How the Pandemic Alters Supermarkets Customer Experience
Last week, I read an article in the Atlantic where the Author, Ian Bogost, outlines how he believes the COVID-19 pandemic will change supermarkets, and probably not for the better. While I agree with some of the aspects of his argument, I believe the outcome will offer a different result than his conclusion.
I have worked in the grocery industry since I was a teen. I started as a cashier, moved to the distribution center, later delivered the first frictionless shopping solution to Ahold Delhaize USA, and ultimately was the CEO of a software company that specialized in providing order management SaaS and Internet of Things solutions to mid-size, natural, and organic supermarkets.
Similar to the real estate industry and their monopoly around commissions, the more things change in supermarkets, the more they have remained the same. However, that is starting to change as Bogost correctly points out. But, not in the way, you may think, or the writer describes.
The Rise of Supermarkets Pre-Pandemic
Historically, I found grocery shopping always came down to either price or experience. And, up until recently, it was a consumer’s experience that was winning. Publix is a great example. Throughout Florida, where the supermarkets are headquartered, they have driven out other grocery chains that are cheaper such as Kroger, Food Lion, Wal-Mart, and Winn-Dixie. They do this by providing a premium on service, then quality, and then lastly price. This is a far cry from Wal-Mart’s slogan: “Always low prices.” As we all know, the big-box retailer competes primarily on price.
Although, I think Bogost is correct that the Big grocery stores have the upper hand post-pandemic. I believe the winners in this new world are not the supermarkets you might predict.
There is a very crowded grocery mid-market, combining affordable, private-label products with experiential stores. An excellent example of this was Kroger’s failed experience with Lucky Foods, which pulled out of Florida after Kroger’s investment ceased. There is also Amazon’s acquisition of Whole Foods. Amazon is also finding their customers are not flocking to this model, the way they hoped. And they are cutting prices further while they look at other formats.
What is the Customer Experience Customer’s Desire Post-Pandemic?
But, If you ask Wal-Mart, who they are most worried about. It is not Amazon, and it’s not Publix.
It is Aldi.
This company has grown under the radar into the 3rd largest supermarket chain in the country. They now operate 1,900 stores in 36 states with a goal of getting to 2,500 by 2022. The chain is doing this by offering no thrills, rock bottom prices, brick, and mortar convenience, but in a smaller format.
They are also altering the historic grocery labor model by cross-training all store employees. By doing this, their employees can be the cashier, produce clerk, baker, or dairy stocker — any employee can do everything that needs to be done in the store. That’s a major paradigm shift in store efficiency.
However, it’s not the pace of Aldi’s growth that concerns Wal-Mart and Amazon the most. It’s the changes in peoples’ mindsets that it is bringing with it along the way. The small stores facilitate quick trips in a way no other format (other than Trader Joe’s and Lidi) are doing – the new norm for post-pandemic shopping.
The most crucial change is in the consumer experience. Aldi divests all of the things that make people shop at a Publix and do it unapologetically and in a viciously effective way. Coupled with that, Aldi’s prices are generally 75 percent less than advertised sale prices at Publix. And, they provide new surprise product launches in many areas of the store which keeps the shopping experience fresh.
While I agree that in-home delivery will increase as Bogost suggests. I think the more important shift will be for shoppers to get in and out of stores more expeditiously and consumers directing how they want to do it. There is no one better at this customer experience than Aldi.
What seems to be an ignorant lack of effort is, in fact, part of Aldi’s strategy. Their goal is to deliver what customers care about the most. In essence, surprisingly, low prices with high-quality store-brand products. Aldi has made these products, customers used to be ashamed of, into a symbol of rebellion against the major higher-priced CPG brands.
Why is This the New Norm for Supermarket Customer Experience
The pandemic will create a seismic shift in consumer’s habits. They will want a no-hassle experience that is different from what they are accustomed to in the large supermarkets. Aldi is the best positioned to grow into the new post-pandemic leader by upending the grocery kingpins. They are doing this by giving the business world an unexpected lesson on customer experience while enhancing their fresh, organic, and easy-to-prepare food options.
Supermarkets were created nearly a century ago by merging what used to be specialized markets, produce stands, bakeries, and the butcher into a much larger store. With the rise of the smaller Aldi footprint and business model, it is slowly reversing this century-old concept.
Aldi is creating a new attitude about supermarkets, and a connection with its customers could change the way consumers approach grocery shopping in general.
“The grocery industry is in a perfect storm with consumers changing their shopping habits, different formats taking away market share from the traditional supermarket, and supermarkets defending their share with price wars,”Aldi US CEO Jason Hart told Business Insider. “While we focus on our competition and we keep an eye on them … we’re more focused on the consumer, our customers, and the customers that don’t shop us, so we can communicate to them that Aldi is a better way to shop.”
I doubt Aldi’s unconventional approach to business will not go unreplicated by the other kingpins.
I predict this will be the new model for supermarkets in the future.
OVESTO is a leader in providing fractional and interim senior executives on-demand. We have decades of experience in retail and in helping customers provide frictionless customer experience. If you would like to learn more about our Fractional services. either contact me directly or click here.
JOHN R. MILES
John R. Miles is the founder and CEO of OVESTO, the leading provider of on-demand executive staffing. OVESTO provides transformational leaders for fractional, interim or project assignments. Miles is widely viewed as an expert on digital disruption, problem-solving, and business transformation. He is a highly sought after speaker, consultant, and writer. Miles has significant business experience as a Fortune 50 CIO, ASX 10 CISO, and seasoned private equity leader in CEO and COO roles across several diverse industries.
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