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How brands can reach the new modern grocery consumer

The takeover of omnichannel grocery marketing isn’t surprising. What may be surprising is the diversity of today’s omnichannel platform. This article survey investigated constantly evolving omnichannel solutions, revealing four major consumer shifts.

This article presents how the composition of the e-commerce shopper has evolved during the pandemic. From what-to-what may defy expectations, indicating why grocery marketers have reformulated their plans to account for greater generational diversity. A recent survey revealed four major shifts in the grocery landscape. This article presents collective insights gathered from more than 250 top grocery retailers, key findings from the survey and how leading grocers are keeping up with evolving consumer behaviors, as well as:

  • How advertising agility gains prominence as emerging formats take center stage as investment priorities
  • How shopping ease and convenience have evolved by demographic into a broad mix of virtual and in-store experiences
  • How top grocery retailers have reshaped their 2022 marketing strategy to better reflect unexpected 2021 advertising trends

Content Summary

Grocery Shift #1: Consumers are more willing to experiment, and in some cases are less price-sensitive than before.
Grocery Shift #2: The demographics of online shopping have changed, with all generations seeking the ease and convenience it brings.
Grocery Shift #3: At-home dining is here to stay.
Expert Advice From Amazon Ads
Conclusion

Grocers are heading into a new year that promises new challenges and opportunities. While many innovated on the fly to meet shifts and surges in demand in 2020, throughout 2021 they came to terms with foundational shifts in consumer behavior. Many of these changes are likely here to stay — and are expected to become permanent going forward.

2020 saw sweeping change in consumers’ grocery shopping habits. The Food Industry Association’s 2021 U.S. Grocery Shopper Trends Report revealed an increase in online shopping among all demographics. Fifty-two percent of shoppers surveyed in 2020 said they’d bought groceries online, but that percentage grew to 64% in 2021. There was also a significant spike in demand for buy online, pick up in store (BOPIS) and delivery services.

Although many people returned to stores after the first few months of 2020, their shopping and media consumption habits had been transformed. More shoppers shop online and in-store than ever before. In a Retail Feedback Group survey, 50% of in-store shoppers had also made a purchase online within the last 30 days. Today’s shoppers continue to conduct pre-purchase research online while blending digital and physical experiences in new ways. They’re doing things such as comparing prices and product options on their mobile devices while inside brick-and-mortar grocery stores.

“In today’s world, all the old models from prior to 2020 don’t apply anymore,” said Steve Truxal, Director, Physical Stores, Amazon Ads. “Grocery advertisers need to meet shoppers wherever they like to shop — and, ideally, as close to the purchasing decision as possible. Figuring how to reach this audience is the first big challenge. The second is measuring how well advertising is working across these complex purchasing journeys.”

To help grocery marketers and advertisers navigate this complicated new territory, Amazon Ads and studioID recently surveyed 250 grocery executives to hear their insights on staying competitive in an omnichannel world. From the results, studioID has identified three key shifts in the grocery marketplace that marketers must address. We outline them below and also discuss key ways an advertising partner like Amazon Ads can help grocery brands effectively engage their customers across omnichannel shopping journeys.

Grocery Shift #1: Consumers are more willing to experiment, and in some cases are less price-sensitive than before.

Consumers’ work schedules and commuting patterns changed in 2020, leaving shoppers with more time to shop during the week. They also had more time to consider novel product categories. Data from NCSolutions found that nearly half of U.S. households explored new brands when shopping for food or household items during the pandemic. And shoppers became willing to spend more on high-quality ingredients and sustainable packaging.

The Amazon Ads/studioID survey found that adjusting to changing consumer behaviors has been the most significant business challenge grocery brands have faced in the past year. According to Acosta research, 45% of consumers increased their use of online grocery ordering and subscription services during the pandemic. With today’s consumers more digitally engaged and more willing to experiment, it’s imperative for grocery advertisers to expand their reach.

81% of respondents to the Amazon Ads / studioID survey listed reaching new audiences as among their business’s primary advertising objectives.

The message for marketers: Marketers already understands that reaching new audiences is of the utmost importance today. Eighty-one percent of respondents to the Amazon Ads /studioID survey listed this as among their business’s primary advertising objectives. How to achieve this isn’t always clear, though. Respondents stated that their three biggest advertising challenges include understanding new and emerging ad channels, measurement, and optimizing advertising efficiency. In the survey, 42% of executives chose “new emerging formats” as their main investment priority, which means that a majority may still be missing out on the digital shift to emerging formats such as streaming TV ads.

“New audiences can come from the places you’d least expect,” explains Scott Bush, Head of US Grocery Sales Account Management, Amazon Ads. “For instance, a new healthy food brand may resonate with customers shopping for running shoes or cookbooks. Grocery marketers should consider this when thinking about whom to reach with their advertising campaigns. If you’re only reaching shoppers who are already buying products that are similar to yours, you may be missing an opportunity to drive new audiences.”

“Brands need to truly pay attention to find out where their customers are discovering new products, browsing and making purchases,” added Srishti Gupta, Director, Media Measurement at Amazon Ads. “One-third of grocery shoppers no longer pay for cable TV, according to an October 2020 Kantar study. To stay top of mind and continue growing, brands need to go where their customers are and lean in to new formats, such as audio and streaming TV advertising. They need to find the media mix that will help encourage customer loyalty.”

Amazon Ads offers omnichannel solutions that help brands connect with customers before, during and after their shopping trips. Amazon Ads can also help optimize growth and efficiency across channels with marketing and media strategies as well as tools that facilitate omnichannel measurement to provide a comprehensive view of campaign success. Because prioritizing a narrow category like “new emerging formats” or “social media advertising” can potentially create a siloed view of ad effectiveness, Amazon Ads encourages brands to use expanded media mix modeling (MMM) and third-party research to better understand how each advertising channel or publisher contributes to the brand’s success. Amazon Ads also offers streaming TV advertising options to meet today’s consumers where they’re spending increasing amounts of time.

Grocery Shift #2: The demographics of online shopping have changed, with all generations seeking the ease and convenience it brings.

Gone are the days when online shopping was popular only among Tech savvy shoppers. Consumer segments that never purchased online before the pandemic are now doing so regularly, and many will continue for the foreseeable future. In the past, young families and working professionals shopped for groceries online more often than other demographic groups, but in 2020, empty nesters (people aged 55 to 75) became the second largest demographic among online shoppers. Consumers of all ages will likely continue to invest in online shopping and opt in for grocery delivery and BOPIS, which bring benefits of time savings and convenience.

At the same time, younger adult buyers continue to turn to online channels as a place where they can explore, learning more about unique foods, new products, and the latest culinary trends and recipes. The demographic profile of the average online shopper in 2019 was younger, urban, with kids and higher incomes, according to the Food Industry Association, and this group has only increased its frequency of online shopping since then.

Grocery brands are responding to this trend by — for instance — making it easy for shoppers to gather the ingredients in recipes that have gone viral on social media by displaying them together in physical stores or creating curated product assortments like the Whole Foods Trends Discovery Box.

The message for marketers: While an omnichannel approach might have been a nice-to-have in 2019, today it’s essential. By combining search and display ads with physical store and streaming TV advertising, brands can better reach these newly expanded demographics. According to the Amazon Ads/studioID survey, nearly two-thirds of the grocery executives surveyed (64%) said that social media advertising would be their main investment priority for the next 18 months, which means they may be missing other opportunities to reach multigenerational audiences. Instead, brands need to utilize advertising strategies that will move the needle across all retail channels, both online and off.

the rise of digital technology and the growth of online shopping have opened up opportunities for brands to be smarter with insights. Grocery brands can leverage important shopping signals to shape the shopping experience. In-store technologies, particularly mobile apps, will allow brands to reach their audience through tailored experiences, helping shoppers discover relevant deals and products or offering in-store sampling while they shop. – MICHAEL HUFFAKER, Vice President at Amazon Fresh

Grocery marketers should focus on detailed and in-depth market-segment research. Optimizing marketing and advertising strategies to reach new demographics requires an understanding of each group’s preferred channels — something that’s evolving very rapidly in today’s world.

“It’s important to take time to understand how the customer journey has changed for your brand,” Bush said. “Learn more about where you can find new customers and invest in those channels. Continuing to rely on marketing techniques that worked even just a few years ago may no longer be the right strategy. For instance, Amazon Ads has a ‘new to brand’ metric that helps marketers understand which ad tactics are most successful at driving new customers. If you focus on return on ad spend (ROAS) alone, you may not be maximizing your reach. Instead, Amazon Ads has developed measurement solutions that help brands maximize their campaigns midflight so they can reach their goals efficiently.”

64% of respondents said that social media advertising will be their main investment priority for the next 18 months, which means they may be missing other opportunities to reach multi-generational audiences.

Grocery Shift #3: At-home dining is here to stay.

Remember the early days of 2020, when there was a surge of interest in sourdough starter kits and kombucha brewing? Today’s consumers have settled into dining in and made meal preparation part of their everyday routines. The FIA report found that 58% of grocery shoppers say they’re eating at home more often than before the pandemic, and 49% are preparing their own meals more often. Thirty-five percent of the respondents to an Acosta survey reported that they’d recently discovered a newfound passion for cooking. And sales of baking-related products soared 24% in 2020 to reach a record high of $26.5 billion.

As health and wellness continue to be top of mind for customers, these trends are likely to continue.

At the same time, though, ready-to-heat and ready-to-eat meal offerings are growing in popularity as consumers experience cooking fatigue or struggle to find time for meal preparation on especially busy days. According to Fine Foods Guild purchase intelligence platform Cardlytics, spending on meal kits and grocery boxes increased as much as 114% from 2019 to 2020 in certain markets segments.

74% of grocery shoppers now plan their trip in advance, and 63% are engaging online as part of this planning process.

The message for marketers: Greater consumer interest in cooking and baking has created new opportunities for grocery brands to reach digitally engaged audiences in contextual fashion. Providing high-quality foodrelated content and meal solutions can attract their interest while they’re browsing online.

Leveraging digital advertising to reach these shoppers is a matter of great importance for today’s grocery executives. Nearly half of the respondents (49%) in the Amazon Ads/studioID survey said that investing in search and display ads was a top priority for their brand. Furthermore, consumers are increasingly going online to do research before making grocery purchases. Seventy-four percent of grocery shoppers now plan their trip in advance, and 63% are engaging online as part of this planning.*

As Steve Truxal explained, “The pandemic has created a new era in home cooking. Shoppers today search for information on new foods or cooking techniques more often than ever before, and they leverage technology to do so. Grocery advertisers need to find new ways to get their message in front of these shoppers through online channels as well as in the physical store. The last two years’ trends have resulted in a wave of new home cooks who are open to doing research to find great foods or simple new recipes. Online streaming services such as Twitch offer new and exciting ways to reach this new generation of home cooks.”

Rather than relying on traditional sources of inspiration, such as cookbooks or family recipes, consumers have turned to social media to learn about new cuisines, recipes and ingredients. Grocery brands must develop advertising strategies that allow them to make the most of this change.

Advertisers should increase their organic and paid presence on prominent social media channels and leverage industry experts, including chefs, recipe writers and tastemakers (including food and lifestyle influencers) to create branded content and provide endorsements of their grocery brand. These tactics will help drive top-of-mind awareness and encourage consumers to consider their grocery brand when they’re ready to shop for specific ingredients and make a purchase. – MICHAEL HUFFAKER, Vice President at Amazon Fresh

Amazon Ads omnichannel solutions help grocery brands connect with home cooks before, during and after their shopping trips.

Expert Advice From Amazon Ads

We polled a handful of leading executives in grocery and advertising at Amazon for their top tips for today’s grocery advertisers and marketers. Here’s what they had to say:

Highlight key products and offers. Lean in to digital ads and circulars that highlight selection and product discounts that inspire customers to visit online and physical stores.

Introduce new features to make shopping easier. Develop features to make grocery planning easier, such as digital grocery shopping lists and meal-planning tools.

Offer tailored shopping experiences. Today’s consumers expect a seamless experience between online grocery delivery and physical store shopping. Amazon has developed technology that leverages machine learning and audience shopping signals to tailor our customers’ shopping experiences both online and in-store. Forecasting models help Amazon Fresh find the suppliers that have the most relevant selection and optimal delivery times to give customers access to the best quality products at the lowest prices. Predictive modeling also enables Amazon Fresh to recommend the most apt substitute to a customer whose favorite brand is out of stock. Plus, we’ve also included Alexa kiosks in our physical grocery stores to help customers find items easily while they’re shopping.

Be stubborn on the vision but flexible on the details. Understand the value of your product, but be open to evolving the ways you reach and speak to your customers. Make the most of their feedback. Don’t be afraid to steer away from legacy approaches that may no longer be working. Instead, put your customers first and work backward from there.

Focus on how ad experiences can add value to customers’ lives. As shoppers’ attention is increasingly fragmented across multiple channels, their time and attention are at a premium. The onus is on brands to make a true connection with relevant audiences in authentic ways.

Develop a measurement strategy that’s both targeted and comprehensive. This means focusing on KPIs that are closely tied to campaign objectives so that it’s possible to make optimization decisions on the basis of those KPIs. It also means taking advantage of measurement solutions that break channel silos and showcase cross-channel impact. At Amazon Ads, we are beta testing a solution called Omnichannel Metrics, which brings together ad-attributed conversions at Amazon stores as well as sales off-Amazon channels. This omnichannel view can bolster in-campaign optimization of budget allocation.

Conclusion

There’s little doubt that the events of 2020 drove significant change in the grocery industry, and more recent surveys show that many of these shifts persist today. We cannot be certain of what the future will bring, but it’s clear that the most successful brands are those that can stay agile enough to meet consumers where they are, anticipate their evolving preferences and accommodate changing lifestyles. Brands will also need to find new ways of reaching audiences and staying top of mind.

Amazon Ads offers a full suite of brand-building and performance marketing solutions that can help grocery brands make this transformation. Amazon Ads designs omnichannel experiences that drive long-term engagement across channels and motivate consumers to take the next step in the shopping journey. With extensive expertise in omnichannel marketing and media strategy as well as comprehensive measurement solutions, Amazon Ads helps brands connect with relevant audiences, increase the discoverability of their products and figure out how to make smart, future-focused investments.

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