Thanks to Amazon and Whole Foods, a new kind of locker talk could be sweeping the grocery sector, and it centers on how much can be bagged in a five-minute window.
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Micro-shopping trips, defined as trips that take less than five minutes, are becoming increasingly common thanks to grocery services that let customers order online and pick up in-store. The development made national news when such trips were reported to have climbed 8.7% at Whole Foods stores after Amazon acquired the grocery chain in August 2017, according to research by data-analyzing firm InMarket. The increase is attributed to its Amazon Lockers, where shoppers can pick up preordered items.
These super-short trips can result in higher-proportioned revenue because shoppers who place pickup orders, encouraged by the prospect of a quick in-and-out visit, remain prone to split-second purchase decisions.
“As good as delivery is getting — one-day delivery, sometimes one-hour delivery — that still can’t compete with the one-second immediacy of being in store and picking up that avocado … because I thought about it in that moment,” explained Todd Dipaola, chief executive and founder of InMarket.
This explains why retailers from Walmart to Kroger are adding pickup options to attract time-strapped shoppers.
Evidence that shopper lockers and similar pickup options lead to shorter trips exists in the breakdown of micro-trips at Whole Foods. Micro-visits at stores with Amazon Lockers rose by 11%, according to InMarket. At stores in the same cities without lockers, such trips rose by 7%.
It counters what retailers strive for, which should be longer trips, but when shoppers have at their fingertips the means to shop wherever and however they want, food sellers are forced to acquiesce. However, smart merchants can find advantages in the micro-trips, from more efficient store formats to improved targeted marketing.
Consider: 34% of shoppers who use click-and-collect shopping features (order online, pick up in-store) buy more than intended, according to research by WSL Strategic Retail. More important: 89% of those who use it are satisfied with the experience, largely because of the convenience.
How big a segment is this? Right now, about 40% of U.S. shoppers use click-and-collect for groceries, according to Nielsen research, and the figure is expected to increase as the service becomes more available. Nielsen and the Food Marketing Institute estimate that Americans’ total online grocery spending will reach $100 billion between 2021 and 2023.
Walmart Towers Over Convenience, Target and Kroger Click On
As click-and-collect options expand, shopper loyalty shifts from brand to service, which often means ease. Among the services aimed to attract shoppers:
Walmart Towers. In the first quarter of 2018, the superstore chain generated nearly $3.2 billion in e-commerce sales, according to its earnings report, and it is prioritizing online sales growth over that from new stores. Walmart operates 1,100 online grocery pickup locations and plans to add 500 pickup kiosks, or towers, by the end of 2018. It installed nearly 200 of the towers, which shoppers access by scanning barcodes into the kiosk computers, in 2017.
Kroger’s ClickList. Online sales rose 66% in the first quarter of 2018, Kroger reported, crediting its ClickList in-store pickup service. The chain is even retrofitting some stores to accommodate ClickList, which enables users to retrieve orders at designated drive-thru areas. Among its features is a “favorites” list that tracks a shopper’s most commonly purchased items for faster reordering.
Target Drives Up. Target is aiming for micro-parking with its Drive Up service, which it recently extended to 270 locations in the South. Through the app-enabled option, customers can place orders and wait to have their items brought directly to their cars by a store team member. Orders arrive within two minutes of the consumer pulling into the store parking lot.
The 5-Minute Window Is Open for Business
But how can a parking lot encounter, or any of these designated pickup options, translate to added purchases? It all hinges on understanding what the shopper is trying to accomplish.
Here are ways merchants use what they offer to better cater to shoppers in a five-minute window.
Be complementary. In addition to tracking frequently ordered items, Kroger can change suggestions week by week based on the items its ClickList shoppers purchase. With this history, it can alert shoppers if they will soon need to replenish detergent or benefit from complementary products. Promotions sent while the shopper is online can translate to larger digital baskets, while special promotions timed for at-store pickup can encourage the shopper to run in for a discounted item (particularly when those items are near the pickup area and can be easily retrieved).
Shorten other causes for a trip. Shoppers do not always enter a store to pick up an order or even fulfill a list. Sometimes they have to return or exchange a purchase, grab a cup of coffee or simply use the restroom. Beauty vending machines that sell lipstick, cologne, shaving items and hair accessories can be placed by the restroom (two birds; one stone). As for transforming the pesky return process into an easy, quick shopping trip, Walmart’s Mobile Express Returns app allows shoppers to make super-fast returns in dedicated express lanes — and it gets them into the store, perhaps to buy a few dinner ingredients.
Cover the last foot. This is where retailers really are tasked with understanding the shopper’s pain when picking up an online order, because they often have a lot going on. If a consumer is saddled with kids who are hungry after a day at school and a lengthening mental to-do list, she simply does not want to traverse the store for another thing. So retailers can bring the things she needs to her. Nearby grab-and-go snacks, prepared meals and even wine could find their way into her bag — if an easy payment option is available.
Necessary for any of these efforts to work is understanding the shopper’s pain points and remembering that while convenience is essential for micro-tripping, not all shoppers insist convenience be fleeting. Lockers may help retailers bag sales, but they won’t capture loyalty — that takes locking in on shopper lifestyles.