How will competing grocery chains utilize delivery options to maximize profitability?
In 2019, the simple act of going to the grocery store has evolved from the experience that it was just a few years ago. In this digital age, we see companies starting to incorporate more technology into how the stores are run, while creating a unique experience for the customer.
The point of experiential retail concepts, naturally, is to try and draw in more and more customers in an attempt to maximize the profitability of each store, and as a result, the company as a whole. As profits climb for a company, this can increase the stability of individual stores in their current location adding to their bottom line while improving their credit rating.
With companies doing everything they can to make shopping more convenient for the consumer, it takes constant evolving of ideas to retain and bring in new customers. Some perks we have seen recently are the discounts Amazon is offering to Prime members after they acquired Whole Foods, but it has not stopped there. Now Prime customers can use that subscription to get their groceries delivered to their door step for a minimal price. This sells convenience to the customer as they do not have to go the store, and can use their time accordingly for other errands or activities of their choosing.
As expected, we now see competitors, like Walmart, exploring similar options in order to keep up with amenities offered elsewhere. In the future look for additional stores to explore this avenue, and use applications on mobile devices or websites as part of the shopping experience. Consumers are choosing to spend their time and money based on convenience and making their retailer choices based on experience.
Being a retail merchant, grocery stores want to maximize profits so they can have stability at a given location and retain their store. As profits increase, creating a more positive ratio against debt, this also helps drive up financial credit ratings handed out by credit agencies. Companies know in this mobile world everyone uses apps and values their time, so by making the shopping experience as easy as possible, companies hope to create and retain new clientele to increase their sales figures.
The bottom line is consumers have a plethora of choices when it comes to where they spend their money. Retailers need to embrace technology and create an experience to drive sales. These factors will create a repeat customer base that will work to the grocer’s advantage, making them a more attractive investment—long term stability is key in the net lease marketplace.
The views expressed here are the author’s own and not that of ALM’s Real Estate Media Group.