Online grocery shopping fast becoming the norm

Online grocery purchasing has gone through the roof, traditional offline shoppers are now discovering and switching to online. Many consumers started buying groceries online over the past two years and will continue to do so in future. Reportlinker states the global instant grocery market size is expected to reach $418.7 billion by 2028.

This is largely as a result of many new technologies being introduced that have improved the convenience, speed and personalisation of online grocery shopping. A plethora of mobile apps and e-commerce websites and platforms that are used for online grocery shopping have increased drastically.

Customers can now order groceries through these platforms and have their orders delivered instantly. Consumers are seeking value and convenience from multiple suppliers, moving away from a single retailer. There has also been a change in customer shopping behaviour, the growing cost of living has resulted in a trend towards shopping smaller baskets.

McKinsey’s research states that one-third of consumers who shop online weekly now buy their groceries from three or more e-grocers. The report says the most prominent new online market segment is instant delivery. It offers the fastest and most convenient delivery of a reduced assortment at a higher price per item, similarly to what convenience formats offer in the offline channel.

With these more differentiated online offerings, consumers are starting to split their online purchases across different online shops. The more often consumers shop online, the more online grocers they use. As the online market matures, more online formats will evolve and value propositions will coexist and compete for consumer baskets.

In this reshaped economic marketplace, the many new users and their new behaviours offer challenges and opportunities for experimentation programs.

Fighting for survival

Many grocery retailers are looking for new profit pools to combat current economic pressures. This is largely achieved through advanced analytics and artificial intelligence – allowing them to acquire new revenue streams. Leading retailers are already using advanced analytics to inform their business decisions, especially pertaining to price and promotions.

There is a lot of untapped potential in this area with many breakthroughs in personalised offers and localised, store-specific assortment. This could certainly add a new level of value to improve sales and profitability.

Tech is a game changer

Technology is disrupting the entire online value chain, from user experience to logistics around order preparation to the last mile. With these advancements, many business models and retail operations that are unprofitable today could become more sustainable in the future.

For example, advanced personalisation has the potential of increasing order sizes and automation could transform the cost model for order preparation and last mile delivery.

Instant delivery

Due to the convenience, consumers have embraced instant delivery, making it one of the fastest-growing segments in grocery. Retailers can use this to capture market share in addition to their many other e-commerce propositions. The instant delivery market will likely continue to grow and evolve at a fast pace, requiring an agile response from both retailers and instant delivery players.

To carve out a winning and sustainable market position in the future, retailers need to take decisive action and make strategic investments today.

Loyalty

Dunnhumby suggests that in-store grocery consumers may be more loyal, but with online and omnichannel shoppers buying where and when it is most convenient for them. The omnichannel shopper is a more loyal shopper and whilst they spend more on groceries, they also shop at more retailers on average (estimated 3.9 to 6.6 a month across all channels).

Conversely, in-store only customers shop an average of 3.2 retailers a month. This indicated that in-store shoppers may be more loyal customers, and that omnichannel shoppers are potentially harder to pin down, buying where and when it’s convenient for their busy lives.

Frictionless engagement

Although technology has improved the consumer retail experience, consumers are still required to re-introduce themselves to a brand at too many touchpoints. There is more emphasis on frictionless engagement, making the process of discovering, buying and returning products significantly easier than ever before. There is certainly a lot of room for innovation when it comes to streamlining the discovery to purchase process, and a targeted focus on frictionless engagement is what will help achieve that vision.

New personalisation strategies

Website visitors expect some form of personalisation when they visit a site, websites should not be offering a one-size-fits-all experience where every visitor sees the same thing. Busy customers increasingly demand content that is already filtered to their preferences and interests. They have a growing expectation that sites should know about them and engage them in a relevant way.

Optimisation

To keep the preferences of consumers in sight during all these processes, retail executives are relying more and more on agile platforms – and that’s where an optimisation-led mindset comes in. Optimisation is about constantly refining the whole process, including personalisation, experimentation, content management and ecommerce, and introducing new elements based on what you’ve learned.

Adjusting to today’s online grocery shopping environment means retailers continuously need to build new experiences that can meet the expectations not only for consumers as they are today, but as they will be tomorrow. Moving fast has its benefits, but it can’t yield long-term results without dedicated optimisation.

Creating omni-channel experiences

Multichannel experiences involve many joined up channels through which visitors engage with brands. But historically, each channel represented a silo of data and behaviour that were not connected to each other. In-store data was not shared with online data, for example, and vice versa.

Omni-channel takes visitor experiences one step further. It represents the development of a coherent strategy where data and learning in each channel are shared and consolidated. It presents a single view of the business to each visitor, regardless of the channels they decide to use.

While retailers think in channels, customers don’t. They pursue whatever they are interested in according to their time, convenience and availability. They can buy everywhere, and in many ways and that brings both challenges and opportunities.

Retailers can now capitalise on personalisation in all the channels that customers engage with, including onsite, in-store, mobile, call centres, emails, marketplaces and print. This omni-channel environment is complex, but understanding customers’ buying preferences and their ways of multiple engagement is critical to sustaining customer satisfaction, loyalty and long-term value.