The pandemic-driven rise of online grocery shopping caused sales to soar, making it almost as profitable as shopping in-store. But its growth didn’t end with Covid restrictions – it’s continued since.
When UK consumers rediscovered the outdoors last year, ONS data found that internet sales took a slight downturn. But this wasn’t the case for online grocery shoppers. Remote foodies have continued to add items to their virtual baskets – with convenience replacing safety as the key motivator.
Globally, the number who’ve shopped for groceries online in the past month has grown 19% since the beginning of 2020, and there’s no sign that this number is starting to dip. Any movement in the percentage of grocery items bought virtually is worthy of some spotlight, as the global annual spend is immense.
So what can we expect from the grocery industry as behaviors continue to shift? And what can stores do to keep up?
1. Grocers need to enhance the in-store and online experience
Shopping in-store is still favored among consumers – but they like to have a choice. Nearly three quarters of in-store shoppers buy groceries at a supermarket monthly, but a third still order for home delivery, and a quarter opt for collection.
It appears that consumers do the bulk of their shopping either online or in-store, but carry out top-up shops using either. The most popular reason to order groceries online is as part of a regularly scheduled purchase, but this is followed by needing staple products quickly.
With more people shopping for groceries online, pioneering on-demand delivery services like GoPuff, Gorillas, and 1520 started to offer delivery of groceries within 30 minutes or less. This type of service offers consumers the option to do top-up shops to supplement their weekly grocery shop, which they may prefer to do in-store.
Many traditional grocery stores have also been ramping up their online offerings by partnering with third-party delivery companies like Instacart or expanding their click-and-collect services. Put simply, they’ve got to be competing for a slice of the ‘need it now’ rush.
Grocers should ensure they offer both a same-day service as well as the ability to book a weekly delivery.
This will guarantee both types of consumers are captured – those who order a top-up online but prefer to shop in-store, and those who prefer to shop online but are happy to go to the store to refresh their supplies.
On top of this, supermarkets that cater to the omnichannel consumer may need to work on their in-store offering. With home delivery becoming more important, stores will need to become more competitive to keep up.
We may start to see stores adopting more technology, such as cameras and software alerting staff when shelves have run empty. We’re likely to see more contactless stores too, with Whole Foods being the latest to use walk out technology. Another way grocery stores can cater to all is through offering a click-and-collect option, which has been used by a third of consumers in the past month.
For sustainable shoppers eager to make their mark (or, in fact, reduce it), the option to have refillable groceries in-store is something that is gaining more traction.
Naturally, that’s hard to replicate online. Stores offering delivery should therefore ensure their service is also attractive to sustainable online shoppers too to avoid excluding this type of buyer. In fact, over a third of online grocery shoppers place importance on eco-friendly delivery.
2. Stores offering delivery need to ensure quality is matched
Since 2015, as part of our Core survey, we’ve asked consumers what’s most likely to make them buy products online. In every single wave we’ve asked this question, and in every single country, free delivery is the stand-out factor.
It’s clearly a big deal. But when it comes to groceries, the cost of delivery isn’t the be-all and end-all.
For online grocery shoppers, the most important factor is the quality of produce, followed by its freshness, and whether the groceries arrive as scheduled. Consumers want these things set in stone as they can’t handpick the products themselves and test out their readiness to eat.
So it comes as no surprise that the majority of people feel the biggest drawback to online grocery shopping is receiving damaged products, followed by the issue of out-of-stock products. Again – these are more important to get right than the cost of delivery.
Stores can help alleviate the issue of out-of-stock items by offering more personalized alternatives, while issues with damaged products can be rectified through small changes to packaging. ULMA Packaging has found that excess air used in storage bags can lead to larger-than-necessary packs and can damage fresh produce. These insights have encouraged new ways to seal packaging, which reduce waste and keep groceries a little safer on their commute.
While those who shop in-store are more likely to pick somewhere to shop based on proximity, consumers can be more choosy when shopping online. In this day and age, digital journeys have got to be slick – shoppers are looking for great experience and service.
Supermarkets can nail this if they have an open dialogue with their customers, and more importantly, take on board feedback to optimize the end-to-end journey.
3. The online offering needs to be optimized
Shopping on smartphones has helped accelerate the growth of online grocery purchases in the US in particular, with 57% buying at least some of their groceries via mobile, and a fifth doing all their grocery shopping on a smartphone.
So, grocery stores should make sure they’ve got an optimized and user-friendly app for customers. A key way to do this is through offering account personalization.
As unsatisfactory product substitutions are a bugbear for many online shoppers, an app may offer more personalized substitutions based on consumers’ preferences, which would also help alleviate issues around out-of-stock products.
Personalization can also be used to recommend items to customers. For example, Lollipop AI, a new British online grocery marketplace, has recently created a platform where people can build meal plans from recipes, adding the ingredients automatically into their shopping baskets. The platform also suggests remaining household essentials. Its aim is to help improve cooking skills and minimize food waste.
Another way to optimize an online service is to offer customers the option to repeat order the items they know they’ll need. Amazon has been ahead of the game with this for a while now, but we may start to see more supermarkets following suit.
On top of that, with many people wanting niche products from specialist retailers, supermarkets may start to offer more specialty sections on their websites in a bid to cater to customers with any requirement.
Our key trends to digest:
- Online grocery has shown continued growth long after Covid restrictions have eased, creating more omnichannel consumers. This trend shows no sign of slowing down.
- Grocery stores now need to ensure they’re optimizing both their online and in-store offering to cater to all types of shoppers.
- Online grocery shoppers are placing more importance on quality, availability, and the freshness of products rather than price. Stores will need to ensure standards and quality don’t slip.
- With the growth of online grocery shopping on smartphones, stores need to leverage personalization to create a seamless online experience, while also alleviating some of consumers’ biggest bugbears.