As the recently shifting fortunes of grocery giants like Tesco and Sainsbury’s have shown, a successful formula today can quickly become outpaced by the changing demands of shoppers. The rise of low cost, no frills retailers such as Aldi and Lidl are a great example of disruption in this industry. These retailers didn’t care about online offerings; they competed entirely on price. But now, as the majority of the UK consumers own a smartphone, increasing mobile capabilities and communications will be the next frontier for grocery retailers.

Mobile already plays a prominent role influencing a shopping experience, bridging a shopper’s ability to research and compare as part of a decision-making process. For retailers, this means consumer loyalty has become far more challenging. A recent survey of modern UK grocery shoppers revealed they use their mobile to compare prices (46 per cent), collect promotions and discounts (35 per cent) and find nearby stores (28 per cent). The study also revealed that showrooming (where consumers compare prices from rival retailers on an item whilst in-store) is not just for bigger purchasing decisions, with 29 per cent of respondents admitting they look for better priced grocery items on their phone while in the store.

Online shopping already accounts for almost £8 billion of our annual grocery spend, and will only grow. The way smartphones and tablets are influencing consumer shopping behaviour is growing much faster than the previous major shift from physical retail towards online. It is fair to say this is largely because the infrastructure necessary to enable digital commerce is already in place. Similarly, the extended convenience of anytime, anywhere shopping is only improving with every digital generation.

However, it is easy to understand how this trend may invoke a degree of trepidation for the grocery sector. After all, they had just about strategically realigned and made considerable investments to meet the demand for online shopping home delivery.

Change creates new opportunities

While such a change may present retailers with new challenges in gaining and retaining customers, the same behavioural shifts are also creating new opportunities. For example, our research found that amongst consumers that had already downloaded a grocery retailer’s mobile app, 61 per cent of them used it regularly or occasionally - a very high level of engagement when you consider that 20 per cent of downloaded apps are never used more than once. Mobile apps create an opportunity to deliver tailored offers, build loyalty, gain valuable customer insight - in fact it wouldn’t be an overstatement to view mobile as a far more powerful and interactive version of loyalty schemes such as Tesco’s Club Card or Sainsbury’s Nectar.

Mobile usage reflects other key shifts in consumer behaviour too. Coupons, such a stalwart of retailing over the years, have had a new lease of life thanks to the convenience of being able to use your smartphone at the till. We found that of the shoppers surveyed, among those aware of mobile coupons, more than half actively used them or planned to do so - again, generating a very high level of engagement and uptake.

Unleash the mobile ad

One of the distinctive advantages of the mobile phone is that it offers so many touch-points between a retailer and consumer, creating several opportunities to engage and influence them. Grocers and retailers need to think about mobile advertising as one of the most effective ways to engage users. Our own research has shown that 91% of consumers recalled advertisements they saw on their mobile devices, far higher than the 50% recall rate generated by TV alone. Our survey of shoppers also found that app-based advertising led advertising recall with 56%, while search engines (49%), video websites such as YouTube and Vimeo (34%), and retailer websites (25%) were the other more effective sources for mobile advertising. Clearly, the ability to use multiple ways to advertise through a single screen drives a greater degree of engagement and recognition than existing formats.

And it’s not just about recall: a rather more surprising finding was that 62% of UK consumers said they were equally or more comfortable with mobile ads than advertising shown online or TV – busting a common myth that mobile advertising is largely unpopular with consumers.

It’s all about location, location, location

For decades, grocery chains would obsess over the location of their physical store since that would determine the extent of footfalls and casual shoppers. In the current era of the “mobile” consumer, retailers can now target consumers based on their precise location. Using hyper-locational technology such as beacons or geo-fencing, a grocer could target a mobile customer as they enter a certain radius of a store and based on previous purchasing activity, send helpful reminders and targeted offers. Or, retailers could use this technology to re-target customers who went into a store but didn’t make a purchase or reclaim an offer. All this can be done automatically through programmatic buying or a real-time bidding platform. The possibility to cement user loyalty using mobile devices and audience targeting is immense for grocery outlets and supermarkets.

Future developments in mobile technology will undoubtedly create further shifts in our grocery shopping habits. Developments in contactless payments, seen recently in the iOS8 launch, and wearable technologies may see even further moves away from the big weekly shop, to daily or even hourly shopping ‘micro-decisions’, further challenging the ability of retailers to influence spending patterns. But even as technology evolves, opportunities emerge to engage with consumers in new, rich and rewarding ways. The real challenge is having the creativity and vision to harness what new technology brings.


By InMobi

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