How a 100 year-old grocery store is winning the modern retail game
The modern supermarket came about in the 1930s based on the premise that one store would have most of what we all need to buy. The rise of the internet and mobile, though, has ushered in the opposite: a focus on personalization. So, at first blush, Wegmans would seem to be on the wrong side of history.
Actually, Wegmans is thriving in the digital age as the 100-year-old chain has embraced data-focused marketing and changes in consumer expectations wrought by the rise of mobile and ubiquitous Internet access. Keeping a close eye on evolving consumer preferences, the chain has adapted to what’s known in the industry as omnichannel — the ability to fulfill demand via in-store, online and mobile and providing seamless linkage between all three. In addition, Wegmans has realized that for many, shopping is a form of entertainment, and the retailer has worked at creating memorable customer experiences.
Thanks to these efforts, Wegmans recently topped the list of grocery stores with the highest level of consumer satisfaction. On Satmetrix, Nain & Co.’s closely watched Net Promoter score, which is based on an email survey of 23,000 shoppers, Wegmans scored 61%, which means 73% of respondents said they would recommend the brand to a friend versus 12% who wouldn’t.
Years ago, the only way supermarkets could discern consumer preferences was by looking at receipts, or perhaps, running focus groups. But thanks to its Shoppers Club loyalty card program started in 1990, Wegmans has been sitting on a mountain of data about its customers’ buying habits. The data, which is kept in-house and not shared with outside firms, has allowed the chain to offer a more efficient supply chain. Looking at the data, Wegmans tells farmers which crops are likely to be the most lucrative and helps them fulfill demand. When there’s a recall, as there was in 2014 with 12-ounce sizes of MaraNatha Almond Butter, Wegmans is able to directly address customers who buy that product.
The rise of omnichannel
There was a time, not long ago, when many expected brick-and-mortar retailing to largely disappear as online retailers like Amazon continued to expand their offerings. That hasn’t quite happened, as consumers have moved from “showrooming” — patronizing brick-and-mortar stores to scope out the inventory and then using their phones to find better prices online — to “webrooming.” In the latter case, the consumer researches items before he shops. Rather than waiting a day or two and having to pay shipping fees, the consumer then goes to the store to pick up the item. In a 2015 survey by Deloitte, 69% of consumers said that being able to pick up items in store or have them delivered was important to them.
Sensing this change in the market, Wegmans began offering curbside pickup in 2014. The service, which includes a flat fee of $5.95 is designed for busy shoppers who would like to save time they would otherwise spend in the store. Such shoppers buy their items online and then pick them up at designated stations. The program has been rolled out to Wegmans locations in Pittsford, New York and Bridgewater, New Jersey.
Shopping as entertainment
Of course, some people like to shop. For those consumers, Wegmans has worked hard at creating a pleasant shopping experience. A 2013 BuzzFeed post celebrating the 25 Reasons Wegmans is the Greatest Supermarket the World Will Ever Know highlighted the store’s retail milieu, which the writer compared to a “small, beautifully maintained, self-sustaining city.” The post has received 1.3 million views at this writing.
As BuzzFeed notes, Wegmans stores are designed to emulate old city centers, in which bakers and cheesemongers lured shoppers with fresh items on display, including some 300 types of cheese. The stores are also expansive. A Northborough, Massachusetts, store, for instance, takes up 138,000 square feet, which is double the size of the average Shop & Stop.
A lesson for retailers
For struggling brick-and-mortar retailers, the takeaway is that despite the prevalence of digital technology, consumers still have a craving for high-touch experiences and the type of escapism that a retail environment can provide. If you look forward to going shopping, then the retailer has done its job. At the same time, brick-and-mortar stores have a new obligation to provide omnichannel solutions, as well. It’s possible, for instance, that a consumer utlizes both options. Perhaps he loves shopping in-store, but is having a very busy week and would gladly pay for the extra convenience from time to time.
As Wegmans’ experience illustrates, digital has prompted the best players to up their game. Those that attempt to provide the same solutions they always have without adapting to consumer demand will ultimately find themselves on the wrong side of these trends.
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