7 digital disruptions in food shopping

Published
  • June 09 2017, 10:16am EDT
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Grocery shopping may not seem conducive to e-commerce due to the category's massive cart sizes and perishable goods, but many companies are trying to put a digital spin on the process. Here are a few of the latest innovations.

An idea that clicks

Kroger's been adding online tools at a rapid pace over the past year. The company's Kroger ClickList enables people to order groceries online, choose a pickup time and retrieve items at the store.

But it's not skimping on the personal touch. A store employee greets the shopper and helps load the groceries.

"ClickList makes it easier for customers to engage with us," said Kroger payments chief Kathy Hanna. "They are extremely busy and have children and parents, jobs, etc. The digital platform helps make the grocery experience a lot easier."

Consumers pay at the point of pickup, though Hanna said Kroger is developing an online payment option, which is already active in a few stores. "We want to make that smooth as it ties to our loyalty program," Hanna said.

The process gives Kroger an e-commerce feel at a time when grocery stores are accelerating their move online. As payments and grocery shopping give way to omnichannel order memory, the pressure's on for Kroger to stay ahead of the pace of innovation.

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Multi-merchant rewards

The multi-merchant loyalty program Plenti has grown under the watch of American Express management to the tune of 36 million shoppers making use of the program in the past year, but it had its share of early confusion among consumers who questioned its deliberate lack of merchant participants.

In securing Southeastern Grocers LLC in March as its first grocery participant, Plenti now has a mix of basic life essentials to offer consumers through its gasoline, grocery, clothing and pharmacy retailers, among others.

Though Plenti still promises merchants exclusivity within their category and region, the addition of Southeastern Grocers will add 700 more store locations and potentially millions of consumers to the program, said Josh Berwitz, president of U.S. loyalty for American Express.

"We expect Southeastern Grocers will add significant scale and Plenti membership around the southeast," Berwitz said. "They have a strong and loyal customer base actively engaged in their loyalty programs."

The Winn-Dixie, Harveys, BI-LO and Fresco y Mas grocery chains operate under the Southeastern Grocers umbrella.

"The grocery category in the U.S. is highly regionalized, and Plenti expects to expand the coalition with new grocery partners over time in other regions across the country," Berwitz said. "We know many regional grocers are consistently evaluating loyalty and we believe our coalition model is especially appealing."

AmazonFresh

AmazonFresh Pickup is yet another foray for the retailer from the online to the offline, alongside other proof of concepts such as Amazon Go and Amazon Books.

Even if these projects fizzle, they serve a purpose. Amazon needs to test and iterate in the wild rather than in a sterile environment such as a corporate campus. The e-tailer has the advantage of a blank canvas for designing the grocery store of the future, which may present a significant advantage in improving on the archaic model of pushing a heavily used cart through crowded grocery aisles.

However, there is a ritualistic nature to the weekly grocery shop and for the less tech savvy, Amazon may struggle to gain traction with the masses.

To spur adoption, Amazon is offering discounted Prime subscriptions to anyone with a valid Electronic Benefits Transfer card, lowering the barrier to buying groceries via AmazonFresh, which requires a Prime subscription.

Shipt shape

The online grocery contender Shipt is expanding.

The Birmingham, Ala.-based company raised an additional $40 million in funding from previous backers Greycroft Partners, e.ventures and Harbert Venture Partners.

Unlike the AmazonFresh Pickup model, which lets customers set a time of their choosing to get their groceries from an Amazon location, Shipt suggests delivery windows and works with local grocery chains.

Shipt has an annual membership fee but does not charge a per-order fee.

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Walmart's grocery experiments

Walmart is piloting a delivery program that leverages its store staff as delivery drivers in a decidedly manual response to the digital threat of Amazon.com.

Conceptually this initiative may be a stroke of genius, not unlike the Seinfeld “Bottle Deposit” episode where the economics of bottle redemption out of state are resolved by leveraging a character's mail truck. But, as with the Seinfeld episode, the devil is in the details — converting store clerks to delivery drivers may be a can of worms that Walmart doesn’t want to open, creating staffing and liability issues.

Even if that doesn't pan out, Walmart has other options. It is testing a system for using unmanned kiosks to deliver grocery orders.

Unlike Amazon or Shipt, the system doesn't restrict the window of pickup. The kiosk is available 24 hours a day, and customers retrieve their order by punching in a five-digit PIN. The kiosks are still in testing, and the service is free but requires a $30 minimum purchase, The Verge notes.

In the cards

When Citi took over the Costco card portfolio, it made a curious choice: It made the cards EMV and NFC compatible despite Costco not being able to support those payments in its stores.

Fortunately, Costco was on board with the strategy and in February began deploying compatible hardware at the point of sale.

Costco’s delay in introducing EMV isn’t surprising, given the challenges faced by many national retailers—especially grocery chains, analysts say.

Citi, which says it’s experiencing strong growth since launching the card last year—picking up more than 1 million new cardholders in the bargain—clearly hopes that by using NFC, it may drive more payments volume among consumers, according to industry observers.

Faster food

Digital wallets such as Mastercard's Masterpass are working to embed themselves into all kinds of retail environments, with a focus on food sales.

The restaurant category is so important for Masterpass because purchase frequency means it could be a major “gateway” for consumers’ initial enrollment and ongoing usage of the digital wallet.

And Mastercard’s preferred method of enrolling consumers in Masterpass differs significantly from that of rival wallets like Visa and PayPal, which have users sign up via a website to link multiple cards.

Through its “digital by default” strategy, Mastercard directs consumers enrolling for the first time with Masterpass to link a card from their own bank from a list of financial institutions that support the digital wallet. Consumers may also enroll any payment card through the Masterpass website.

Mastercard expects to see more restaurants adding Masterpass in the coming months, as offering broader payments options becomes a competitive advantage.

Dunkin’ Donuts recently became the first fast-food marketer to support both Masterpass and Visa Checkout through all channels and devices. It hasn’t yet added PayPal.

“We want to feature payment methods that our consumers want to use for payment, but we’re still in the early stages of digital wallet adoption and will continue to evaluate other platforms and opportunities” said Scott Hudler, Dunkin’ Donuts’ chief digital officer.