Marketing Communications Strategies for Independent Grocery Retailers
If you’ve read my past blog posts or follow me on social media, you know I’ve been busy with graduate school for the past three years in addition to working at AWG. Good news: after a full year of researching, writing and finally defending, I have competed my thesis and graduated with my master’s degree from Mizzou!
So what does this mean for you? I’ve condensed my 80-page thesis down to a quick summary of what I learned.
The lovely title of this blog post is also the title of my thesis. In layman’s terms: I studied how independent grocery retailers (like AWG members) can successfully market and communicate their online grocery shopping offerings to their customers to secure sales online and in-stores. I did this through marketing email communications.
Besides the fact that I work at AWG each day and have a vested interest in helping our retailers, omni-channel grocery shopping (online and in-store shopping options) is constantly evolving and grabbing headlines in the news. For example:
“By 2022, the Food Marketing Institute predicts that 70% of Americans will grocery shop online, accounting for $100 billion in consumer spending” – FMI & Nielsen
That’s huge! Independent grocery retailers have the opportunity to secure part of that $100 billion in online grocery sales. But in order to compete against their larger, corporate counterparts like Amazon and Walmart, they need to effectively marketing their omni-channel retailing platforms to their current and potential customers.
The purpose of my two-fold study was to test which incentives or messaging (if any) would motivate consumers to start online grocery shopping with independent grocery retailers by applying the diffusion of innovations theory. (YIKES – academic speak! I know, just stick with me).
The Research: For the past two years, I’ve been researching the current and potential state of online grocery shopping through academic and trade publications. I narrowed my references down to 51 important studies to guide my experiment.
The Experiment: The first aspect of the study was an email experiment. AWG Member Retailer, Marsh’s Sun Fresh, allowed me to use the store’s already-established customer email list to announce the launch of its new online shopping platform, and then test which incentives and messaging in emails would most influence customers to try online grocery shopping. The marketing incentives and messaging that I tested included:
- Online customer reviews from real customers about positive experiences shopping online.
- A $10 off coupon on any store-branded products (Best Choice & Clearly Organic).
- Money-back guarantee messaging to try out the shopping platform risk free.
- Free service offer to try out online shopping for the first 3 times free. (The service normally carries a $4.99 fee each time a customer places an order.)
I measured the open rates, click rates to the online shopping platform, coupon and service offer redemption, and statistical relevance. Below you’ll see a break down of the experimental groups and an example of one of the emails.
The Survey: One week after the email experiment, I emailed all of the participants with a survey about their opinions on online grocery shopping and what they thought would be the biggest motivator to try it.
Through the formulation of seven hypotheses, I predicted that the emails with the combination of online customer reviews and the free service incentive would have the greatest effect on online grocery shopping trial of any of the messaging and incentive combinations.
I predicted wrong! Plus, the experiment and survey results didn’t agree with each other. Out of the 2,883 participants, the control group (which received no extra messaging or incentives, just an informative announcement about the new online shopping platform) received the highest number of clicks to try online grocery shopping. 154 people took the survey and the majority said free home delivery and coupons would be their biggest motivators to try online grocery shopping. However, during the experiment time period, not one coupon was redeemed!
Another interesting piece: whenever online customer reviews were included in emails that had an incentive offer, those emails received a higher click rate.
The experiment data points us to believe that simple, educational emails with no additional marketing messaging or incentives will produce the highest effect on online grocery shopping trial.
Going off of this data alone, I would recommend that independent grocery retailers send an initial educational email introducing the new technology to consumers in a simple, clean layout. This would be similar to the controls group’s email in the experiment. Then retailers should deploy an email marketing campaign with incentives such as coupons, free service or free delivery, combined with marketing messages of online customer reviews.
Even though this experiment tested and surveyed a small demographic, this was a starting point to academically studying independent grocery retailers in a natural setting. The data was statistically relevant. Email messaging is not a new marketing strategy, it consistently shows a successful return on investment for retailing.
My thesis goes further into how to use these results and why I think they turned out the way they did. (Hint: demographics have a big role to play). Once the university officially publishes my thesis, I’ll share a link to it here. You can view my thesis presentation that I defended here: https://prezi.com/view/GwPXdCYRxmWNojhoyCz9/
If you have questions about online grocery shopping, my research findings, or how to market to your customers, let us know! We’re excited to take our results and help you secure a portion of that $100 billion in online grocery sales.