The U.S. grocery industry is worth $800 billion, and while Amazon/Whole Foods looms large in it, there is plenty of room for smaller grocers to thrive. The keys, the author explains, are flexibility, communication, and emotional connections with customers. Shoppers want options, especially around how and where their groceries can be delivered. They also value proactive communication from stores, including order updates and delivery status. And they want grocers to make them feel good, whether that comes from friendly employees, welcoming store layouts, or generous return policies. Companies that prioritize these three things will be positioned to succeed in the future.

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The fight for the $800 billion U.S. grocery industry has just begun. Amazon has shaken up the playing field, but traditional grocers have been slow to embrace technologies for online ordering, fulfillment, and delivery. Today online orders make up just 2% of grocery sales (in retail overall, the number is 10%). But e-commerce is quickly growing: Some analysts estimate that by 2025, 20% of grocery purchases will be made online.

And although Amazon/Whole Foods looms large, the e-commerce giant is far from the decided winner. In the past year Walmart, Kroger, Costco, and Target have driven down costs and introduced delivery capabilities in new regions, cutting into Amazon’s market share. Meanwhile, new business models are thriving. Six-year-old Instacart, for example, has secured a $7.6 billion valuation and a loyal following by building a platform for grocery delivery and partnering with more than 300 retailers.

Instacart’s success underscores what may be the most important point about the grocery industry’s current state: Most shoppers today are not loyal to a single store or chain. The nature of customer loyalty is changing as shoppers get more comfortable buying groceries online — prioritizing convenience, choice, and ease over physical proximity to a store. As consumers become more sophisticated, retailers need to inspire lasting loyalty across their customer base. To do it, they should offer flexibility, proactively communicate about order status and other details, and build emotional connections with shoppers.

Flexibility is a big factor in repeat purchases, because consumers want to shop on their terms. In a recent study by my company, Narvar, 80% of shoppers said they’re more likely to buy repeatedly from retailers that offer a range of convenient, flexible delivery options. Only 3% said such options have no impact on their likelihood to buy again. Shoppers want to choose when and how they get their groceries, whether it’s same-day delivery; in-store, curbside, or drive-through pickup; or delivery to a convenient location, like a school or an office building. Grocers should aim to be able to bring products to their customers no matter where they are.

Walmart offers the leading example of this strategy. The company uses its dense network of stores as fulfillment centers and trains thousands of personal shoppers to pick high-quality meat and produce. On Walmart.com or through the Walmart Grocery app, shoppers can reserve a time for free pickup at their local store and have their groceries brought to their car. In the past year Walmart has invested significantly in last-mile grocery delivery, partnering with companies including Postmates, DoorDash, and Uber to expand its same-day delivery service from six metro areas to more than 100.

These investments seem to be paying off. Last year the company grabbed market share from Amazon and outperformed analyst expectations. In a 2018 survey, more consumers said they shop exclusively at Walmart than at any other retailer but Amazon. And during the last quarter of 2018, Walmart’s digital sales rose 43%, which the company attributed to two things: strong growth in grocery delivery and pickup services and a broader product selection on its website.

Communication is another important, and often overlooked, part of keeping customers happy. As people have grown accustomed to constant text conversations and Slack messages, they’ve come to expect brands to always be available too. They want timely, accurate, and helpful information; some may prefer emails with recipes and promotions, while others may want pertinent updates through text messages or push notifications. Grocers should ask customers for permission to message them through different formats and give them control over how often and in what ways they receive information.

Proactive communication pays dividends in loyalty: Our study found that 81% of people are more likely to purchase again from a retailer that keeps them updated on the progress of an order. Shoppers want to be kept in the loop, so it’s particularly important that companies reach out if something goes wrong.

Grocers can learn from innovators that are building direct lines of communication with their customers. They might take inspiration from the direct-to-consumer e-commerce startup Iris Nova, whose Dirty Lemon brand sells wellness drinks with ingredients like charcoal and turmeric. Iris Nova is on track to reach $100 million in revenue by 2021, driven by its text-based ordering system. Once customers register their account with a phone number, they can order by simply sending a text message. Since the company was founded in 2015, 90% of its orders have been processed through text. Once a customer orders, Dirty Lemon texts back to confirm the shipment and then sends delivery updates the same way, using the occasional emoji to create a casual rapport that works for its brand and younger-skewing audience.

Another example is Honey Baked Ham, which ships 700,000 hams every year, primarily around the holidays. (Disclosure: Honey Baked Ham is a client of Narvar’s.) The company takes steps to assure customers they’re in good hands at every step of the way. After a customer clicks “buy,” they receive a branded shipping confirmation from Honey Baked Ham, rather than a generic email from a carrier. The customer can click through to a tracking page that includes product recommendations and tips for storing and serving their ham. In 2017 Honey Baked Ham boosted its revenue by $2 million over three months by communicating directly with customers and reducing “Where is my order?” inquiries.

Emotional connection is another driver of loyalty; our survey found that 50% of consumers are more likely to buy again from a brand that connects with them emotionally or reflects their values. While good communication and flexibility are foundational to loyalty, grocers should also consider how they’re making customers feel. A 2018 consumer survey by C Space found that shoppers were more likely to recommend and purchase repeatedly from brands that made them feel respected and understood. The study also found that these measures of positive emotion were correlated with a company’s growth.

And people are emotionally connected to grocers, as utilitarian as grocery shopping may seem. For example, Trader Joe’s, which ranked highly in the C Space study, inspires loyalty by creating an enjoyable shopping atmosphere. A 2018 Forrester survey of 287 brands rated Trader Joe’s first in positive customer experiences, and the company regularly outranks other grocery chains in sales per square foot. Trader Joe’s fans closely follow new product releases, request stores in their towns, and have even created their own community on Reddit.

Trader Joe’s doesn’t offer grocery delivery, but it has created such a personal and enjoyable shopping experience that customers actually want to visit its stores. Everything at Trader Joe’s is designed to make grocery shopping feel more friendly, personal, and laid-back, including its flexible return policies, free samples, quirky product labels, fast check-out, and helpful employees. The associates, called “crew members,” are happy — Trader Joe’s has made Glassdoor’s list of Top 100 Best Places to Work five times since 2010 — and create a feeling of community by talking with shoppers and recommending their favorite products. “Friendliness and service” earned Trader Joe’s the top ranking in a 2018 study of shoppers’ favorite grocery brands.

Grocers need to offer their customers more than points-based customer loyalty programs, which are no longer a competitive differentiator. Most grocery chains offer similar benefits and do little to foster an emotional connection between a shopper and a brand. A study by Accenture found that 78% of shoppers abandon loyalty programs after signing up.

By investing in the factors that build long-lasting loyalty instead of transactional programs that most people ignore, grocers can attract repeat buyers and brand advocates. As shoppers expect more from the brands they do business with, they will prioritize their experience with a company, both online and in-person, over everything else. The companies that offer people the most flexibility, communicate directly and effectively, and connect with them emotionally will emerge as the winners.

Editor’s note: This article has been updated to clarify that Dirty Lemon is a brand owned by Iris Nova.