Game-changers in Retail

The Future of Omni-Channel Grocery Retail

Sep 20, 2021

Game-changers in Retail: An Interview with Justin Honaman, Head of Worldwide Consumer Products – Food & Beverage, Amazon Web Services

Today’s grocery retail world is changing like never before. Customer shifts around online, convenience, and healthy lifestyle agendas are creating an extraordinary challenge and a golden opportunity for grocers.

In this Game-changers in Retail series, we’ve met with Justin Honaman, Head of Worldwide Consumer Products – Food & Beverage, Amazon Web Services, to discuss how he sees the future of grocery retail.

Before we look ahead, let’s talk about modern consumers. What do you think today’s consumers expect from omni-channel grocers?

First, let’s talk a little bit about what happened in the last two years. When we think about the Covid-19’s impact in grocery even more broadly in consumer goods companies, I don’t know if anybody could plan for supply chain pressures and tension that has been placed on these companies. Today, retail and consumer goods companies are in the midst of a transformation unlike any before in their history. And that plays out on consumers too. During this time, consumers have reacted in different ways. Their behaviors changed, and their expectations from grocers have increased.

A couple of things we can expect now:

First, Digital Engagement.

As consumers, we want the experience to be the same online as in stores. Although this is easier with the center store items, the bigger challenge is around the fresh produce, dairy, meat, and deli.

We all want our shopping experience to be delightful, frictionless, and omni-channel, right? Therefore, retailers need to act today, and the digital experience needs to evolve quickly. When we look at the numbers from consumer brands and retailers, the last two and a half years have accelerated many of their plans around digital customer engagement. This is exciting, and it represents significant opportunities for grocery retailers.

Secondly, Know Your Customer.

Grocery retailers need to know their customers better. They need to market to them, provide promotions, discounts, or rewards that are relevant to them. As a consumer, when I walk into a store, I really like an offer presented to me based on the things that I’ve bought before. And on the grocer’s side, doing this requires data and analytics. Once a grocer is armed with great customer insights, they can maintain a positive relationship with their customers.

Lastly, Variety.

Consumer preferences continue to evolve around health and wellness. Today’s consumers are looking for nutritious, plant-based, fresh food for meals and snacks. We also see a rise in energy drinks, healthy beverages, teas, and coffee. And, these consumers look at their grocers to offer a variety of healthy food options. If their grocers don’t provide this, they lose a significant competitive advantage.

What should the grocery retailers do well to meet the expectations and win in an increasingly competitive space?

Think about the grocery stores and why we go there. There are some things like tomato sauce that I can easily buy it online and have it delivered to home. In this case, online grocery stores can offer more convenience. But if I want fresh seafood, fresh deli, fresh sushi, or veggies then it is different.

As consumers, we want to go to the store, see the avocados, for instance, touch them, feel them pick them up, and put them in our cart. This is an experience that you can’t get if you order online.

And grocers who want to succeed in the omni-channel world, need to nail at both online and in-store experiences. They need to do a good job on customer experience, and they need to be and ahead of the consumer.

Today online platforms and apps can deliver orders in an hour or even less. What do you think this means for physical stores in the near future?

I think the idea of getting the products at home in a short amount of time is fantastic and it is very efficient. Instacart is a great example of that. They go to a store, do the shopping for you and bring the product to you.

The numbers show us that online grocery shopping will increase in the near future. That’s great, but there is a reason why the stores exist. People still like the in-store grocery shopping experience. Why? Because they like the atmosphere and experience in brick-and-mortar stores and they also want to inspect and pick out their own products. And fresh is the driver in that sense.

Today, both online shopping and in-store shopping have their advantages. Will consumers prefer shopping online or in-store? I think the answer is both. It’ll always be the balance of these too.

How important do you think it is to make granular, data-driven forecasts in the omni-grocery era?

I believe it’s very important. For retailers, forecasting, planning, and delivery is a top priority right now. To succeed, grocers need to start with good data.

Today, they can access rich customer data. They also know what is in stock, what is out of stock, what the price is and what the margin is on that product in that store. And then there is IoT data, sales data, supply chain, logistics, and distribution data available, and the list goes on.

What grocers need is to have the right tools and right platform to bring all these data together and do the analytics on top. And it’s challenging for some retailers because, most of the time, data is not in one place. Instead, they are all disbursed across the organization and that makes accurate forecasting even more challenging for a grocer.

Luckily, advanced solutions are available today that use artificial intelligence and advanced analytics to help grocers make data-driven forecasts. Grocers just need to take advantage of that.

What do you think will be key trends shaping the grocery industry in the coming years?

I believe the online grocery shopping trend will continue. We’ll definitely see more buy online pick up at store, buy online and have it delivered to my house. And I think there will be an absolute focus on in-store fresh food, deli, bakery, plant-based, immunity boosting, high protein healthy food. We are in the era of at-home meals and snacks. On the beverage side, we’ll see more healthy drinks and energy drinks. It’s an interesting time to be in grocery retail. It’s time to accelerate the adaptation of new technology and keep up with evolving consumer trends.

Thank you Justin.

Did you enjoy reading this? You might also be interested in reading The Future of Grocery Retail: How to Become Omni-Channel Grocery Champions and, Special Report: The Future of Grocery Retail Planning.