Grocers typically rely on shopping trends, lagging sales data and limited algorithms that make recommendations based on past purchases and those of similar shoppers to predict what else to stock and suggest to consumers, but these are far from fool-proof, often resulting in missed sales opportunities and in some cases poor recommendations or bad substitutions for online orders when a product is out of stock.
Enter Halla, the Taste Intelligence company, which its three Gen Z creators claim is the only “human preference engine designed for grocery” to more accurately predict what shoppers want before they even know it, resulting in better personalized recommendations, substitutions and search results for consumers; larger baskets, improved consumer loyalty and more impactful promotions for retailers and brands.
In this episode of FoodNavigator-USA’s Soup-To-Nuts Podcast, Halla founders Spencer Price, Henry Michaelson and Gabriel Nipote share how the fast adoption of online grocery shopping in recent years has raised the bar for personalization, online search and discovery and acceptable substitutions, when necessary. They also share how their patented digital solution leverages more than 100 billion shopper and product data points to help retailers not only better meet consumer needs but manufacturers’ needs as well by bridging the gap between ecom and merchandising teams. Finally, they share where they see untapped potential and where the market is heading.
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Halla offers ‘the only grocery specific relevance engine’
Pushed by the pandemic, many grocers have significantly improved their ecommerce presence in the past three years, but according to Michaelson they still lag far behind other industries’ ability to personalize the experience, offer consistent and reliable search capabilities and deliver what consumers order – a shortcoming that is costing them.
“Personalization becomes life or death for these businesses,” because if a shopper has to perform multiple searches to find the product they want or a grocer sells out of a product and makes a poor substitution, that consumer isn’t going to return, he said.
“As we saw during the pandemic, many, many, many shoppers – something in the double-digit percentages – switched their primary grocer because the ecommerce experience was not up to snuff on their main grocer,” he recalled.
The way to raise the bar is through personalization.
Price explains Halla was designed to address the online shoppers’ primary pain points, including recommendations, search capabilities and better substitutions.
But he added, the platform is expanding to also help retailers bring together their ecommerce and merchandising teams to better support the business’ and consumers’ needs simultaneously through recommendations that could boost private label sales, increase margins and promote specific brands – creating a marketing opportunity for brands.
Halla’s three main pillars
Halla’s first pillar – improved recommendations – was inspired by Netflix, YouTube and Spotify, according to Michaelson who explained the services attract and keep consumers in large part because they supply users with a steady stream of content they want, even if they didn’t know the specifics even existed.
“When we think about our recommendation product, it is how do we begin getting these grocers on a journey where they can be more and more discovery-based? Because that’s really where the magic is,” he said.
The answer is take different angles for recommendations, including items that pair well – like chips with salsa – or companies with coupons or reminders when a shopper hasn’t purchased milk for a few weeks and may need to restock their fridge.
While recommendations in theory could be how people find everything they need, many grocery shoppers still rely on search – especially within ecommerce. And, as Michaelson notes, most grocers’ search capabilities are “pretty poor,” which is impetus for Halla’s second pillar: search.
He explained searching grocery is hard because terms could have multiple meanings. Orange for example could be the fruit, a flavor profile or a color. Halla tries to figure out which one the consumer means and then make recommendations based off of where it would be in the physical store – such as by the other citrus or fruit.
Ultimately, consumers’ ability to discover and order products they want is only as good as a retailers’ ability to deliver those products – an area where, again, Michaelson says many grocers fall short. Halla’s third pillar – substitution – tackles this challenge.
“Substitutions are a giant issue, because the vast majority of fulfilment in grocery is done inside the store,” where availability is constantly changing as pickers and other consumers shop, he said.
Bringing ecommerce and merchandising together
The primary function of each of these pillars may be to streamline the shopper experience, but thanks to an administrative overlay that the trio developed that allows merchandising teams to directly control the mechanics of Halla’s personalization software, Michaelson said, the pillars can also help bridge the gap between retailers’ ecom and merchandising teams.
“Right now there is a rift in companies between the ecom team and the merchandising team, where the ecom team is trying to give the company the best tools, the best personalization, the best recommendations, and the merchandising team is trying to” sell specific products, he explained.
Halla allows companies to link the two through an administrative panel that allows them to tweak recommendations based on inventory, marketing and other priorities, he said.
Retailers are not required to use this feature, but Michaelson emphasized it can boost their return on investment in Halla. But even without it, Nipote said, they can expect a return “several times” their investment in the service.
He added that using Halla can also be as hands on or off as retailers want, with some employing someone to manage it full time, but others trusting it to work its magic on its own after an initial set up.
Health is the next frontier
Looking forward, much of the team’s immediate focus is on introducing their technology to retailers and helping them bring their online shopping experience up to par, but Michaelson says he sees longer term potential for Halla to help industry players tap into the emerging food as medicine movement.
“We do see a few trends that seem extremely exciting that’d we’d like to join in on the party, so to speak, and one of the big ones that we see is health. We see more and more studies coming out that a person’s diet is one of the largest risk factors to their health outcomes,” and we think grocers could help shoppers manage both better, he said.