Trendsights: Technology Is No Longer a Nice to Have, It’s a Need to Have
NATIONAL REPORT — Consumers today are accustomed to having the goods and services they want literally at their fingertips. With a few scrolls, taps and clicks, they can get what they want, when they want it.
For example, digital ordering in foodservice is growing by double digits in a market that is not growing at all. And while using the internet to buy food may lag behind online purchasing in industries such as travel and small appliances, online grocery customers in the United States report high levels of satisfaction and strong repeat rates.
This doesn’t mean physical stores will cease to exist. As a matter of fact, NPD recently conducted a study on online grocery shopping and those who grocery shop online say that 76 percent of their grocery spend is still at brick-and-mortar stores.
Virtual and physical stores can coexist because both are needed and each serves specific purposes. Convenience stores, in particular, have always met the consumer’s need for convenience — and that convenience will only be enhanced by technology.
Digital Convenience in Foodservice
Food-forward convenience store operators can pick up some tips from what is currently happening in foodservice when it comes to digital ordering. Digital ordering for delivery or pickup from a website or app is catching on quickly.
Digital ordering now accounts for 3 percent of total foodservice traffic, or about 2 billion visits. Dinner is the meal most often ordered digitally, and families are the heaviest users of digital ordering. Fifty percent of digital orders come at dinnertime, and 35 percent of digital ordering includes parties with kids. People under the age of 35 and those with higher household incomes are also above-average users of digital ordering for foodservice.
NPD has found that no matter the consumer, deals play an important role in digital ordering. When consumers order digitally, they are twice as likely to order on a deal, and that deal is usually a coupon. Twenty-nine percent of all digital orders use a coupon. Other top deals used are discounted price, daily special, and combined item special.
Additionally, NPD found that the ability to pay with mobile boosts customer satisfaction scores and encourages guests to visit for reasons related to loyalty. While more consumers are placing orders using websites, orders placed via a mobile app are growing more strongly. It’s all about the mobile app, and it’s becoming an expectation on the part of the consumer.
Brick-and-Mortar Retailers Still Key
In the case of shopping for groceries online, grocery e-commerce has a lot of headroom for growth with only 7 percent of U.S. consumers shopping online for groceries in the last month, and those who do shop online still spend 76 percent of their total grocery spending at physical stores. Consumers who are lapsed from grocery shopping online, or have never shopped online for groceries, point out a number of barriers to their adoption, the top reason being that they want to pick out their own fresh items.
The takeaway for convenience stores is to note the importance of fresh food and foodservice to consumers and leverage that need. NPD predicts online grocery shopping will grow at a faster rate than the early online pioneers as consumers have already experienced the convenience of online shopping. In fact, 20 million consumers who are current, lapsed or new to online grocery shopping plan to increase their virtual shopping for foods and beverages over the next six months. However, in addition to selecting their own fresh foods, many consumers simply like the experience of shopping in a brick-and-mortar store.
These consumers say that walking the store reminds them of what else they need, or they like to see what’s new. Other barriers are the higher costs associated with grocery shopping online, like delivery or membership fees, and needing to wait for the delivery.
The point is that convenience stores are still very much needed but, to remain relevant to customers, technology needs to be part of the shopping experience. There continues to be a large percentage of the population who will prefer to shop at brick-and-mortar stores.
Convenience store operators should market the unique consumer needs they meet; at the same time, they need to keep up with the times and leverage digital technology via their own click-and-collect programs, as well as partnering with third parties for delivery, in order to expand their offerings.
Trendsights is an exclusive bimonthly feature that appears in Convenience Store News.
Bonnie Riggs is the restaurant industry analyst at The NPD Group, a leading global information company.