Grocery Stores Can Win Millennials With Mobile Convenience

Supermarkets can entice younger shoppers by thinking like they do.

As more restaurants adopt mobile payments and online reservations, last month’s Commerce Dept. report finds that for the first time, Americans are spending more on going out to eat and drink than they do on grocery shopping.

While the difference between spending on restaurants and grocers is slight — $50.4 billion in March versus $50 billion, respectively — retail industry observers suggest that supermarkets need to update their marketing strategies, particularly with respect to firmly establishing their mobile and digital presence, when it comes to attracting younger consumers. 

The spending shift reflects consumers’ rising interest in convenience, particularly, as FTN Financial chief economist Chris Low noted on CNBC’s Closing Bell, among millennials, who “tend to be frugal but also tend to live in cities and like to eat out…[and] customize their food.”

Low painted a rather depressing portrait of supermarkets, suggesting they were popular among baby boomers because this group has generally “under-saved for retirement,” and thus is forced to eat at home more.

Toss Out The Newspaper

To an extent, restaurants will always be more attractive destinations than supermarkets; it’s part of their purpose, but certainly grocery stores can take steps to up their appeal to millennial consumers. They can do so in part, by running marketing campaigns that make the best use of mobile. This means moving dollars from traditional to digital media, and putting ads where millennials are actually looking: their smartphones.

“If grocers want to reach a younger audience they definitely are not reaching them via FSI [aka “Free Standing Inserts” or drop cards], newspaper insert, or direct mail,” says Adam Meshekow, EVP, Product Strategy & National Sales, SITO Mobile. “Most Millennials don’t even have cable let alone read the newspaper.”

But they do have smartphones. Many have tablets. And soon, quite a few will have wearables. One would think that most every grocery store with a marketing budget would be jumping on the opportunity of mobile, particularly given the opportunities it presents to target local shoppers, but as GeoMarketing has explored in the recent past, the grocery industry is notably lagging behind other retail verticals when it comes to online-to-offline technologies.

But a supermarket doesn’t need beacon technology to be engaging on a smartphone.

“We work heavy within the category and we see [grocery stores] succeeding in both SMS for mobile CRM, and mobile circular/mobile deals,” says Meshekow.

The Millennial Mindset

Grocers need to understand that millennials have shopping behavior that is unique to their generation.

DevelopmentNow's Kathryn Brown
DevelopmentNow’s Kathryn Brown

“[Millennials] don’t rely on grocery lists and coupons,” says Kathryn Brown, chief evangelist at digital products solutions agency DevelopmentNow. “They want to know what they should buy and when they should buy it, and they want their mobile devices to do the thinking for them. This is the generation that grew up with ecommerce recommendation engines: if you like this, then you’ll like that. They want the shopping experience to be tailored to their tastes.”

And they want the process to be seamless and simple. Gabe Winslow, partner at conversion optimization agency Sq1 suggests that grocery retailers invest in the “game of content,” and, provide shoppers with easy recipes, suggestions, and most importantly, the option of delivery.

“The option of delivery allows for customization,” says Winslow, adding that delivery also appeals to millennials located in cities as they are increasingly “foregoing cars” and relying on public transport.

Millennials are also becoming more and more “Uberized,” in that they’re looking for on demand services they can access via their smartphones. It is in the best interest of supermarkets looking to engage with millennials to partner with one of these startups. The retailer may not make as much of a profit, but it will make itself relevant.