We are in the midst of a true revolution in grocery shopping that is disrupting the industry in an unprecedented way. With online grocery sales expected to make up 20% of the overall grocery sales in the next 5-7 years, retailers are scrambling for ways to differentiate their business from that of their competitors.
Unsurprisingly, Amazon has taken an early leadership role in defining this newest frontier for e-commerce, and captured nearly 20% of the U.S. online grocery market. According to One Click Retail, this is essentially double their nearest competitor – retail giant Walmart. Even with the fundamental changes in the grocery landscape, shoppers are still much more likely to visit their local retail establishment to make a purchase than to order online. Why are even the most devoted online shoppers still hanging on to their local brick-and-mortar retailer? The reality is that online simply cannot (yet!) match the convenience, exceptional service and instant gratification of shopping for groceries at their local retailer.
Portrait of Online Shoppers
Online grocery shoppers span across all age and demographic verticals, but the majority of them are in two main age buckets: 18-29 and 30-49. More than 60% of Millennials are shopping for groceries online, but 55% of Gen X and even 41% of Baby Boomers are also opting to fulfill their grocery list online. The convenience of home delivery is often stated as the compelling reason to buy online, with the ability to find unique products online driving an additional 40% of shoppers. These numbers can also be quite misleading: more than 99% of all online grocery shoppers continue to shop at brick-and-mortar grocery retailers on a regular basis.
Online Grocery Shopping Habits
Understanding what online grocery shoppers are and are not buying allows retailers to create distinct offerings that would appeal to a broad group of buyers. There are specific grocery categories that tend to fare well in online shopping, such as snacks and canned goods. These items have a long shelf-life, are reasonably priced and are not overly heavy to make shipping too expensive. The dry goods segment continues to grow drastically as shoppers discover the ease of use of online shopping with such offerings as Amazon’s Prime Pantry, where you can select items to fill specific percentages of boxes for delivery. Brand-name goods that may be difficult to find in local retail stores are often purchased online as well. The endless aisles of online retailers provide a ready market for niche brands that may not be able to afford shelf space regionally.
These same shoppers who are willing to buy their dry goods online are still likely to visit their local grocery store to select their staples such as meats, cheeses, milk, eggs and pre-cooked meals or meal kits. While Amazon Prime Now is making inroads into delivery areas, there are still only select cities throughout the country where these delivery-based options are available. Shoppers appreciate the experience of being able to select their own perishable items – choosing avocados and bananas at exactly the right degree of ripeness for their needs, for instance. This all leads to an overlap in shopping behavior: shoppers of all ages are willing and able to shop online for some items, but are still more comfortable with a visit to local retailers for their more short-lived purchases.
What Makes Online Shopping So Compelling
Shoppers are flocking to websites, mobile apps, and in-store digital experiences, but are they seeing the true value of their online shopping? Statistics show they are, as more than 50% of these individuals are selecting online shopping options for the ease of home delivery. While more shoppers appreciate the ability to find unique brands online, only 35% are driven by curiosity about the online grocery shopping experience.
Shoppers today are keen to avoid the checkout lines as the perception is that they have much more important things to do with their time than wait in line. The ability to save time, potentially save money and make the entire buying process more convenient are all incentives for today’s busy shoppers. However, there are still plenty of shoppers who are more willing to invest their time and attention for what is perceived to be a superior in-store buying experience.
The ability to handpick their own products – along with a reminder to pick up additional needs – are some of the most cited reasons for the continued dominance of in-store shopping. The smells of freshly-baked bread or fresh produce and the tactile experience of selecting your own fruits and vegetables are also benefits that online grocery shopping simply cannot duplicate. Perhaps this is why 65% of shoppers say they have no interest in buying groceries online – ever.
The ability to immediately take possession of the items that you need is yet another factor, as cooking enthusiasts, in particular, appreciate the ability to have their items available in only a few minutes. There are still lingering concerns about the safety of online shopping and the technical challenges that can plague even the largest online retailers. Amazon’s recent miss during their Prime Day provided plenty of opportunities for industry pundits to take a jab at the e-commerce giant.
Key Takeaways for Retailers
With all of these statistics and data, what are some strategies and tactics that shopper marketers can implement immediately? Shoppers want to touch and feel their products, so look for ways to create an experiential marketing strategy. This is one of the places where Costco excels by offering enticing samples of their goods. The personal interaction with staffers provides a feeling of community that can be lost when shopping online, making your friendly store associates even more important than ever before (ask Publix!). Entice shoppers with alluring scents, and look for ways to offer interactive experiences that will build loyalty and return visitors. Create excitement around brand names or specialized products that are unique to your store in order to motivate repeat business from faithful devotees.
While there are certainly some segments where the shift towards online shopping is growing at a much faster pace, the majority of shoppers are still hesitant to completely switch to online grocery channels. The convenience and time-saving factors of online grocery shopping are still outweighed by the brick-and-mortar experience, especially when purchasing fresh items such as vegetables, bread, and fruits.