July 24, 2017

Pushing the button on machine-led commerce in FMCG

Tim Reay, Head of Grocery at Salmon
Tim Reay, Head of Grocery at Salmon

Ever since the explosion of technology, vendors have speculated – and tried to capitalise – on the future of commerce. From consumers looking to shift online, to Amazon’s potential drone delivery service, and Morrisons’ recently launched instant grocery service in association with Amazon, retailers cannot deny the impact that technology is having. Amazon dominates the industry because it understands the customers craving for a speedy, quality service. Its launch of Amazon Echo moved it closer to the home, while the retailers’ aforementioned grocery deal with Morrisons shifted it towards the grocery sector.

Digital tools are pushing the boundaries of what can be achieved in retail and the FMCG market is not exempt from this kind of disruption. Amazon remains an innovative leader for a reason. Its Dash button, for example, allows consumers to simply push a button to re-order their favourite product. At Salmon, we coined the term Programmatic Commerce to describe the phenomenon of connected devices making purchases on behalf of the customer, through smart devices with pre-determined characteristics set by the user.

The Internet of Things is already impacting industries around the world: Gartner predicts that connected devices will grow in use to 6.4bn in 2020. Programmatic Commerce, however, offers vast opportunities to improve and support shoppers when grocery shopping. A recent Kantar study found that 55 per cent of online FMCG shoppers use the exact same shopping list from one purchase to the next. The study also highlighted that customers are increasingly building loyalty online over offline, with customers spending three times more per trip online. Therefore, as users continue to shift towards online, Programmatic Commerce will inevitably be the technology that locks in brand loyalty.

Making Grocery Personalised

Unsurprisingly, the UK has one of the most advanced online grocery markets in the world. The competitive nature of the ‘big four’ – Tesco, Asda, Sainsbury’s and Morrisons – is part of the reason why the grocery market has exponentially grown. Morrison’s recent grocery deal with Amazon only goes to highlight the shift that retailers are taking to online services. Ideally, as consumers look for greater convenience, Programmatic can be the future of retail.pushing-the-button-cover

For it to be a success retailers must find the balance between brand loyalty and marketing. They must be able to aid the consumers’ route to purchase without intruding on their choice of product. This will be crucial to Programmatic succeeding and data will be the key to retailers unlocking the ever-evolving digital world. A grocery retailer carries vast data on the customer, and a wealth of information on the products it has available. Because groceries are bought by nearly everyone on a regular basis, retailers have the advantage over other sectors in that they can develop purchasing patterns.

This is the sort of strategy that online leaders such as Amazon take, and grocery retailers should be looking to implement. Having a personalised service such as Programmatic Commerce can reinforce repeat delivery schemes and strengthen the brand-consumer relationship: it can make grocery shopping easy and accessible to all.

Changing Ways

Retailers that want to benefit from Programmatic Commerce must build a system that feeds off personalisation and loyalty. Ultimately retailers must ask: will we get to a stage where machines will do our grocery shop for us? Programmatic Commerce is currently in developmental stages, and will require time until it becomes ubiquitous. Technologies such as smart fridges have only just begun to become the norm; a recent study at Barclays found that 57 per cent of shoppers would be more likely to visit a store that installed new technologies such as virtual reality and smart-fitting rooms.

Vendors should start with the predictable areas of the shoppers’ basket. Programmatic can prompt customers for items that they are low on and help them easily locate what they will need to buy. Over time, this can develop from predictive algorithms to sensors or physical devices installed in the home. Consumers will continue to shift online and as smart phones grow in use, retailers should take this approach that prepares them for a digital revolution.

Equally so, the customer must also prepare for the impact of new technologies on their shopping experience. Programmatic Commerce can eliminate boring tasks and build the shopping list, constantly reviewing, updating and changing it to the consumers’ tastes and trends. Any change takes time to become fully implemented, but Salmon’s recent Programmatic Commerce study found that 57 per cent of those asked will be ready for this kind of platform within the next two years. A Programmatic approach that is centred on helping customers will enable a grocery retailer to claim more share of the basket, while also increasing the consumer’s loyalty.

It’s a Programmatic Future

Retailers, and specifically grocery retailers, must learn and evolve with the new technologies that are impacting the industry. Programmatic Commerce won’t completely automate grocery shopping but will be the revolution to take over the more menial tasks such as creating tedious shopping lists, repetitively going to the store to buy goods and will put convenience at the very front of priorities.

Retailers that shy away from innovative digital trends will only see a loss of customers and business. Any new idea must benefit the customer journey, expand a business’ offering and improve the overall service. Programmatic will do this, and much more.

Tim Reay, Head of Grocery, Salmon

Interested in hearing more from Tim? See Salmon’s upcoming Commerce 2020 annual conference: https://www.salmon.com/en/commerce2020/