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Choice paradox in grocery retail: how to help consumers make the right choices

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Capgemini Invent on how marketers can use in-store emerging technology and customer data to help consumers

To meet the expectations of ever-more-demanding consumers, the offer of grocery products has skyrocketed in the last decade. Retailers have the opportunity to leverage first-party and zero-party data and new technologies to help consumers with their choices.

Traditionally, grocery retailers have acted as filters for consumers. They help them with their purchase decisions by selecting products from suppliers and offering them to consumers. Think of the traditional corner shop, with a limited range of products the shopkeeper tailors to meet the needs of local consumers.

Historically this role has been imposed by physical constraints as only a limited number of products can be displayed on store shelves. As consumers have evolved and become more demanding, retailers have had to adapt their ranges in supermarket aisles and expand them; the average grocery retailer now carries 40,000 more items than it did in the 1990s.

In recent years, supermarkets have started reducing their product ranges, mainly in search of operational improvements rather than consumer satisfaction. However, traditional supermarkets still on average offer four times the number of products than discounters.

Online shopping has brought even more options to consumers, offering them infinite choice; online retailers don’t have the same space limitation that physical stores have, manufacturers can target consumers directly – bypassing intermediaries that may filter their products out – and new channels such as social commerce have emerged.

The choice paradox

This abundance translates into more choice and creates difficult decisions for consumers. Contrary to what we may think, having more options to choose from is not always a positive. As pointed out by Barry Schwartz in The Paradox Choice: Why More is Less, being confronted with an abundance of choice can be so demanding that it generates psychological distress. It gives consumers ‘choice fatigue’ that makes it harder for us to make a decision. This has been empirically demonstrated by the ‘Jams Experiment’, which showed that consumers who were offered six different varieties of jam were ten times more likely to purchase than consumers who were offered 24 types.

The retail landscape is growing in complexity. UK grocers are now competing with the fast growth of discounters whose market share has almost tripled since 2012. Direct-to-consumer (D2C) is growing fast as a channel, and Amazon has started opening physical stores, redefining the concept of convenience and collecting new data on consumer shopping habits.

Leveraging first-party and zero-party data to help consumers choose

To be successful in today’s market, grocery retailers need to be more than simple filters for their consumers; they need to become trusted advisers. They can achieve this through data they collect when interacting with their consumers (first-party data) and data consumers intentionally share with them (zero-party data).

UK grocers have traditionally collected first-party data through loyalty card schemes and online purchase data to offer consumers personalized promotions. However, today retailers can collect even more data on their consumers, demonstrated by the recent opening of Amazon Fresh stores in the UK. Cameras and sensors track consumers’ in-store behavior to enable a frictionless shopping experience.

Retailers can leverage their ‘golden data’ collected to help consumers navigate their ranges, both in-store and online. This can be achieved through recommendations on what really matters to consumers to help them identify the products that best meet their needs.

Grocery retailers need to ensure they have the capabilities required to deliver personalized recommendations. This includes the ability to collect consumer data and store it securely, and combine different data sources into a single view of the consumer using advanced analytics techniques and the ability to manage personalized content.

As retailers get better at using consumer data to offer personalized experiences, consumers are growing more wary about sharing their own data. To combat this retailers must give consumers control of their own data using zero-party data – the information consumers actively share with a company, usually in exchange for specific benefits. This can be overlayed with transactional data to uncover new consumer insights and offer even more personalized experiences.

It’s important that retailers that do this to gain the trust of their consumers by ensuring they can clearly see how their data is used to improve their experience.

CornerShop: the store of tomorrow

An innovative example of how zero-party data and first-party data can be used to help consumers with their shopping decisions can be found at CornerShop, Capgemini’s store of tomorrow, created in collaboration with the connected experience platform SharpEnd and global media platform The Drum. Here consumers can buy grocery products using the CornerShop app, which bridges the online and in-store experiences, offering a real and engaging omnichannel experience.

Consumers who buy grocery products for the first time are asked to complete their profile providing information on allergies, food preferences (e.g. low sugar products) and sustainability goals (e.g. preference for local products). This information is used to help consumers with their product choices: the app and the in-store screens will automatically filter the products meeting the consumer’s preferences.

Consumers can also point their phones to the shelves and immediately identify the products meeting their choice of preferences, thanks to a visual overlay powered by augmented reality. These solutions will help consumers focus only on the products they’re interested in, without getting distracted by the wider offering.

Data provided by consumers (zero-party data) is integrated with additional data captured by analyzing consumer in-store behavior (captured though beacons) and purchase history, and is used to deliver personalized promotions to consumers.

UK grocers have the opportunity to drive sustainable loyalty by demonstrating that they really understand their consumers and helping them choose products that better meet their needs. First-party and zero-party data will play a fundamental role in this, but to successfully collect and leverage it retailers will first have to earn their consumers’ trust.

If you are interested in knowing how to use in-store emerging technology – combined with customer data – to help consumers make better choices, get in touch.

Matteo Costa, senior consultant specialising in CRM & Loyalty at Frog, part of Capgemini Invent, with additional insight from Jenna Chowdhury, consultant specialising in CRM & Loyalty at Frog.

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