Digital transformation for grocers. Learn more about the critical role that headless commerce will play in shaping the future of grocery e-commerce.
How grocers can take advantage of hyperlocal e-commerce
Regardless of how large a grocery brand becomes, the customers it serves are always local. The term ‘hyperlocal’ has been gaining traction in the restaurant sector for more than a decade now. It refers to the sourcing of local produce and suppliers, with a strong focus on community and homegrown value. In 2019, the National Restaurant Association ranked hyperlocal food as the number one emerging trend, particularly among millennials and Generation Z.
Despite many grocers becoming successful nationwide chains with a strong e-commerce presence, their core business still depends heavily on locality. A significant amount of their offering is made up of fresh, perishable produce that doesn’t travel well, resulting in complex sourcing and logistical issues. Successful grocers are buying into the hyperlocal framework as quickly as they’re embracing digital transformation, but what do we mean by hyperlocal?
What is the concept of ‘hyperlocal’?
A hyperlocal marketplace is something that some supermarkets have been doing, perhaps unknowingly, for a while. It utilises local businesses - both offline and online - to fulfil customer demand for a particular item. A local grocer might therefore tap into the services of a local butcher or bakery if it doesn’t do those things independently, thus turning a small town or city into a connected marketplace. In the midst of the COVID-19 pandemic, the hyperlocal model has soared in popularity as local businesses band together in order to serve customers during lockdown.
4 benefits of hyperlocal e-commerce
1. Freshness and quality control
It almost seems like the hyperlocal model was made for grocers. No matter how large a grocery chain gets, it still has to serve customers on a local basis due to the perishable nature of its goods. Because fresh food doesn’t travel well, it’s highly beneficial for supermarkets to lean on local producers.
2. Boosting local economies
While many grocers provide a variety of in-house services such as deli counters and bakeries, they rarely match the quality of highly specialised local vendors. Instead of competing with local vendors - who often have a great deal of trust and goodwill within the community - grocers can join forces, strengthening their own brand in the process. Not only does this provide the best possible selection for customers, it also lifts up local businesses and supports the local economy.
3. Price versus provenance
As we mentioned in the introduction, locality is a trending concern for consumers. With the ongoing climate crisis and local businesses being put at risk by the pandemic, consumers are more concerned than ever with where their food is sourced. Many would rather pay a higher price to support a local farm or butcher than opt for something cheaper that’s had to travel a great distance.
4. Cost efficiency
Unlike other traditional retailers, grocery retail doesn’t typically have a central warehouse to ship goods from. It’s simply not feasible to ship fresh produce cross-country, and it would be almost impossible to have it arrive in a way - unbruised and with optimum freshness - that would guarantee customer satisfaction. Grocery traders, therefore, have a natural dependence on local ecosystems; they need to pick locally, pack locally and deliver locally.
Hyperlocal e-commerce: the online experience
From a customer perspective, groceries are probably the most sensitive ‘trust’ purchase. Just one poor experience can be enough to persuade a customer to shop elsewhere. From the quality of the food to knowing its origins, customers will want to build up a relationship with their local grocer as they would any local vendor. Translating this ‘local’ experience online is essential if e-grocers are to maintain these relationships.
Austrian grocer, MPREIS, is a great example of building trust and loyalty through localised services and then replicating that experience online. They have 250 stores in Austria, but each one delivers a very local service. As they now advance the integration of offline and online shopping, this local-first service remains central to the brand.
MPREIS’ digital storefront has been developed so that the local store remains in charge of its product catalogue and the promotions that it displays online. This enables each store to manage their local market and respond directly to the preferences of its customer base. The customer can continue shopping online safe in the knowledge that they are dealing directly with their trusted local store.
How will hyperlocal e-commerce develop in the future?
The increased localisation of online grocery services can be expected to keep growing as a trend in response to this important customer requirement.
Ulrich Theilmann, digital transformation and e-commerce lead at MPREIS, considers the next big step for the industry: “I think that grocery will eventually go in the direction of marketplaces. We saw that in fashion – they started with their own assortment, and then they started opening up marketplaces to partner with other providers. I think this approach will happen in grocery as well. When you are driving to a neighbourhood several times a week, for example, why shouldn’t you deliver other goods that you don’t have in your own assortment – such as partnering with the local farmer to offer their produce?”
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