Omnichannel Innovation Trends in the Grocery and Drugstore Space

The emergence of digital technologies, social media, and mobile devices has led to significant changes in the retail environment and provides opportunities for retailers to redesign their marketing strategies. Retailers, particularly those within the grocery/drugstore space, are looking to deliver intelligent, personalized, and connected customer experiences at every stage of the shopper journey – from awareness to purchase, service, brand advocacy, and beyond.

We believe the following key trends are empowering leaders in the grocery/drugstore space to fully embrace and capitalize on omnichannel innovations as a way to drive lifetime value of core customers:

1. Experiential In-Store Shopping: In hyper-competitive categories such as beauty, health, and grocery, retailers are launching specialized in-store and near-store experiences to attract young millennial shoppers. Such in-store shopping opportunities cleverly merchandise products in a way that entices consumers to experience the brands in the physical world, and thus re-frame physical stores as novel destinations designed to keep consumers engaged longer. The following use cases exemplify experiential in-store shopping:

• CVS launches “Beauty IRL” in-stores, featuring trendy brands and immersive experiences, including indie brands and on-demand salon services via a new partnership with Glamsquad. The concept stores reimagine beauty to encourage shopper discovery of new brands and trends, playing host to pop-up shops and fresh “breakthrough” experiences, like a Test-And-Play hygiene bar. CVS enables their customers to discover and engage with popular, social beauty brands and trends—making them more accessible and tangible. In return, CVS customers are offered access to professional makeup artists for beauty and product recommendations.
• Walmart is launching a “Town Center” concept, with the goal of leveraging underutilized real estate around its supercenters to promote relevant and entertaining activities, commerce and services, thus keeping shoppers nearby for longer. Such a collaborative approach stands to draw additional shoppers and generate more revenue from existing real estate. Perhaps more importantly, though, these plans underscore how Walmart is intending to leverage its strongest assets via experiential omnichannel strategies involving its physical locations, in-store shopping and e-commerce in courting younger millennials.
• Elevating the in-store experience with engaging and ancillary services drives consumer engagement with retail brands and deepens customer loyalty. Innovative technology, such as LISNR’s ultrasonic data transmission, uses inaudible tones to offer store-based promotional offers to consumers, further bridging the digital in-store divide.

2. Proximity-Marketing Based Programs: Given the vast amounts of data that retailers can capture on their customers via mobile apps, e-commerce, and in-store technology, many grocery and drugstores have an opportunity to target their marketing efforts to customers in a highly personalized manner. Location-based mobile marketing programs compel customers to visit their stores and buy, especially when they receive contextual offers at the right time and location. Using digital-enabled proximity tools such as LISNR’s ultrasonic-based solution, retailers can better understand local customers’ needs and offer targeted promotions that close the gap between digital and physical channels.

The proximity-enabled tools powering retailer data analytics and reporting can also help store managers track and accommodate traffic flows, optimize product placement, encourage consumers to try new products, and offer a seamless store experience that traverses the online/offline boundary. Such an approach offers multiple benefits including not only immediate conversion improvement and increase transaction size, but ultimately promoting higher lifetime customer value.

According to research by Blis, WBR Insights, and Future Stores, proximity marketing-based programs are increasingly gaining traction among retailers. Most retailers provide location-based resources for customers, including local product or inventory search (60%), interactive maps (65%), localized social media accounts (60%), and localized online customer service (51%). More than 70% of retail marketers already have some sort of location-based advertising strategy in place to drive foot traffic.

An example of an increasingly popular proximity-based technology is LISNR’s inaudible tone, which can be heard using retailer-specific apps for promotions and product information. When a user enters a store while the retailer-specific app is powered on, the consumer can receive targeted promotions and product information in real time. The offers can be sent directly over audio tones as consumers walk through the store. Unique to LISNR is Precision KAB, offering the ability to micro-target offers down to a consumer’s hyper-specific location. In a retail store, this could be the specific aisle the user is visiting. For example, consumers in the cereal aisle will not receive pet related promotions and vice versa. Offers are sent inaudibly, making for a seamless and highly relevant targeted marketing opportunity.

3. Implementing Branded Payment Options: Looking to own the payment experience and “close the loop,” retailers are launching branded and app-based payment experiences. This new direction among retailers is another way for them to own the payment experience and the customer data that comes along with it. Rather than routing the customer payment experience via third-party card networks or payment terminals, retailers are taking the control back. Here are some recent examples of retailers looking to own the payment moment:

• CVS launched CVS Pay as part of their newly branded CVS app. This is part of CVS’ plan to drive app usage as a one-stop-shop solution for consumers – to deliver a frictionless customer journey. According to Retail Dive, “CVS is giving its customers access to payments, prescription pickup and the brand’s reward system, ExtraCare loyalty, all in one place.”
• Additional retailers such as internet giant Alibaba and grocer Kroger have implemented in-store mobile scanning and payment systems into their physical stores. Alibaba unveiled facial recognition-based payments and is currently piloting pay-by-face technology in select KFC locations and at Marriott hotels. According to CB Insights, we will continue to see retailers explore ways to implement mobile and smartphone technology into the fabric of their stores to increase convenience for customers.

All of these trends point to a growing focus by grocers and drugstore retailers to offer an increasingly seamless shopping and payment experience for customers. LISNR offers a solution to drive frictionless payments by using inaudible tones to authenticate shoppers and safely process payments. Contact us to learn more!