Omnichannel Takes on Food Industry, Gains Consumer Support

There is a shift in how consumers approach grocery shopping, using more channels. Annual supermarket and grocery store sales in the U.S. are over $765 billion, but there is a new, trendy way to purchase groceries- online.  

The number of online grocery shoppers nationally is expected to grow from 72 million to 163 million between 2018 and 2024. It is becoming a strong preference, especially amongst the younger population, to turn to apps such as Instacart or Fresh Direct when in need of groceries. However, in-person shopping is still the most popular way to purchase perishable goods. Because of contrasting shopping preferences, companies are investing in an omnichannel strategy to please all customers.  

What is an Omnichannel?

An omnichannel approach to running a business means promoting and distributing products through various methods such as brick-and-mortar stores, apps, websites, and more. The goal of omnichannel retailing is to meet every customer’s needs. As a business owner, you do not want to lose customers simply because they prefer a different way of shopping.  

Before the COVID-19 pandemic, the food industry had invested less than other sectors in understanding consumers through eCommerce interactions. Consumers do not necessarily cling to any one channel for buying; we know that they want to buy the product they want, when they want it, from whatever channel is most convenient. Today’s consumers demand local, fresh, organic, and sustainable products when grocery shopping and expect food companies to follow these demands.  

As soon as the pandemic swept the globe, people began to rethink how they completed even the most mundane tasks, such as grocery shopping. Large crowds, unsanitary carts, and interacting with cashiers suddenly became risky tasks. So, to stay healthy, people turned to eCommerce grocery options.  

Consumer demands for fresh food combined with “pandemic culture” mean grocers can no longer dismiss the omnichannel landscape.  

How to build a successful omnichannel  

Building a successful omnichannel is not the same as making a successful multichannel. While both strategies distribute products to customers through different methods, only omnichannel allows customers to seamlessly jump from channel to channel. Of course, this means more work on the business side, but your customers will thank you later.  

Food Logistics cites seven elements for a successful omnichannel retail supply chain:  

1. Real-time visibility into inventory to reduce safety stock and inventory carrying costs  

2. Active control over access and allocation of inventory in real-time  

3. Processing and shipping of individual orders at the lowest cost, either direct-to-consumer or direct-to-store or for click and collect  

4. Using material handling equipment and fully automated distribution processes will increase productivity and fulfillment rates.

5. Flexible fulfillment paths to meet demand, regardless of which channel it comes from  

6. Maximized efficiency in every part of the supply chain to meet customer expectations  

7. Minimum cost to serve  

Industry Leader: Amazon

Amazon is notorious for reinventing itself and finding new ways to create value for its consumers. Since the 90s, Amazon has constantly grown and tapped into new markets to expand its empire. One of Amazon’s most recent successful ventures is its omnichannel presence in the grocery industry. ‘  

In 2017, Amazon acquired the high-end grocery store Whole Foods, but their penetration into the market has not stopped there.  

Amazon Fresh  

Amazon Fresh is a hybrid grocery store that allows people to conveniently shop for groceries through several channels depending on their preference. First, you choose to order groceries on your computer, phone, tablet, or Amazon Alexa. You can also choose between delivery and pickup options; delivery is free to Amazon Prime members. Delivery and pickup options are available in 2,000 US cities.

If you prefer an in-person grocery shopping experience, Amazon Fresh has that option. With 23 locations and growing, Amazon Fresh stores change the shopping experience. Customers can scan and bag their groceries as they walk the aisles and pay virtually. However, if you prefer to shop the traditional way, you can opt to pay with a cashier.  

Amazon’s online grocery sales are expected to nearly double between 2021 and 2026, from $14.5 billion to $26.7 billion. Brick-and-mortar stores such as Kroger are only expecting 2 percent growth in that same period. Slow growth for brick-and-mortar stores can be attributed to the business’s inability to meet the customer’s growing needs for individual shopping experiences. At this rate, all grocery stores must invest in omnichannel solutions to stay competitive.  

Logistics and Omnichannel

The direct-to-consumer fulfillment method is creating a need for specifically built distribution centers. Direct-to-consumer forces more outbound, direct fulfilment responsibilities but lower prices for your customers. This trend, combined with the expansion of eCommerce in the food industry, has increased the volume of orders, which means utilizing more carriers to fulfill orders for shippers.  

If you want to apply an omnichannel strategy to your business but are already overwhelmed by logistical work, consider outsourcing with a third-party logistics (3PL) company.

A 3PL can handle inbound/outbound operations, route modeling, dock scheduling, invoicing, and mode selection. Partnering with a reliable 3PL lightens your workload and gives you access to a transportation management system to make booking and tracking loads easy.

PLS Logistics is an industry-leading 3PL dedicated to excellence. Since 1991, PLS has helped small to medium-sized businesses move freight across the country at great rates. Get a quote with PLS today to save up to 10 percent on your transportation costs!