands have recognized the need to make it easy for consumers to find the products they want on their mobile phones and via voice command, she said.
In addition, the consumer expects the quality of the product to be consistent no matter where or how they receive the product, be it at a store, via mobile order or delivered by a drone, she said.
As for balancing digital with the traditional brick-and-mortar space, Kang said the company does not view the two as separate entities as much as part of an omnichannel space.
Grupo Bimbo launches dedicated technology group
Grupo Bimbo has addressed digital transformation by launching a standalone group called Acelerada to focus on new markets, channels and technologies, Haque noted. He said the new group is able to move faster on developing new products since it does not need the parent company's approval to make decisions.
Among the challenges his group is working on is that the fact that a "pure play" e-commerce market requires a curated product assortment, he observed.
Supply chain issues also pose a challenge for companies transforming from physical to digital commerce, Haque noted, since direct store delivery is different from e-commerce delivery.
The panelists agreed on the importance of not being afraid to fail when testing digital initiatives.
To this point, Haque noted there are both bad and good failures. A failure caused by mismanagement is a bad failure. A good failure is when you learn from something that doesn't work out, he said.
Center-of-the-store a fierce battleground
As more outlets vie for a piece of the consumer's grocery purchasing, competition has become especially fierce for center-of-the-store products, D'Anna observed.
"I think center store is going to shrink (in the traditional supermarket) over time," he said. "The perimeter of the store will be your differentiator."
Patrick Walsh, chief business development officer, Food Marketing Institute, moderated the session.
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.