We continue our discussion on the intricacies of teaching machines to think like humans in the latest episode of our ongoing HallaPod Series, where Halla shares ongoing perspectives at the intersection of how people make food choices, the grocery industry, and technology
Of all the shoppers who purchased groceries online during the pandemic, who do you think were the least satisfied?
If you guessed “less internet-savvy older generations of shoppers,” who presumably prefer the brick-and-mortar experience they are accustomed to, you’d be using pretty good logic.
You would also be dead wrong.
Despite being digital natives, it was actually Millennials and Gen Z who reported the lowest satisfaction rate amongst all online grocery shoppers in 2020.
Does that seem strange to you? It actually makes perfect sense to me. Those of us under 35 have grown up with relatively frictionless digital shopper experiences. Online shopping to us is already personalized, mobile-friendly, supported by one-click payments, and with free shipping and easy returns. We get only our favorite music from Spotify, movies tailored to our personal tastes from Netflix, and exactly the products we are looking for from Amazon.
In fact, most eCommerce stores understand us well and make buying from them as convenient and frictionless as possible. Why shouldn’t they? They have had decades to develop that level of convenience and service. And here’s the kicker—this online shopping experience is all we know.
Meeting Millennial and GenZ expectations is no longer optional for grocers
According to Pew Research, however, Millennials have already overtaken Baby Boomers as the nation’s largest adult generation and Gen Z is in hot pursuit. Giving Millennial and Gen Z shoppers what they want is no longer optional for grocers.
However, satisfying young shoppers in online grocery is far harder than it is for other retail categories. Grocery shoppers buy more items per shopping trip. They must choose from a higher volume and diversity of merchandise. Fresh foods and substituting out-of-stock items pose complex challenges. And then, of course, there is the highly personal nature of food itself. With a multitude of bespoke tastes and dietary habits, how can grocers begin to know what a shopper wants?
That’s why we started Halla—and then created Taste Intelligence.
My co-founders Henry Michaelson, Gabriel Nipote, and I have been friends for more than half our lives. We grew up together. We’re similar in a lot of ways, but we each experience food very, very differently. I have food sensitivities. Henry is an adventurous eater. And Gabriel counts calories and carbs. In a sense, that’s how Halla started—three Gen Z friends thinking about how unique each of our human preferences really are.
Ultimately, that question became more specific. We asked: “How do grocers manage to understand what shoppers like us really want?”
And it turns out—there was simply no answer to that question.
So we created one. Halla Taste Intelligence is the only real-time, grocery-specific, and API-ready personalization engine in the market today. It is trained on over 100 billion behavioral and product data points across the food retail landscape to present to grocery shoppers exactly the products they are looking for, when they are looking for them, based on 1:1 customer ID’s, not just aggregate “people like you bought” algorithms.
Taste Intelligence works to improve the online grocery shopping experience in all the ways that really matter to young shoppers today: I am talking about:
— Search results that prioritize products according to unique shopper preferences and dietary habits.
— Recommendations that accurately predict what shoppers need to complete recipes or meet household stocking requirements.
— Substitutions for out-of-stock items that meet customers actual cooking and household needs.
Halla Taste Intelligence does all of that, personalized on a 1:1 basis to unique customer IDs, and it does it in real-time. It understands what Millennial and Gen Z shoppers want in a way that often feels as if it is some kind of magic (but—spoiler alert—it is actually just cutting edge data science).
Improving shopping for the young delights customers of all ages
While it was largely young shoppers driving online grocery before COVID-19 arrived on the scene, Boomers and Gen X rushed online in 2020 out of sheer necessity. Today, most grocery shoppers across generations are still buying groceries online— at least some of the time.
Although the young may have higher expectations from digital grocery, everyone appreciates being served well, regardless of their age.
Studies show that younger generations highly value convenience, for example. (Hence the popularity of subscription meal services like Blue Apron and Hello Fresh). But when it comes to convenience in general, who doesn’t want it to be easy to get their stuff? Inconvenient, non-intuitive online experiences are hardest on those “less internet-savvy older generations of shoppers.” My colleagues and I all had to help our parents and grandparents with online grocery shopping when the pandemic hit.
Millennial and Gen Z also expect what they see online to be personalized to our personal preferences like organic, paleo, vegan, and gluten-free. But offering search results, product recommendations, and substitutions that genuinely reflect a grocery shopper’s personal preferences is a good idea, regardless of the shopper’s age or personal dietary proclivities.
Better online grocery shopping experiences is not just good for shoppers, of course. It also translates into bigger basket sizes, better loyalty percentages, and higher net promoter scores. Millennials and Gen Z may be the shoppers who are driving the demand for better online grocery experiences, but if you ask me, grocers who invest and improve in this area early are the ones who stand to benefit the most.
Spencer Price and Brittain Ladd discuss the grocery industry’s response to Gen Z’s expectations of frictionless.
By Spencer Price, co-founder and CEO of Halla
Like most other Millennial and Gen Z Americans, I can’t remember a time without the internet. My generation grew up digitally connected. It didn’t take COVID-19 to convince us to shop online. And yet, despite our comfort shopping online, Gen Z and Millennials reported the lowest satisfaction rate amongst all online grocery shoppers in 2020. We are—in the eyes of our elders, at least—“hard to please.”
If you are in the grocery business, you already know that this is actually a wonderful opportunity. Millennial and Gen Z shoppers stand 150 million strong and contribute hundreds of billions of dollars to annual retail spending. We will soon surpass GenX and Baby Boomers both in shopper volume and spending power.
But it is about much more than that. When you meet the high expectations of Millennial and Gen Z shoppers, you will simultaneously delight Gen X and Boomers as well. While my suggestions below focus on how to capture my generation’s market, I encourage you to think about how these improvements in grocery retail will improve customer experience for all of your shoppers.
We have learned to have high expectations
As a grocery industry insider, I understand why Millennial and Gen Z’s high expectations might seem unreasonable to some. The store item count, transaction basket sizes, fresh requirements, in-aisle order picking, and other complexities of grocery create unique online shopping challenges not faced by other retail categories. But you have to understand—we grew up with the likes of Zappos and Amazon. Hyper-convenient online shopping experiences are the well-established norm for us. Getting exactly what we ordered, delivered in a timely manner is how virtually every other online retail experience we engage in already works.
Grocers need to meet our generation of shoppers where we already are in our relationship with retail. We know what we want, we have virtually unlimited choices online, and we have learned that “getting what you want is always just a few clicks away.”
So what do Millennial and Gen Z shoppers want from online grocery—and how can you give it to them?
1. Reliability: There is nothing more disappointing than “conveniently” ordering your groceries online, only to find that your order could not be delivered or picked up at the scheduled time, or worse yet—that some items could not be fulfilled at all. If we have to go to a physical store or place another order with someone else because you didn’t come through, we won’t soon forget it. In fact, according to a 2020 McKinsey study, one in five shoppers claim that they have switched grocers due to such fulfillment fails. Order fulfillment needs to be as reliable as possible because we’re not as flexible with our food choices as other generations. We want grocers to use proactive technology that ensures efficient picking and delivery, accurately predicts our needs and makes our lives convenient. The only alternative— back-and-forth texting between picker and shopper—annoys us, delays our orders, and costs you valuable picker time.
2. Frictionless shopping: Second only to fulfillment fails in the drivers of online grocery dissatisfaction amongst my generation’s shoppers is the clunky experience itself. Like most other consumers, what we like about shopping in-store is the feeling of control of our choices and the joy of discovery of delicious foods and cooking ideas. But online, we instead endure tedious scrolling through products we don’t want, narrow filters that don’t take into account our specific dietary needs, an awkward search process that produces irrelevant results, and a dull, impersonal experience overall. We’re not strangers to bad UI/UX, but we also know how amazing a good ecommerce experience can be. I’m talking about remembering who we are the moment we log in, prioritizing search results according to our personal preferences, making recommendations and offering promotions that genuinely help us discover products that match our tastes, and offering to prefill our cart with frequently purchased items. Most of these are already table stakes in ecommerce, and part of how we judge the experience. As ecommerce continues to evolve, our expectations are going to rise up with it.
3. Mobile-friendliness: Mobile is the characteristic that most singularly defines the relationship of Millennials/Gen Z with grocery shopping. 93% of Americans aged 18-39 use a smartphone, and 71% of Millennial/GenZ shoppers (vs. 44% of Boomers) are comfortable using digital devices in their grocery shopping experience. We use mobile phones to look up recipes, scan reviews, find products, and compare prices, even while shopping in physical stores. Whereas our parents’ generation may still write their shopping list with pen and paper, we input ours to our phones. We “check-in” and “tap to buy” on social media, use grocery apps, take advantage of mobile scan-and-go options, and use digital payment systems like Venmo and Apple Pay. We welcome digital coupons and rewards from mobile-savvy companies like Honey and Fetch Rewards.
To satisfy Millennial and Gen Z shoppers, you need to make sure that your omni-channel grocery experience is heavily optimized for mobile devices. Our tech literacy presents you with the opportunity to personalize our experience, in real-time, wherever we are. We are on our phones, so—voila— take advantage! Present digital coupons as we walk through a given aisle. Send us a “Did you forget?” notification from our online shopping lists. Give us free wi-fi in-store, incent us to promote you on social media, and make recommendations for items that complement what is already in our scan-and-go cart.
4. Consciousness: American Millennials and Gen Z are the nation’s most socially, ethically, environmentally, and health-conscious generations. We represent the bulk of America’s vegetarians and vegans. We choose foods that are organic, free-range, ethically-sourced, and environmentally sustainable in greater numbers than any other generation, and we are willing to pay more for it. We also care about racial and gender diversity, fair employment practice, and other social issues. These ideas are not just lip service for us; This is what we expect from the companies we do business with—and we speak with our wallets. Show us products that run counter to our values and we will notice that you are not listening. I recently ordered a dozen Vital Farms pasture-raised eggs, for example, but instead received factory-farmed AA white eggs. It was so tone-deaf that I immediately decided to shop elsewhere next time. Failing to recognize and cater to Millennial/GenZ values in grocery search, recommendations, and substitutions does not help your customers—it only helps your competitors.
Meeting Millennial/Gen Z expectations is a huge growth opportunity
Although pleasing Millennials and Gen Z may sometimes feel like a sisyphean undertaking, keep in mind that we are also much more accepting of subscription programs and meal kits, new shopping and delivery models, and even new products and brands. Take services like Hello Fresh, for example, whose revenue is predicted to more than double this year. This poses a real threat to conventional grocers. (When I’ve used it, my monthly spend with my local grocer declines by 60%). Conventional grocers could mimic these intimate and lifestyle-tailored models successfully. Why not curate and re-market products you already have on the shelves, using what you already know about me, and lock in my loyalty to you, instead of to the competition?
You can see how meeting the high expectations of Millennials and Gen Z can actually be a great source of growth and loyalty. But to be clear, I’m not suggesting that you change your entire strategy to cater exclusively to these generations of shoppers. Actually, meeting the expectations I’ve highlighted here will boost lift and loyalty across all generations of shoppers.
Considered in this context, Millennial/Gen Z dissatisfaction with online grocery shopping is quite good news for grocers. We are telling you exactly what we want, and how you can give it to us. And in doing so, we are telling you how you can create a competitive advantage with all of your shoppers. The question is—”Will you listen?”