Conventionally, robust competitive analysis identifies current and potential competitors, reflects on their strengths and weaknesses subsequently highlighting trends and uncovering opportunities.
A popular framework to summarize the results of such an investigation is the fairly common Competitor Analysis Matrix (Fig 1). The matrix is a bird’s eye view of competition with an in-depth analysis of their offering.
While the competitive analysis matrix provides a clear overview of available features and services, it does not divulge the direct relationship between feature ‘richness’ and customer experience.
The competitor analysis matrix shows what items there are on the menu. But, not if what you want to order is actually good.
In 2018, the Chief Technology Officer of a large European grocery retailer partnered with Thoughtworks to go digital. The grocer had built a loyal customer base and a network of many stores all over the country. However, they did not yet possess a digital presence. By embarking on the digitalization journey, the retailer intended to offer premium and truly frictionless customer experiences, hence, catapulting the grocery chain to an enviable market position.
The customer experience of an online grocery store has two key components -
Online shopping: the customer’s digital experience of browsing and ordering on a website, an app, or a smart speaker such as Alexa or Google Home.
Delivery or pick-up experience: the customer’s physical experience of receiving the goods. The user can pick up their groceries in the store - click & collect or collect it outside the store, from their car - drive-through. The user could also receive their groceries at home - home delivery.
To empower a positive customer experience, behind the scenes, the grocery store needs to -
Manage the inventory with near real-time visibility of the same: much of customer dissatisfaction stems from non-availability of their choices which means what is promised should always be delivered.
Manage the online assortment: add products and update assortment data to the website.
Fulfil orders: prepare the order for delivery or pick-up. The most common models, from low to high maturity, are in-store pick ups (where the store employee fulfils the order inside the store), the dark store (which is a dedicated manual picking facility) and semi or fully automated warehouses.
For a customer, a premium grocery experience feels like a seamless service that requires a combination of impeccable digital experience and physical services.
For our project, we analyzed services provided by notable grocers who had an online presence alongside online marketplaces that allow users to buy groceries from multiple brands, such as Amazon and similar aggregators.
Fig 1: Competitive Analysis Matrix. Each row represents one competitor. We analyzed a total of 11 competitors.
By identifying the competition’s strengths and weaknesses, we formulated some key competitive advantages with respect to user experience -
Broader assortment: Providing the full range, including frozen and freshly made food, adds complexity to operations but improves the customer experience.
Immediate order fulfilment: Customers expect to collect or receive goods within a couple of hours or a maximum of a few days. This is a consequence of becoming used to services like Amazon Now and Amazon Prime.
Lower delivery fees: Customers have a low tolerance for delivery fees and prefer free delivery over a certain amount.
Highlights of the competitor analysis have been framed as customer experience do’s and don'ts.
Our recommendation for the client was to start with a click & collect solution. This would remove the complexity of delivery and focus on perfecting the digital experience of online ordering and store operations directed towards order fulfilment. Customers would finally be able to order their groceries online and collect their order at a nearby store - avoiding boring strolls between aisles and long queues at checkout counters.
Start small. Reduce complexity. Nail the basics.
Determined to create a premium and frictionless click & collect experience, we invested time into understanding how such an experience feels. We interviewed customers and also experienced the service for ourselves.
Our interviews led us to believe that all (regular) grocery shoppers had one thing in common; they wanted to save time and possibly money without compromising on quality.
“Doing grocery shopping with the children on a Saturday is a nightmare. It takes 1 hour to reach the store, 1 hour to fill the chart while entertaining the kids followed by a long wait at the counter.” - Alice, 34, mother of 2 boys, office worker.
“The first thing I check for are the offers. And, I waste a lot of time doing this because they are not well organized.” - Tom, 41, accountant.
In parallel, we were testing and documenting our experience of the client’s main competitors. The amount of information we garnered from engaging with competitiors’ pick-up processes was impressive. I believe, if we hadn’t tried it out for ourselves, we might have underestimated the complexity of providing such a premium experience.
Sample of our documentation of competition’s service (Competitor n.4. - shopping experience, in-store pickup service)
Sample of our documentation of competition’s service (Competitor n.5. - shopping experience, in-store pickup service)
For each competitor, we focused on what was excellent and on what could have been improved. The following is an example of how we put that information together. And, the ‘what could have been improved’ sparked recommendations of their own.
User perspective matters more than you know
When organizations toy with the idea of building new services for customers, they usually run the gamut of analyzing market opportunities, global trends, expert advice and competitors. However, more often than not, user perspective is left out of the mix or not dealt with in a strategic manner.
Entering a market that’s home to strong players offers new entrants the opportunity to learn from them. Understanding competition’s offering, strengths and weaknesses is an essential first step. And, equally important is understanding how competitors craft their customer’s experiences. This can be done by investing time in talking to customers and experiencing their services, first-hand where possible. During the recent COVID-19 global pandemic, with more people moving to online shopping, it's becoming more important to craft both thoughtful and intuitive end-to-end customer experiences. This experience often becomes a key differentiator when consumers decide where to place their loyalty.
Our guidance is that teams strategizing or developing solutions should expose themselves to what is happening in the industry at large and the wider market. We’d suggest that teams study, remix, mash together and transform their learnings while holding firm to what makes the client unique in their markets.
Thanks to Jeyakar J Vaiz for pairing with me on this client project. Thanks also to Sanjeev Seshagiri Athreya for sharing his knowledge of retail with me, and to Andrea Piovani for his feedback on this article.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.