Image courtesy Brick Meets Click
Leveraging data to understand shoppers better will be key for retailers competing with Amazon in the coming years, according to a new report from consulting firm Brick Meets Click.
The firm expects that Amazon will focus its grocery efforts on aggressive customer acquisition, strategic site selection for stores, and optimization of its product mix, according to a news release. Amazon has long eyed the grocery industry as one in which it wants more share because of the trip frequency associated with the category.
Getting more Amazon Prime members to buy groceries from the company — or from Whole Foods Market, which Amazon owns — is a key part of the strategy, according to Brick Meets Click. One example of those efforts is the company’s elimination of the $14.99 monthly fee for Amazon Fresh. Now the service is free for Prime members.
“The richer data set that Amazon is able to develop as a result of leveraging Prime to accelerate its appeal among high-value, affluent households is powerful,” Brick Meets Click wrote in its report. “It will enable Amazon to do in grocery what it’s done in other parts of its business — identify offers and services that provide greater value for each household.”
In response, traditional grocers need to be diving into their own customer data sets and examining buying patterns to understand what shoppers are wanting to buy, the firm suggests.
Brick Meets Click recommends retailers work to strengthen relationships with their customers who are likely to also be Prime members; to ask their top shopper group — “the 20% that generate 80% of the profits” — how the retailer can better serve them; and to adjust their assortments to focus on products that appeal to that group.
“For both retailers and brands that want to survive, it’s no longer advisable (or affordable) to incent customers to buy what the retailer wants to sell them,” Brick Meets Click wrote in its report. “Instead, retailers must offer customers what they want to buy.
“While not an easy shift, the good news is the data, tools and processes are available,” Brick Meets Click wrote. “Over the past few years, customer centricity has matured into the discipline of customer management, and the analytical tools needed to customize assortment and promotions have become much more affordable.”