Data, Differentiation and Retail 2.5 Drive Online Grocery in 2019

While 2017 brought us Amazon.com's acquisition of Whole Foods, 2018 was perhaps even more transformative for the grocery e-commerce industry. We’ve seen Amazon expand Whole Food’s Prime Delivery across 63 cities, Walmart announce plans to expand grocery delivery to 100 cities, and many other initiatives coming from major players and regional grocers across North America.

We shouldn’t expect these announcements to slow down in 2019. The emphasis on innovative technology investments will only grow. Grocers and retailers will understand the importance of investing in e-commerce and last-mile delivery, and the grocery industry will continue to dominate retail news in 2019.

Grocery Retailers Will Act to Protect Their Brands, Customer Data, and Margins

Over the past couple of years, grocery retailers looking to implement an e-commerce strategy have outsourced these capabilities to third parties, giving up control of both the customer experience and invaluable customer data. In 2019, mature retailers that have previously relinquished their digital commerce experience to fulfillment solutions will emerge with a renewed sense of strategy and take back control to protect their brand. They will realize e-commerce offers the opportunity to gain that extra margin.

Moving forward, they will explore the amalgamation of best-of-breed solutions and invest in deep retail customer experiences by leveraging numerous sources of data about each individual shopper. By owning these experiences and the data, grocery retailers can build and maintain the most profitable of shopper relationships.

Differentiation in Digital Grocery

Currently, we have four major players in the online grocery basket: Walmart, Kroger, Albertsons and Ahold. Add in Amazon and Whole Foods, which garner a lot of media attention, and the opportunity for smaller retailers to rapidly differentiate from these players looks daunting. This need not be the case.

Leading grocers can set themselves up for long-term success with a holistic digital strategy. The future is undoubtedly not merely online vs. in-store. Rather, shoppers will be devotees of both in a mix that makes the most sense to them. Pendulums swing, and as e-commerce continues to pick up stride, a digital strategy needs to embrace aspects that will bring shoppers back in-store as much as helping them with the convenience of online. In today’s digital world, shopping must be combined seamlessly with automation, social recommendations and a personalized omnichannel shopping journey. Customer-centric grocers that engage and delight their customers through in-store innovation and the latest digital personalization are poised to win.

M&As and Partnerships Will Increase

Amazon’s acquisition of Whole Foods was only the beginning. As customer adoption of online grocery options continues to grow, grocers are waking up to the fact that, while innovation is key to surviving in retail, your brand can’t do it all. Retail is entering a new era, Retail 2.5, in which executives now understand that they have the ability to acquire. As such, they will increasingly realize that they need to bring in the right people in terms of talent, M&A or partnerships. And this doesn’t stop at the consolidation of the grocery industry through retail mergers. We’ll see a growing number of pointed tech investments and acquisitions from more grocery retailers, not just major players like Kroger and Walmart.

As we begin 2019, the consensus among industry insiders is that Amazon’s Whole Foods acquisition hasn’t quite played out the way the technology giant might have planned. While Amazon has announced new strategies and tactics following the acquisition, it hasn’t gained significant market share. However, the greater impact of the acquisition is the significant role it has played in spurring technology adoption and innovation across the broader grocery industry. In 2019, we’ll see this effect continue as grocers get their digital feet wet and the market further evolves.

Sylvain Perrier is the president and CEO of Mercatus Technologies Inc., a provider of digital commerce solutions for grocery and other retail verticals.