Lowenstein's View: Grocery shopping is an area ripe for mobile innovation

Mark Lowenstein

During this holiday season, you're likely to be spending more than the usual amount of time shopping for food. When I think of the many aspects of our daily lives that mobile has helped to improve or simplify--navigation, finding a restaurant, comparison shopping, fitness tracking, all manner of personal information management--the grocery shopping experience is one that has been virtually untouched by mobile. A relatively small percentage of consumers have any sort of electronic relationship with their local grocery stores, be it national chains like Whole Foods or Trader Joe's, or regional stores such as Shaw's, Safeway, or Publix. Grocery store apps are one of the least-downloaded categories, and many of these apps have received poor reviews.

In an era of big data, the quantified self, huge attention to health/wellness/nutrition, the ability to deliver hyper-local targeted advertising, and new technologies such as beacons, the grocery shopping experience is ripe for innovation.

State of mobile and grocery shopping
First, a quick review of the current state of mobile apps. I downloaded several grocery store apps, from a combination of national and regional chains. Note my research did not include "big box" stores such as Wal-Mart, Target, Costco, etc. My key findings:

  • Not every store has an app. For example, in Boston, strong regional chains such as Shaw's and Stop & Shop have apps. Market Basket and Hannaford don't. Amazingly, Whole Foods and Trader Joe's do not have mobile apps.
  • Most grocery store apps are quite similar in layout, features and functionality and have fairly basic functionality and features. These generally include: store locator, image of weekly "circular ad," ability to make a shopping list, and featured recipes.
  • Coupons and offers are a mess. Finding specials/deals is still stuck in the "Sunday Circular/Coupon Clipping" mode. In many cases, it is presented as an image of the circular or a list of items, with limited search functionality. Overall, a fraction of paper coupons that are sent out are ever redeemed. The old-fashioned way is to clip, stack, and sort. Electronically is not a lot better. It still requires scanning, uploading photos, and other cumbersome procedures at checkout.  There are a few apps, such as SavingStar and Milk, that are trying to take the whole process digital, but none have really caught on yet.
  • Link to loyalty card. Some stores do a much better job of linking their loyalty card to the app than others (and loyalty cards are diminishing in importance in the grocery industry).  With Wegmans' app, which is one of the better apps that I've seen, one can display an image of the card for payment. In addition, the app does a nice job of showing purchase history. Safeway's app does a nice job of integrating offers and lists.  
  • Stores make very little use of purchase data from the customer's perspective. For example, many shoppers have a regular set of items that they buy for their family. Very seldom do stores pro-actively communicate "specials" on items, offers from competing brands, "if you like this then try that" promotions, and so on.
  • Most of the apps make the customer do a lot of work – typing in lists, painstaking searches for items on sale, and so on. Many grocery store apps are poorly reviewed.
  • For the customer who has time, there is a lot of information available on the products shown in mobile apps. For most items displayed on a device, there is the full list of nutrition information that one would see on the actual package.

How it can be better
I think there's lots of opportunity to bring the grocery shopping experience into the modern, mobile and app era. This is a combination of leveraging the available technologies and making the experience easier for the customer.

1. Digitize the coupon process and make it more intelligent

Coupons and specials should be digital, searchable, and more targeted. Coupon use would rise significantly if it was more easily accessible on a mobile device. It would be great if the searching process was easier. They could also tie into past purchase history. On an opt-in basis, customers could receive coupon offers from competitors to try their products. If you regularly buy FAGE Greek yogurt, Chobani can send an offer to try their brand.

Also, using a coupon could become more real-time and serendipitous. For example, using more precise location information or "wand-ing" the camera over a particular section in the grocery store, you could be presented with coupons, special offers, and additional product information.

In a survey of 1,000 shoppers by Catalina last year, respondents said they are interested in coupons, but it's "more than about savings…they want them delivered in an intelligent and personalized way."

2.  Use the camera, use location

Today, the camera is used in the grocery store mainly for bar code reading and in some instances, self-checkout. The camera could be used for other purposes, such as "wand-ing" over products/product sections, to bring up additional information, specials, offers, and so on.

Grocery stores should also be at the forefront of the coming wave of improved indoor location capabilities. I've had lots of discussions with retailers looking to use iBeacon for in-store marketing, but have not seen a lot of action yet from the grocery sector. Whole Foods is apparently testing iBeacon in Philadelphia.

3. Leverage data more effectively

Given the amount of data grocery stores are collecting on purchases, I'm amazed how little that information is used, compared to other industries. For example, some grocery store apps show purchase history, but that rarely translates into recommendations or special offers. "We see you regularly buy Granny Smith Apples: You might like XX type apples."

Data could also be used for more intelligent inventory management, particularly with regard to perishable foods. Customers could sign up for notifications: "We have strawberries that are very ripe," or "not all of our fresh tuna supply was bought," come into the store by 6 p.m. for half off. Grocery stores could take a cue from, or partner with, companies such as Groupon and Open Table, who have become expert at matching inventory, supply and demand.

4. Health and wellness

Every month or so, I get an email "report card" from my gas company, showing my energy utilization, and how it compares to past periods and other people in my neighborhood with similarly sized houses. Grocery apps could do some very interesting things with regard to health, wellness and nutrition, across all sorts of metrics. Spending and nutritional information, for example, could be compared to past periods, other individuals/families. For example, recommendations for more healthy eating could be provided and could become more integrally tied to other health and wellness apps, "health graphs," and SDKs such as Apple's nascent Health Kit. All sorts of exciting opportunities exist here.

5. Integration With other applications

I'd love to see grocery applications work in conjunction with other applications popular with users. Areas for integration include:

  • Popular to-do list/reminder apps could link to shopping lists
  • Store loyalty cards should be integrated into leading award program tracking apps such as Award Wallet
  •  Emerging mobile payments apps – for example, very few grocery chains are working with Apple Pay or any of the other m-payment "ecosystems." More checkout terminals at grocery stores need to be NFC-enabled.
  • Tying into the family of health and wellness apps. Customers who are in fitness loyalty programs such as EveryMove could get awards for healthy grocery shopping, for example.

The caveat to all these ideas is to recognize the unique nature of the grocery shopping experience. First, all the concepts around e-coupons, recommendations, and targeting must have the proper opt-in procedures. Second, grocery shopping is a highly transactional, time-sensitive experience. It is not a leisure activity. From a consumer perspective, innovation in the sector must be focused on cost savings, efficiency, and valuable, actionable information. Easy integration with other apps is also key, as customers don't need another major app to "manage."

A final challenge is the unique structure of this category: there are big box stores (Wal-Mart), national chains (Whole Foods), regional chains (Publix, Shaw's, some of which are brands of the twelve or so "major" grocery retail chains), and local chains/mom & pops.  Some of these groups might not have the technology teams or resources to develop leading-edge apps. There is a handful of third-party "digital retail solution vendors," such as Catalina and MyWebGrocer, that work with the grocery trade. There are a few really good apps (Safeway's is the best I tested) and some neat individual features and capabilities (Stop & Shop's scan & bag works well). But few stores/companies has really nailed the total customer experience yet. The ingredients are there for grocery stores to leverage mobile technology, apps, and big data to take the store experience and customer relationship to the next level.

Mark Lowenstein, a leading industry analyst, consultant, and commentator, is Managing Director of Mobile Ecosystem.  Click here to subscribe to his free Lens on Wireless monthly newsletter, or follow him on Twitter at @marklowenstein.