Personalizing the Grocery Shopping Experience
An interview with Albertsons’ Narayan Iyengar and Quotient Technology’s Mir Aamir
Albertsons has access to a cornucopia of customer data through savings programs like just for U at its eponymous stores and Safeway as well as Acme’s MyMixx, which are integrated in each retailer’s mobile app.
Behind the scenes, digital promotions technology provider Quotient helps the grocery store conglomerate use this data to engage with customers one-on-one through digital. eMarketer’s Tricia Carr spoke with Narayan Iyengar, senior vice president of digital marketing and ecommerce at Albertsons, and Mir Aamir, president and COO of Quotient, about the level of personalization that grocery shoppers expect in exchange for their loyalty.
eMarketer: What trends are driving an increased desire for personalization among your customers?
Mir Aamir: The No. 1 trend is changes in customer expectations. There is a strong desire from consumers everywhere for relevance and personalization. Their patience for messages or offers coming from any business that are not personalized is running very thin. Historically, grocery retailers and CPG [consumer packaged goods] brands have done mass marketing, like weekly flyers. The desire for personalization is not only a challenge, but a huge opportunity for them to capitalize on.
eMarketer: The right technology can help retailers personalize across multiple consumer touchpoints. What’s most important for Albertsons from a technology standpoint?
Narayan Iyengar: The technology infrastructure for marketers continues to evolve and transform dramatically. There’s data, big data, machine learning, all of that. But it’s also happening at the customer level in that everybody is looking at small screens, and that changes how they view the retail store and influences preshopping [before they get to store].
The North Star toward which all major grocers want to move is to have an integrated, end-to-end, seamless experience that addresses a majority of the customer journey—be it in-store or online, stock-up trips or quick trips, and no matter what type of customer you are. We want to be able to help everybody because we are a mass market company. Picking any one challenge and solving it is somewhat easier, but for a company with our scale, we have to solve all of them.
Aamir: To reinforce that point, about 97% of groceries are still purchased in-store. Even though the online piece is growing rapidly, it’s growing from a small base. Using digital to influence in the preshopping and planning stages to get a growing share of wallet and market of that 97% is very important.
eMarketer: How have Albertsons’ customers changed since you started offering a heightened level of personalization through mobile apps and other digital channels? What behaviors are you noticing now?
Aamir: As we started on this journey of personalization, and as digital coupons became more personalized for the customer, we naturally saw higher engagement. Then habit-forming happened, and it’s happening fast for an industry that’s used to 40 years of clipping coupons out of the Sunday newspaper.
As we introduce more features during this digital preshopping—for example, when you create a shopping list in the just for U app, it’s sorted by aisle—we start seeing shoppers engage with that. We’re also seeing engagement outside of the app environment—for example, on Facebook where users see advertising or content that is personalized and relevant to them. We’ve seen this engagement build over time in these kinds of preshopping experience.
eMarketer: Are there any other key factors outside of changing customer expectations that make personalization so important right now for grocery retailers?
Iyengar: It becomes more important as stores hold a larger number of SKUs. Ten years ago, stores carried 10,000 SKUs at best. Now we are at 50,000 SKUs, and there are entirely new product categories: natural foods, organic, gluten-free and so on. This makes finding what you want very hard. At the same time, screen size is getting smaller, and we can’t fit that entire product assortment on a small screen. You have to have the software pick out the items that customers care about, otherwise they get overwhelmed.
Personalization is not a new concept in the sense of the term. Go back 15 years, your store manager knew you as a person—all we’re doing now is digitizing that relationship. All of those aspects of the store that made it successful over the last several decades are what you want to replicate on digital.