Grocers are under attack. Again.

Brett Thornton
By Brett Thornton under Insights 03 May 2016

It used to be so simple: your customers did a big shop once a week at their local big box supermarket who neatly aggregated everything you needed. They filled up their Vauxhall Zafira, and they were done for the week. That fulfilled the job of feeding the family, even if it was time-consuming and a pretty stressful experience for customers.

In reality, though, the big British grocers have been under assault for almost a decade. First they were ‘stuck in the middle’, with customers going upmarket for some things, but downmarket for many. Customers also started to make more regular, and often more local, grocery purchases - signalling a dramatic revaluation of the out-of-town land banks they had built up.

Elsewhere, online specialists, often using subscription models, have started to ‘peel off’ slices of the supermarket shop: from Graze for snacks, to Pact for coffee, and even Amazon for nappies!

Supermarket CEOs have reacted to this raft of changes with talk of focusing on the core retailing operation. This has meant investment in ‘convenience’ (read as more small format stores), trying to make out-of-town stores ‘destinations’ by trying to give customers new and more varied reasons to visit such as restaurant chains and opticians, and experimenting with new ways to hook customers on their online delivery services.

Despite all this change, supermarkets’ core online offerings still haven’t actually changed dramatically in the past decade. The PC-era model of replicating a whole store in a web page has been shoe-horned onto mobile. To make matters worse, the cost of operating online delivery services is depressing profitability more and more as it becomes a bigger chunk of revenue.

The pressure is only continuing to mount. With Amazon’s large scale entry into the market looming after the announcement of their tie-up with Morrisons, there is an important question to be asked: why exactly are British food retailers so far behind with their online services compared to other retail sectors?

Customers are already applying digital expectations to your business

Today, your customers can summon a taxi in a tap, have goods delivered from Amazon in an hour, or have their coffee waiting for them as they walk into Starbucks.

As a result, customers apply digital expectations to all their experiences, comparing your offering to their best digital experiences - and not to the competitors you obsess over. They expect services to be instant, on demand, personalised, contextually intelligent, and proactive.

This realisation makes it clear that the user experience is about more than the app or website you put in front of customers. It is about how the service helps customers achieve the outcome they came to achieve.

A layer of gloss or a shiny new app won’t fix your experience alone. You need to solve problems throughout the stack - fix the payments flow; fix those annoying delivery slots; stop making me search for the same things over and over, and definitely don’t show me the whole shop when I only want 5% of it!

Doubling down on the core offering - or the core job to be done?

In all this talk of ‘focus on the core offering’, what appears to be missing is an understanding that supermarkets are not in the business of operating well-lit stores with armies of staff and great parking. They’re in the business of putting food on the table (or helping you stay clean and healthy, or clothed, or watching the latest TV): these are the core the jobs your customers are trying to get done.

Now take a look at the plethora of small, focused players who are serving the core jobs that supermarkets compete around. Just look at the single, key job of putting food on the table; innovative new services are springing up all along the axis that we call the continuum of convenience - from prepared ingredients providers like Gousto and Hello Fresh, to prepared meals from Deliveroo and Just Eat.

Now, while supermarket giants won’t wake up bankrupt in the next five years, without the right focus, many of them will wake up feeling increasingly irrelevant. Focusing on fine-tuning today’s core offering is a sure way to be the very best service that no-one is using in 10 years. Just ask Borders, or Blockbuster, or Kodak.

Instead, focus on designing services for the core jobs your customers need to get done: solving these will reconnect you to customers in much more fundamental, and compelling ways. Ultimately, they provide a sure way to create new and compelling offerings that reinvigorate your business today, set it up to thrive tomorrow - and help you claw your way out of the supermarket competitive quagmire.

What you can learn from the small, focused players

There are a number of general principles about how to build powerful, modern customer experiences that can be gleaned from these services - we have been building these experiences for over 6 years at The App Business.

However, to sustainably deliver success for your organisation, the most important thing to learn from these organisations is their behaviour, not their products.

They understand the job to be done and align it with their organisational purpose. Why does your company exist? If you can’t answer it right now off the top of your head, then it is not clear enough.

They get close to their customer and adapt quickly, based on feedback. When was the last time you physically spoke to a customer? Or tested a concept by putting a working prototype in customers’ hands?

They build and learn every day. These days, everyone is going Agile or Lean to respond to change more quickly. You can’t pay lip service to it: your real challenge isn’t really the new entrants - it is your organisational inertia, and a lack of experimentation.

They prioritise the short and medium term. The world is uncertain, and none of us have a crystal ball. So build products and services for this quarter and the next - not for a made-up five-year roadmap.

The advantage isn’t all in the hands of these small, focused players. The opportunity for the big British grocer to nail these behaviours and start building products that make radical customer experience leaps is enormous. It is the large, established grocers that also have massive strategic advantages at their disposal, including national distribution networks, huge purchasing power, and a vast surface area for promoting new services.

These advantages, combined with a fundamental shift in the way supermarkets think and act, means there is still everything to play for. Supermarkets could still define the next era of food retailing - provided they don’t leave it too late.

If you need to understand what your customers are really trying to achieve, get in touch today.

Photo courtesy of SITS Girls