How Grocery Stores Can Get More Customers

At the end of 2022, many key players in the food industry, from fast food to fast casual to grocery stores, had their eyes on tech innovation, believing this would bring people through the door in the new year. Some grocers have embraced this strategy early in 2023, but as inflation and other factors continue to weigh heavily on consumers, the key to gaining shoppers (and keep them coming back) might be simpler than we think.

Grocery Dive reports that Midwestern grocery chain Schnucks has just begun to invest in various technology upgrades such as a smart shopping cart pilot program, electronic shelf labels, and an expanded test of robots that roam aisles checking inventory and prices (known as Tally, in use at Schnucks since 2017). Many of these upgrades are in response to labor shortages, an issue that Schnucks' leadership claims has already been alleviated by the technology.

However, Amazon, which owns both Whole Foods Market and Amazon Fresh grocery stores, has had a mixed record with its own tech innovations. On the one hand, Amazon has paused the rollout of its Amazon Fresh grocery stores and even chose to close some locations that lacked growth potential, Grocery Dive reported earlier this month. Most Amazon Fresh stores are outfitted with one or all of Amazon's proprietary tech systems, such as its Just Walk Out checkout-less system, its smart carts (known as Dash Carts), or its palm-scanning payment technology called Amazon One. Despite all these bells and whistles, some industry experts say customers don't find the shopping experience at these stores unique enough to make the switch from their regular store.

Yet for all the hurdles faced by Amazon Fresh stores, Whole Foods, an already established grocery brand, seems to be faring better. Whole Foods locations equipped with the Just Walk Out technology have seen increased foot traffic and other metrics of success related to the system.

Walmart also recently closed two locations that focused only on delivery and pickup orders, a format intended to increase convenience for its e-commerce customers. The supermarket giant has chosen to move away from stores focused solely on online shopping and instead take things in house.

Similarly (though on a smaller scale), Heinen's, a grocery chain with 23 locations in Ohio and Illinois, just ended its partnership with Instacart in favor of taking its grocery delivery and pickup services in house. Although the company did not openly state its reason for ending its relationship with Instacart, the move will still likely save Heinen's money, speed up service, and reduce added fees for customers.

Anecdotally, ALDI has long-been the MVP of my budgeted grocery shopping experience. Despite others using checkout-less options, reward programs, and other tech-based updates to try to reel in customers, ALDI has kept things simple and continues to grow as a result.

ALDI's operational model has a number of cost-effective practices that make it stand out from other chains. For example, regular ALDI shoppers know the store carries a limited inventory of all products, many of which are from the chain's own private label rather than larger name brand options. The store also offers reusable bags and trains customers to bring their own; shoppers can also use the cardboard boxes in which products are delivered, cutting down on the cost and waste of plastic bags.

Visits to ALDI have increased substantially over the years and the chain only continues to expand, per a report shared with The Takeout by retail analytics firm Placer.ai. From the fourth quarter of 2019 to the end of 2022, overall visits increased by 30.8%, and for the fourth quarter of 2022 visits were also up 7.3% year-over-year. ALDI has almost 2,300 locations in the U.S., with a majority in the Midwest and on the East Coast, but it also expanded to California in 2016 and currently has 95 locations throughout the state.

ALDI's success is evident, and so is consumer sentiment. Although the nation's largest grocery chains might assume the convenience and novelty of tech-based solutions is what the average consumer wants, a recent study from consumer research platform Attest indicates the path forward might be far simpler than that.

Survey responses from "2,000 nationally representative working-age consumers based in the United States" showed that customers are most motivated by lower prices when choosing where to do their grocery shopping. Furthermore, respondents ranked "in-store technology" as the least likely factor to motivate them to shop at a specific store. 

All this isn't to say advances in shopping technology are useless or that they should be abandoned. But maybe it would be best to place them on the back burner until the pressure on our wallets subsides.