Pew Research estimates that millennials will overtake baby boomers as America’s largest generation in 2019, while Accenture shows that each year millennials spend approximately $600 billion. For grocery retailers, this means that it’s impossible to ignore this huge market and the differences in their grocery shopping habits.
While it’s always difficult to generalize such a large group, there are a number of trends that point to where the grocery industry must head if it wants to stay relevant in an increasingly competitive environment. The following four important trends demonstrate what millennials want and how you can capitalize on these opportunities to position yourself for long term success.
Click-and-Collect Changing Grocery Shopping Habits
Grocery has traditionally been behind other retail segments when it comes to implementing omnichannel. The combination of fresh, perishable goods and a lack of demand from customers made it difficult for grocery retailers to embrace online and mobile channels. However, that is no longer the case, as millennial customers have changed their grocery shopping habits and are turning to online platforms and click-and-collect when shopping.
The Food Marketing Institute found that nearly half of millennials are shopping at online-only grocery retailers, especially for non-perishable goods such as baby food, snacks, sweets, and pet food. In a similar finding, Gallup showed that 15 percent of millennials shop online for groceries at least once or twice a month.
According to Nielson, millennials prefer click-and-collect over home delivery when it comes to grocery. Why? One study found that 55 percent of them say they value the convenience of online shopping without having to pay for additional shipping fees. For retailers, this means solutions like digital lockers could be a valuable item to implement in your stores.
Mobile Drives Shopping Habits
Millennials are the first generation to grow up with smartphones and other connected devices. It’s no wonder then that these devices dictate their grocery shopping habits. A recent survey showed that 60 percent of millennials are using mobile apps to find coupons or discounts on food. A separate survey found that nearly two-thirds of millennials create a shopping list on their phone, while 57 percent use their device to find recipes while in the store itself.
Grocery retailers can capitalize on this by creating their own, branded, mobile app that integrates customer loyalty programs, product information, reviews, and coupons. These could allow customers to create their own shopping lists and receive recommendations based on the products that they are planning to purchase. It could also alert them to discounts or other offers that are personalized to them. By understanding how customers use their phones while in your store, you can capture more of this experience and add value that keeps customers loyal to your stores.
Store Associates Still Matter – Empower Them To Help Customers
One of the most common fears of technology is that it will fully replace front-line store staff and lead to a fully automated experience. While some brands have certainly taken steps in that direction, it’s important that grocery retailers understand what their customers are asking for. A recent study found that 66 percent of millennials find store employees “extremely important” to their shopping experience, while 43 percent would stop shopping if a store replaced human workers with robots.
Your in-store staff can be a huge differentiator over online-only brands that cannot offer personalized or face-to-face service. Instead of using technology to replace these workers, implement technology that empowers them to better help the customer. For example, some stores have used employee mobile devices to allow staff to look up more information about products, check inventory levels and cash out customers immediately in the aisle so that they don’t have to wait in line.
Price is a Big Factor, But Not the Only One
Millennials came of age through a major financial crisis, increasing debt levels and a difficult job market. They have also reached the point in their lives where many are starting families and incurring new expenses, meaning they have less disposable income. With this in mind, it’s easy to see why price is still a big factor affecting grocery shopping habits of millennials and where they choose to shop.
One survey found that 61 percent of millennials say they choose products to create more meals at the lowest total cost, while 57 percent say they purchase more store brands to save money. Millennials are also more likely than any other generation to shop at multiple stores, with 44 percent saying they shop at three or more stores compared to only 29 percent of all shoppers.
However, it’s important to understand that price is not the only reason for this. Only 45 percent of millennials say price is a key factor for shopping at multiple stores. Other factors include product availability, specific brands or products needed for recipes, healthy items, and freshness of produce.
For grocery retailers with razor-thin margins, competing solely on price is not a sustainable option. Instead, brands can look at creating a better shopping experience, stocking unique products that bring customers into stores and building strong loyalty programs that keep customers coming back.
Prepare Your Stores for the Future with Retail Technology
These trends all point to the same thing – grocery retailers will need to adapt to survive and thrive in the future. Retail technology, when implemented with the customer in mind, can help to modernize your stores and create a competitive advantage over online-only brands or other brick-and-mortar competitors. The brands that implement effective click-and-collect programs, design customer-centric mobile applications, empower store associates and balance low prices with the best experience possible will be able to attract the largest demographic – millennials – to their stores.