Ask anyone: I’m obsessed with innovation.
I love the connected-ness of our world and staying close to distant family, friends and colleagues via social media. I let my electric, autonomous car do the driving (where legal, of course). My kids wear activity monitors and count steps zealously. My 5-year-old made me post a picture of her on the family photo stream the day she hit 26,676 steps (on July 4th, in case you’re wondering). Apparently, a five-mile “race” and parade add up when you’re 3 feet tall.
This 4th Industrial Revolution is mind-blowing — offering the promise of artificial intelligence, smart cities and more. Likewise, I marvel at the speed of change in the retail landscape and consumers’ shopping habits. While the top three buying destinations are brick-and-mortar stores, branded ecommerce websites and online retailers, who is shopping and why they buy from each differs by channel and generation.
Reports indicate that 87% of all consumer spending in the U.S. still occurs offline. Similarly, a recent Gallup study found only 11% of Americans order groceries online at least once a month. Their findings: “For now, Americans are sticking with the traditional ways of getting food – shopping for groceries in person at a grocery store, eating meals at restaurants, and ordering food for take-out or delivery.”
Kroger has a clear vision: to serve America through food inspiration and uplift. Everything we do is designed to create a compelling promise and seamless shopping experience so we can serve customers anything they want, anytime they want, and anywhere they want. More than 60 million U.S. households shop with us today, and we believe we know them better than anyone.
I think the future of retail hinges on purpose and connection – how well retailers online and offline deliver on the promise of a convenient, personalized and meaningful experience. Hence, in the spirit of being bold, I’ll proffer a few predictions:
1. Retail won’t go away
Retail is always evolving. During Kroger’s history, we’ve seen disruption and transformation in the retail industry every 10 to 15 years, and it’s certainly still happening ... just at shorter intervals than ever before.T o survive, you must be willing to not only accept and react to change, but also to BE the change. Through Restock Kroger – our plan to change the way America eats – we’re doing just that by changing the retail grocery customer experience once again.
2. Retail will be digital and physical
Many industry watchers are focused on whether the future state of retail will be physical or digital. But it’s not one or the other. Technology and digital are already mainstays of today’s retail landscape; however, most customers don’t spend meaningful time thinking about it. We choose the shopping modality that makes sense to meet our need – physical and digital are not exclusive paths to purchase.
A 2019 Future of Retail report from Walker Sands Communications asserts that all purchase decisions come down to two factors: convenience and connection. Even beyond creating a seamless online-to-in-store experience, it’s about using different platforms to facilitate a deeper connection that feels worth having.
Here’s how it goes down in my world: After my workout every Saturday morning, I visit my Kroger store to grab coffee and clean up a few emails from the busy work week. I sit at the sushi counter, chatting with the guys who start rolling sushi at 7:00 a.m. to keep up with the weekend crowd. I hang with the Snow Fox crew to see their and other familiar faces, connecting with my neighbors and community. Then on Sundays, the family orders our big shop for the week online through Kroger curbside Pickup. During the work week, we get Kroger Rush Delivery for lunch some days or delivery of sparkling water to the office via Instacart. Our health and beauty products come directly to my house via Kroger Ship (the kids love to color the cute cityscape recycled cardboard boxes). That’s a lot of different modalities. What matters to Kroger is the profitability of my entire household overall, driven by our loyalty profile.
As it stands today, 92% of Kroger customers who shop in one of our brick-and-mortar stores can also shop with us for Pickup or Delivery. By the end of 2020, every family in America will have the ability to shop with us, whether they decide to come into a store or use Kroger Pickup, Delivery or Ship services.
3. Retail will offer new solutions to customers
Retailers and innovators are at our best when we’re solving problems for consumers. That’s why it’s important to build an ecosystem that offers different modalities.
Ocado, one of the world’s largest dedicated online grocery retailers, is a huge accelerator of this transformation. Through our partner- ship with Ocado we will scale operations, use game-changing automation to increase fulfillment capabilities, and further redefine the grocery customer experience. We’ve committed to build multiple fulfillment centers powered by Ocado in the U.S. This partner- ship is just one more way we are expanding our footprint beyond our existing physical markets.
4. Retail will be purpose-driven
Retail will solve problems for customers, communities and our planet. Stakeholders are increasingly deciding which businesses to support based on shared values and clarity of purpose. A company’s performance on environmental, social and governance (ESG) topics is top of mind for many investors and NGOs today.
Kroger is at the forefront of shaping the national discussion around the disparity between food waste and hunger in America through Zero Hunger | Zero Waste, an ambitious social impact plan designed to end hunger in our communities and eliminate waste across the company by 2025. More than 40% of the food produced in the U.S. is thrown away, yet one in eight people struggle with hunger. This simply doesn’t make sense. As America’s grocer, Kroger is uniquely positioned with the size, scale, connections and dedicated team to tackle this challenge.
We also recognize that we can’t do it alone. We need innovative solutions and partners to tackle this challenge. To encourage such creative thinking, we created a program from the Kroger Co. Zero Hunger | Zero Waste Foundation. We recently announced the first round of Innovation Fund grant recipients, bringing more partners into the Kroger ecosystem to create Zero Hunger | Zero Waste communities.
5. Retail will disrupt the ad industry
Any marketing professional knows the adage: “50% of my marketing dollar is wasted. I just wish I knew which half! ”That age-old dilemma is going away – and fast.
In 2018, digital ad revenues exceeded $100 billion in the U.S. for the first time, up near- ly 22% from the prior year. Lately, advertisers want to quantify the outcome of every ad dollar, which will require a stronger measurement and verification mindset. But there is a problem: almost all advertising and influencer marketing today is unverified. It lacks precision. And there are only two factors that matter in ad spend – reach and precision.
Retailers are uniquely positioned to know how customers behave and react to those marketing messages. That’s why we introduced Kroger Precision Marketing, which offers CPG advertisers the ability to reach Kroger’s 60+ million customers more precisely with measurable results. There are larger players out there, but the ability to target advertising with precision is our advantage, and we plan to continue to grow.
Remember this
If you remember only one thing, it’s this: retail will not go away. Our customers tell us they still love shopping in their neighborhood store. Regardless, as consumers
and retailers, we all need to become more comfortable with re-invention and resilience.
Just as we embrace technology to make our lives easier in big and small ways every day, we should welcome the future of retail. It’s truly exciting, don’t you think?
To download a full copy of the 2020 Relevance Report, click here.