Major grocery retailers serving dense urban areas such as New York, London and Paris are under increasing pressure to get product to consumers in the shortest possible time, as little as 15 minutes, and often for free.
But there are downsides to the trend. In a recent article in The New York Times, critics said online grocers will siphon business away from local bodegas and supermarkets, and send more delivery workers onto crowded city streets already filled with food app workers racing to deliver hot meals. For their part, small and medium-sized businesses are struggling to compete with the “fast-and-free” model of retail behemoths such as Amazon.com and Best Buy.
Hang on a minute, says Melissa Minkow, director of retail strategy at CI&T, an information technology and software provider to retailers. Maximum speed isn’t necessarily what shoppers want, she says, and the cost to smaller retailers of making unnecessarily fast deliveries could be high.
In its latest Connected Retail Report, CI&T highlights some surprising findings about consumer habits and preferences. The report was in part based on a survey of 415 U.S. consumers of all generations, races and genders. The majority of respondents said they expected deliveries within three to four days of an order, with two-day delivery coming in second. Only 9% expected same-day delivery, signaling a lack of urgency around the need for the “buzzy” 15-minute delivery that some retailers are currently marketing.
Minkow cites her own experience of being in the midst of moving homes, and finding it difficult to ensure that items she ordered for the new place would arrive when she actually moved in.
“When Amazon two-day shipping became a thing, I conducted research and found that consumers don’t necessarily care [how quickly] something is going to be delivered,” she says. “They’d rather know accurately when it’s going to arrive.” The rush for expedited shipping puts enormous strain on small businesses because they lack the scalability and resources to make it happen, especially given the current labor shortages in the delivery business.
“It just puts a lot of unnecessary restrictions on an industry that’s already struggling for so many reasons,” Minkow says. “We like Amazon two-day delivery because Amazon has taught us to like it. But the truth is, there are very few things you actually need in 15 minutes.”
What’s the optimal mix of speed and service? “Asking consumers what they want would be a novel idea,” says Minkow. She suggests that retailers could proactively ask a customer when they’re placing an order: When do you actually need this to arrive? Such a strategy would help keep supply chain costs down, and allow the retailer to focus on those deliveries that truly need to be rushed. “There are so many solutions for retailers that come down to the retailer just asking the consumer what they want,” she says.
Retailers today are in a much better position to do just that. Minkow says shoppers are getting closer to retailers by accessing dedicated apps on their mobile phones, rather than going through third-party browser sites.
To determine consumers’ preference for online channels, CI&T’s survey listed four options: apps, social media pages, websites and mobile sites. An unexpected 41% of respondents favored the retailer’s own app, followed by 35% opting for the retailer’s mobile site.
Consumers’ initial resistance to the use of retailer apps and mobile sites has given way to broad acceptance. That’s due in part to improved data storage capacity on phones, along with a general shift in the culture toward the technology.
“Consumers didn’t realize before how much they repeated their habits with the same retailer over and over again,” Minkow says. “We’re now admitting that we’re going to Target two or three times a week.” She says retailers like Starbucks led the way with app adoption, because buying coffee is something people do daily, so it makes sense to use an app that remembers your order and automatically logs points and presents personalized offers.
“The success of the Starbucks app opened people’s eyes to the advantages of an app if you’re going somewhere multiple times a week,” Minkow says.
Target, which came out on top in CI&T’s ranking of the shopping experience provided by leading physical retailers with omnichannel capability, incentivizes customers to use the Target app by making in-store shopping easier as well. The app includes coupons and a search engine that quickly directs shoppers to the desired item. Home Depot offers similar in-store functionality.
The apps also have the ability to filter by actual consumer demand when determining speed of delivery, Minkow says. For example, the shopper can choose same-day delivery for groceries during the search phase, but opt for slower service for additional items such as household goods. “They’re facilitating the search via the fulfillment method,” she says. “That’s smart.”
Timely, incisive articles delivered directly to your inbox.