As the demands and expectations of grocery consumers shift online, leading brands will be those who make basic investments like enriching product pages and encouraging customers to build larger baskets while also focusing on more nuanced strategies such as leveraging CRM and customer browsing data to personalise loyalty rewards, according to the 'Digital IQ Index: Grocery US 2018' report from L2. This article is copyright 2018 The Best Customer Guide.

The report benchmarked the digital performance of 60 grocery retailers operating in the US, providing best practices and key digital strategies for brands to accelerate their entry into e-commerce and enhance fulfillment capabilities. The index examines a brand's strengths and weaknesses across the four digital dimensions (of Site & E-commerce, Digital Marketing, Social, and Mobile), then classifies brands as either Genius, Gifted, Average, Challenged, or Feeble.

Key findings from L2's report include:

  • From Physical to Digital: Grocers have spent decades perfecting in-store merchandising. However, few translate these efforts to digital as only 55% of Index grocers offer nutrition facts on product pages, 50% cross-sell on product pages, and just 27% display sponsored products on grid pages, the digital equivalent of physical end-cap displays.
  • Promoting Private Label: Leading grocers often boost private label brands and bury competitors to drive gross margin. Target's private labels accounted for 11% of listings surfaced by 1,975 food-related queries on Target.com while Walmart's private labels accounted for 5% of analyzed results on Walmart.com.
  • Instacart Fulfillment: Grocers see Instacart as an ally against Amazon, and Instacart now works with 58% of Index grocers with brick-and-mortar locations. Fifty-five percent of Index grocers that partner with the delivery service host the experience under a separate, branded subdomain (e.g. delivery.albertsons.com). However, grocers should consider whether they are putting the loyalty of their customers at risk in exchange for offering e-commerce more quickly.

The report features case studies on brands including Amazon, Boxed, Instacart, Kroger, ShopRite, Target, Trader Joe's, Walmart, and Whole Foods.

"Digital grocery in the US has long trailed developments in Europe and Asia," explained Tom Gehani, Director for Client Strategy at L2 Inc. "However, Amazon has been quick to reset consumer expectations with a high bar for online product discoverability and fulfillment in the US, forcing Grocers to quickly advance their digital sophistication or risk defeat."