Groceryshop 2021: Three takeaways from Day 2

Groceryshop 2021: Three takeaways from Day 2

There’s no hangover here in Vegas despite the year plus layoff from large, in-person interactions in the world of retail. After wrapping up a content-packed first day we moved into the second day of the conference where we tried to capture new themes that emerged.

Retail is media and media networks are expanding

It would be unfair to characterize the theme of digital advertising as new, but it is a key topic of conversation at this year’s Groceryshop for both retailers and CPGs alike. Retail stores have always been a medium to capture the customer’s attention and retailers charge for this “advertising” through slotting fees for shelf space, endcaps, in-store marketing, etc. However, as the customer has migrated online – and started their trip planning there – retailers have  engaged the customer outside the store via digital assets.

The acceleration and growth of grocery ecommerce (as noted in our Day 1 recap) has meant that the customer’s attention has shifted to digital mediums. Retailers have followed suit by adding digital media networks and capabilities to engage customers. Consumer goods companies are supporting retailers in this shift and, as Mike Del Pozzo of PepsiCo pointed out, an understanding of the customer’s behavior through digital media networks is critical for CPGs to understand changes in the market to manage their product portfolio and react.

Digital media networks are still in the early stages and the big question remains who’s going to get most of the customer’s attention and therefore most of the dollars. Today, Amazon and Instacart are the leaders, but digital media networks are a priority for grocers to both boost their bottom line while providing better access to data for CPGs to support the business and drive growth. As Jordan Berke of Tomorrow Retail Consulting pointed out on Day 1: 4% of online revenue is now parity for digital media networks with 6-7% of online revenue a good marker for where to be to remain competitive in the changing landscape.

Next gen social commerce is on the horizon

Connected to the idea of digital media networks, social commerce is another way innovative retailers are tapping into the growing digital market to engage even deeper with customers. If we think of QVC as the 1.0 version of social commerce, 2.0 (or 3.0?) is about engaging customers through digital assets to share orders or recipes with friends as well as allow customers to directly purchase the items they see on a video through the click of a button.

Han Shen of iFly VC laid out the power of social commerce in China as $150 billion of products were sold through influencers in China in 2020. Social commerce presents an alternative to growing customer acquisition costs (CAC) highlighted by Shen as well as by Jackson Jeyanayagam, of Clorox, who cited 4x greater costs today than pre-pandemic on costs per thousand impressions (CPM) on Facebook. CAC aside, social commerce gives retailers an opportunity to increase engagement and relevancy with current customers if done well which boosts the value of the digital media networks.

Groceryshop 2021: Three takeaways from Day 2 1Source: Han Shen, iFly.vc

Mobile devices are powering the grocery ecommerce boom

This theme may seem obvious to many but the boom in grocery ecommerce during the pandemic meant that the industry skipped over much of desktop ecommerce – the precursor to today’s mobile-first experience. Joey Wilson of Razorfish shared analysis that showed that mobile customers spend 40% more than just in-store customers.

Our own experience is that digital conversion rates are also higher on mobile apps – sometimes 5x to that of what you would see of just desktop shoppers. Wilson cited a “Rule of 50” which means that every step you take the customer through reduces step conversion by 50%. Mobile presents a tremendous opportunity for grocery retailers to lead with a mobile-first experience for customers. This offers customers an easy, one-stop shop to engage with their preferred retailer and provides the retailer with better data to personalize the experience for customers.