Grocery 2023: Strengthening eCommerce Capabilities & Strategies
By Joseph McMenamin
Director of eCommerce, KPS Global
The e-commerce grocery landscape has not slowed since 2020 when COVID drove people to order online instead of shopping in store. With a shift in consumer behavior and an adoption towards omnichannel shopping experiences, grocers are buying into e-commerce strategies, especially as labor shortages increase. The future of grocery stores will be partially driven by e-commerce adoption. However, e-commerce adoption comes with its own challenges. Grocers are looking to robotics to solve the fulfillment piece of online grocery shopping, which poses challenges to integrate the various software solutions due to long implementation times. Up front initial costs are becoming less important as grocers are looking at the ten-year cost to serve the customer for payback models. If the volume of consumers buying online is present in a market, grocers are automating as they see it as a sustainable competitive advantage. As a result, e-commerce grocery landscape will look different across retailers in 2023.
What Will 2023 Bring
Grocery shopping has become an omni-channel shopping experience. In a recent report by Advantage Sales Outlook, 40% of grocery retailers reported “further development of e-commerce capabilities” as a top strategy for 2023, while 79% said “lowering everyday price” will be their top strategy for the upcoming year. In 2023, we should expect grocery retailers to adapt to the new shopper by using software integration across channels to provide an efficient and unified e-commerce order fulfillment process. A more integrated ordering system requires retailers to up their technology and software across the board to have a more accurate inventory system. Doing so is a difficult and time-consuming task that we likely won’t see completed in 2023. However, we should expect the large retailers to make drastic improvements towards high tech systems and inventory accuracy.
Grocery shopping today has become omni-channel. In 2023, we should expect grocery retailers to adapt to the new shopper by using software integration across channels.
What Role Will Automation Play in 2023 E-Commerce Strategies?
Automation has played a huge part in the success of online grocery and will continue to evolve in 2023. Leveraging automation is a primary way for grocers to stay competitive. With an increased labor shortage, automation systems combat the challenge and produce a higher volume of work in a shorter time. Automation drastically improves productivity and if combined with high tech systems, it can be a huge player for grocers. According to a study by McKinsey & Company, retail grocery stores can run 55-65% fewer hours with the available automation technologies. An automation trend we can expect to see in 2023 will be the adoption of auto fulfillment systems to fulfill online grocery orders. Auto-fulfillment systems will be able to fulfill orders directly from the back rooms and eliminate the need for in-store employees to fulfill orders directly. However, the adoption of automation is a daunting task which is why we should expect to see only partial adoption across the industry. Larger retailers with the capabilities to implement these systems, will invest largely in advanced automation systems for their e-commerce platforms this year.
E-commerce grocery strategies will vary throughout the industry and the drawbacks to investing in e-commerce adoption this year are largely influenced by the inflation-weary customer as well. With inflation increasing, the medium to small retailers simply do not have the capability to make the type of investment in automation as opposed to the larger retailers. The upfront cost of robotics is extremely high and therefore not feasible for most retailers. However, we should expect to see investment in robotics for longer term execution strategies.
Regardless, the omni-channel shopping experience is here to stay, and grocery retailers will need to invest in some sort of advancements for their e-commerce strategy to stay competitive in the grocery landscape.
Joseph McMenamin is the Director of eCommerce at KPS Global. Joe is responsible for the growth and integration of KPS Global’s portfolio of offerings for customers in the emerging eCommerce segment. Joe joined KPSG in March of 2016 as a Regional Sales Manager, where he quickly recognized the unique position of the company in the next evolution of the Grocery Industry.
Prior to joining KPS Global, Joe was VP of Sales & Marketing for Digital Lizard, one of the most advanced digital print facilities in the United States. During this period, Joe developed an appreciation for adapting traditional trades like print with automation technologies. Accompanied with his prior industry experience at Anthony, Inc., a Dover Company, and at Hussmann Corporation, Joe’s rare path is driving his desire to provide customers with the necessary tools, support, and insight to maneuver today’s omnichannel shopping environment.
Joe graduated from the Haub School of Business with a degree in Food Marketing from Saint Joseph’s University. He elected to participate in their Co-Op Program, providing invaluable work experiences in both the U.S. and Ireland. Joe continues his relationship with SJU through speaking engagements, classroom participation, and mentorships. He currently resides in Henderson, NV.