Author: Rose Spicer, Global Senior Director, Oracle Retail

Today, consumers have new expectations that go beyond the availability of products and the usual quality of in-store and online experiences. There is more significant pressure for brick & mortar grocers to reassure in-store consumers are safe and that their time in-store is brief and efficient. Agility and adaptability have become critical to the sustainability of grocery businesses. There is a growing imperative to manage stock online and in-store to ensure that the products consumers need are available wherever they shop.

The following trends and drivers are forcing the grocery industry to transform, resulting in permanent changes in consumer shopping habits, ongoing challenges in maintaining a superior grocery experience, and consumer exploration of new brands.

Market volatility: The global pandemic has forever shifted the way consumers shop. As communities shut down, consumers began shopping differently — even with "essential" businesses like grocery stores, which remained open to the public for in-person shopping. This market volatility also impacted retail supply chain models, forcing grocery stores to change existing supply chains, explore private label offerings, and expand supplier networks to meet consumer demand.

New competition: Omnichannel retail mass merchandisers have pushed to digitize the grocery industry. These seamless omnichannel tactics make it hard to compete. With grocery shopping shifting to online, competitors like Amazon's Whole Foods have a competitive digital advantage over the traditional grocer. As we all move forward, grocers need to examine what that means for their operations, store layouts, and everything in-between.

Retail brands Konzum and Mercator gain operational agility with modern retail technology

"Once our buyers got the hang of the new merchandising system, we began to see a marked improvement in the speed and efficiency in which they could get their daily, previously tedious tasks completed," said Željka Mujezinović, IT manager, Mercator BH d.o.o. (B&H).

Promotions and category management: Additionally, mass merchandisers like Target and Wal-Mart introduced $10 off a market basket, impacting the traditional category management process for grocers and changing interaction with CPG/national brands. Consumer goods manufacturers spend millions of dollars on marketing, with a large portion of that going to trade funds. Historically, trade funds are used to adjust retail pricing to boost sales via Temporary Price Reductions (TPRs) or to support traditional marketing. A market basket discount changes the nature of the process between the manufacturer and retailer.

Private brand products: During the pandemic, many consumers who could not find what they needed in the store turned to online storefronts and new brands to meet their grocery needs. Nearly half of consumers (45%) discovered new brands online and will continue to shop for those brands moving forward, with 16% anticipating choosing the new brands over their former preferred brand. 86% of U.S. customers explored private labels during the retail inventory shortages of the pandemic.

Customer Proof Point

Oracle Retail Brand Compliance supports many leading private brand grocers today, including 80% of the U.K. grocers, even the nation's top 4 retailers, and many prominent U.S. grocers.

Supply chain and in-stock inventory: Despite trying new brands when inventory is lacking, nearly 30% of consumers say they would always choose a grocery retailer where loyalty points or discounts on purchases are available versus other options. 88% of consumers say that they would sometimes, frequently, or always choose grocery retailers where these types of rewards are available.

Peer influence impacts customer expectations: Consumers relied on others' experiences to inform their shopping choices online and in-store. Nearly 9 in 10 consumers (89%) stated they were moderately or significantly influenced by bad reviews of a product or a store's service. This reliance on peer inputs has significant potential impacts, as less than 25% of consumers rarely or never leave negative reviews after a lousy product or shopping experience. Beyond relying on reviews and responsible public health measures to drive grocery decision-making, consumers base shopping decisions on shopping rewards.

Hyper-personalized customer experience: The shopping experience continues to be a significant driver of consumer preference. The checkout speed remains a priority for 71% of consumers and knowledgeable staff (57%). In addition, consumers shopping in stores during the pandemic had new expectations for the shopping experience from all retailers. Beyond safety, the research showed that 47% of global respondents said out-of-stock merchandise topped their list for a bad shopping experience. Additionally, 63% said they weren't willing to wait for an item to be back in stock before trying another brand. The hyper-connected consumer expects mass personalization and convenience and will go elsewhere if they don't get what they want when they want it.

Customer Proof Point

Alshaya has teamed up with Oracle as part of an enterprise transformation to improve operational efficiency, build a foundation for future growth and innovation, and create a more responsive and personalized customer service experience across its portfolio of recognized global brands.

New delivery models:  Consumers drive the creation and adoption of new grocery delivery models to mirror their retail and service consumption. New delivery models such as BOPIS, curbside pickup, and direct-to-door continue to grow in popularity, reflecting a change in consumer behavior. And, consumer experience with these new delivery models drives loyalty. One to two-day delivery is becoming more common, often setting delivery expectations. Inaccurate delivery estimates negatively impact loyalty and continued patronage. As subscription services and direct-to-consumer models expand, grocers are reimagining brick and mortars to maximize their real estate investments to support new consumption models.

Customer Proof Point

Oracle Retail enabled Makro to remake itself as a B2C grocer and improve customer satisfaction by 96%. Makro will now be able to control inventory better, standardize operations, and improve in-store experiences in five countries.

Grocery retail success

• Giant Eagle continues to invest with Oracle by expanding programs centered on consolidated sales and margin forecasting.
• Carrefour chose Oracle Cloud Infrastructure to accelerate the migration of their critical databases.
• 7-Eleven Mexico implemented Oracle Retail to simplify operations, facilitate the customer experience, automate best practices, improve communication, and provide more complete data to empower associates.
• The Kroger Company uses Oracle Retail's solutions to adapt to meet the demands of the business quickly and moving off a very complex and customized environment that included 15 disparate HR legacy applications.

Read the grocery guide