BJ’s Wholesale Club, Publix, Brookshire Grocery, Target and Costco Wholesale are among the nation’s most “digitally mature” grocery retailers, according to a study by digital insights firm Incisiv.
In its second annual Grocery Digital Maturity Benchmark report, released yesterday, Incisiv defined “digitally mature” grocery retailers as those that invest in their front-end shopping platform as well as back-end integration, fulfillment, customer service and operational excellence to deliver an optimal, end-to-end customer experience.
The study examined 90 leading grocery retailers, food banners and delivery providers in North America and Europe, rating them based on research and discovery, ease of ordering, fulfillment, and customer engagement and service.
Britain’s Tesco ranked No. 1 overall in digital maturity, followed in the top 10 by BJ’s, Publix, Brookshire’s, Target, Costco, Kroger, Albert Heijn (Ahold Delhaize), Schnuck Markets and Whole Foods Market.
Among U.S. companies, the top 10 digitally mature grocery retailers were BJ’s, Publix, Brookshire’s, Target, Costco, Kroger, Schnucks, Whole Foods Market, H-E-B and Wegmans. Rounding out the top 20 U.S. grocers in digital maturity were Save Mart, ShopRite, Walmart, Aldi US, Giant Food, Cub Foods, Weis Markets, Meijer, Sprouts Farmers Markets and Family Fare.
Target came in first among the global leaders in research and discovery, which also included BJ’s and Brookshire’s, Incisiv reported. The benchmark covered site layout and navigation, on-site search, content and social media. BJ’s finished at No. 1 in ease of ordering (cart, checkout, communication, product selection, convenience and payment), with Target, Brookshire’s and Publix also recognized as leaders.
In fulfillment, Walmart was rated as the global leader, followed by Kroger, Publix, Costco and Wegmans. The category spanned in-store and curbside pickup, home delivery, communication and returns/exchanges. Tesco ranked first in customer engagement and service, with Kroger and Giant Eagle as U.S. leaders in this benchmark, which includes account management, help desk and customer service, targeting, personalization, rewards/loyalty program and store/location services.
“Those who invested in digital early on are now reaping the benefits of higher sales growth,” according to Amar Mokha, chief operating officer and benchmarking leader at West New York, N.J.-based Incisiv.
Indeed, of the grocery retailers examined, the 27 most digitally mature achieved an average annual growth 2.2 times higher than that of their competitors, said the Incisiv study, which was sponsored by e-commerce specialists Mercatus, FlyBuy and ShopperKit. The 27 retailers with high digital maturity had 6% or more average annual year-over-year growth, compared with 1% to 6% growth for medium digitally mature retailers and less than 1% growth for low digitally mature retailers.
Incisiv noted in the report that the correlation between sales growth and digital maturity has been even stronger amid the coronavirus pandemic. During the second quarter, grocery retail overall saw 8% growth year over year, while the most digitally mature retailers grew 19%, or 2.4 times the industry average.
“Based on our research, there are a number of digital offerings grocers should look to adopt,” Mokha explained. “With the prevalence of curbside pickup during COVID-19, we were surprised that less than 5% of benchmarked grocers offered curbside pickup turnaround in two hours or less. Additionally, only 6% of grocers we benchmarked offered the ability to search online for in-store pickup options. We found that 21% of grocers this year enable shoppers to choose picking preferences, like produce ripeness.”
Compared with a year ago, the 2020 Grocery Digital Maturity Benchmark found a number of advancements by grocery retailers in their “digital evolution,” Incisiv said. In research and discovery, the biggest gains were seen in on-site search and navigation, including improvements of 11% in the ability to search category-specific options and 13% in the ability to view deals in the primary site menu. On the ordering side, the 2020 benchmark showed improvements of 37% in the ability to reorder from previous order history and 16% in the ability to see promotions in the shopping cart view.
Gains in fulfillment included a 20% increase in grocery retailers offering free delivery with a minimum order value. Also, in the U.S., most grocers added curbside pickup service. And in customer service and engagement, digital maturation this year included an 18% gain in the ability for customers to save payment preferences and card details, and a 20% improvement in the number of grocers enabling easy returns and refunds of products purchased online.
“While online shopping in grocery retail continues to lag the overall adoption of online buying across other retail segments, the COVID-19 pandemic has created an explosive growth curve across all areas of digital. While physical supermarkets that stayed open during the crisis fared better than any other retail segment, the industry saw a high percentage of shoppers across demographic and psychographic lines adopt online shopping as a first choice,” Incisiv said in the report.
Online grocery stands to expand from 3.4% of overall grocery sales in 2019 and 4.3% in 2020 to 21.3% in 2025 — 60% higher than pre-COVID forecasts, a recent Incisiv/Mercatus report projected. As a result, retailers will need to step up digital investments as online grocery becomes an increasingly large piece of their business, according to Incisiv's digital maturity study.
“As shoppers become increasingly comfortable with the process, a new set of defining expectations has emerged. In many cases, the industry was unprepared and had to institute processes or technology just to address the demand and couldn’t account for profitability,” Incisiv said. “With the market poised to grow from 3% of total grocery spend in 2019 to 21% by 2025, it is imperative that strategies shift to ensure the industry is protecting profits.”