Wall Street Journal recently reported that Millennials are making less frequent trips to grocery stores and decreasing their grocery expenditure. What drives this transformation? Millennials are shopping across multiple options, including online grocery services such as AmazonFresh, prepared meal services, and retailers like Wal-Mart and Target.
The shift away from shopping at traditional grocery stores is obvious. Across a number of studies you see a pattern: a keen desire for the fastest (or free) shipping method possible, and a greater willingness to spend a bit more for convenience or instant gratification. Millennials are raising the bar on customer expectations and are defining what fast delivery means. The major concerns of Millennials, based on The Hartman Group, are cost and time constraints. Millennials are the largest cohort (75.4M in 2015) across all generations which represents a huge market potential.
Millennials are an interesting challenge for retailers. Millennials face time constraints due to household and work schedules, which in turn make it difficult to have sufficient time for planning and shopping. As they mature, they are waking up to the responsibilities of adulthood and are engaging in more “adult-centric” activities, like maintaining demanding jobs and starting families. The rise in dual-income families also means that for families without a stay-at-home parent, there just aren’t enough hours in the day. And, like Gen Xers and Boomers, Millennials lack energy to think about shopping.
Millennials are cost-conscious but are willing to pay more in exchange for time saved. This group of tech-savvy shoppers is always on the lookout for free shipping and is willing to pay as much as $5.50 to get the order the same day, compared to an average of $3.80 for non-millennials, according to the Deloitte study which surveyed 5,000 consumers from Sept. 6 – 20.
The paradox of scaling back on big grocery bills while spending more to get groceries delivered same-day is a reflection of the times in which Millennials live. Their shopping behavior is exceptional, and as such functions as a kind of barometer for future consumer behavior.
Bringing Millennials Back to the Grocery Store
To win over Millennials to brick-and-mortar stores which are in the state of major transformation to online shopping, it’s important to curate a product selection that appeals to young adults on the move who have an interest in cooking and yet are more likely than other consumers to want to “eat out.”
The first and foremost step is to prevent consumers from buying elsewhere. Here are the actions a store can take immediately:
- Convey Strong Brand Identity and Value: Grocers may now opt to join third-party services such as Amazon PrimeNow or Instacart which offer cataloging, e-commerce, and delivery services to quickly reclaim customers, but this fully outsourced model presents risks for brand economics. The store perception depends on the perceptions of the selected third-party service. The products listed from the store on the third-party platform are also subjected to an instant price comparison to other competitors. A fully outsourced model in the long term is more sustainable for smaller brands that can benefit from a national third-party service platform to increase awareness and visibility. If a store’s brand is well received in the community, the focus should be on the area in which one could set oneself apart from the competitors: online and in-store integration. Stores must improve their websites because this is the only communication channel with which the Millennials interact in the digital space. Offering buying online and picking up in store as well as same-day home grocery delivery directly at the store website is also what will make Millennials recognize a brand as innovative.
- Offer a Click-and-Collect and Home Delivery Experience: It always comes back to the millennial mindset that as a group they want what they want, and they want it immediately. Stores can also begin to use their physical locations to improve e-commerce operations. Physical stores can do double duty as a e-commerce fulfillment warehouses. Online orders can be picked up in store or shipped from a store. This will help speed up delivery times so that most online orders arrive on the same-day, matching AmazonFresh’s speeds without requiring an annual membership fee from the shoppers.
- Connect with them via mobile commerce: Millennials are active and connected shoppers, most (70 percent) use their mobile devices while shopping, providing retailers an opportunity to connect with them via mobile commerce. Millennials use their mobile devices to consult a shopping list, call, text or email someone in the household, search for coupons, find recipes or research prices, products and brands, buy from the store and pick up the online order on the way back home. Continuous visibility into customer purchasing data is a great way to engage with the customers in a tailored marketing approach to maintain strong interest in the brand.
As part of their evolution, Millennials are striving to find balance and meaning in their day-to-day lives. It’s not too late to target this large market segment which can have a serious competitive advantage and make it harder for those who set up online operations later.
Pathover helps automate all the manual processes to save time and cost so that any supermarket in the nation can offer its own online grocery shopping and free delivery to its consumers from its own website. Stores maintain their strong store brand while being able to use similar technologies as what Amazon or Walmart have built.