It's no secret that online shopping continues to redefine consumer buying behavior. While supermarkets have been late to the online party, that's now changing rapidly.
Last month, Target began testing a same-day grocery delivery service with Instacart. Meanwhile, Amazon has been piloting AmazonFresh groceries in select markets to gauge consumer buying behavior, while also testing consumers' appetite for innovations such as Amazon Dash, a Wi-Fi connected device that allows shoppers to order products with a click of a button.
By definition, groceries are a complex business, as food is perishable and storage logistics are complex. However, food is also a high-frequency purchase that's largely insulated from economic downturns. As competition heats up in the grocery aisle, big data is gaining traction as the tool supermarkets need to counter rivals and remain profitable.
These days, retailers can access data on product demand levels on a minute-to-minute basis across their fleet of stores. However, many grocers are still in the infancy stage when it comes to analyzing and monetizing the massive amounts of big data available. This leads to stocking shortfalls, such as assessing product demand based solely on historical data. It can also results in misguided marketing efforts: If a consumer bought ketchup on Saturday, an email coupon for it on Sunday is ill-timed and creates little value for the shopper.
This is where data from store loyalty programs and credit card purchases can come in handy. This information can be used to anticipate shoppers' needs ahead of time. For instance, grocers can use data analytics to determine how often shoppers buy milk, condiments or other products, and then send each household coupons based on their specific purchasing habits.
"You come up with a strong list of 20 items per household that you think they're likely to buy," Sylvain Perrier, president and CEO of Mercatus Technologies, told Marketing Magazine. "On the day the flyer comes out, you send those households a nice email listing those top 20 products, telling them they're on sale at their favorite store."
Perishable groceries such as meat, dairy and seafood call for accurate inventory management, often on an hourly basis.
