A recent study from Brick Meets Click found online food sales will increase to over 8% of overall grocery sales by the end of 2022, up from under 5% at the end of 2017. The firm predicts online grocery sales will grow at a CAGR of 13%, as compared to 1.3% for in-store sales.
Pure-play (online only) providers are selling grocery-related products to approximately 10% of potential shoppers based on past 30-day purchase activity, while in-market (local grocers with delivery or pickup services) are shopped by closer to 15% based on the same measures. The firm notes in-market's value to consumers centers around time-saving and improving on the in-store experience. Orders with these providers typically have 30 or more SKUs, sales per order are twice as large, and perishables are present in nearly every basket.
Despite this expected growth, consumers and retailers are still learning how to shop and sell online, says Brick Meets Click. One in five online shoppers can’t find everything that they want to buy, and reducing out of stocks and limiting the difference between what's ordered and what's received is critical. Other factors that affect shopper satisfaction include the direct and explicit cost related to using online shopping options.
While most of the conversation about grocery shopping revolves around competing in the e-commerce space, understanding what consumers are interested, or not interested, in buying could make a huge difference.
Center store has been a sector ripe for revitalization for some time, and even though it may still be a part of most shoppers' trips, it is becoming less of a priority for many consumers. One section in particular that may need a revamp is frozen. Warren Thayer of the trade magazine Frozen & Refrigerated Buyer, claims 46% of grocery shoppers who spend over a $100 don't step foot in the frozen food department, as grocery stores are carving out larger footprints for their delis, reported NPR (May 2). This is making it harder for the frozen food section to compete with the warmth and smells of prepared food, as well as bland packaging designs and the barrier created by the glass door, according to industry analysts.
One solution could be to remove that barrier, like Trader Joe's, which has open coffin cases that allow shoppers to reach in. Alison Bodor, head of the American Frozen Food Institute, notes many other chains have not followed that model because "freezer cases are a high-cost item," but notes it'll take real innovation by manufacturers and grocery stores to boost frozen sales.
Perhaps unsurprisingly, a strong spot in the supermarket is organic and natural products, as one in three consumers makes an effort to buy only, or mostly, organic and natural products, according to a study by Valassis. This percentage increases among parents, 48%, and Millennials, 50%. However, regardless of what the consumer is looking to buy, Valassis found coupons are "extremely influential," with 81% of consumers searching for coupons online. One-of-a-kind shopping is another key motivator for grocery store selection, where 36% of shoppers seek stores that provide a unique or special experience.
Brand loyalty is also important to shoppers, particularly Millennial parents, as almost half remain loyal to a brand despite cheaper options, compared with 30% of other parents, according to the National Retail Federation. Fifty-two percent will remain loyal despite more convenient options, and 64% will shop a brand they are loyal to before looking at a competitor.
E-commerce food sales have been growing at a rate of about 22% per year, and it is expected to make up close to 10% of the overall food and consumables market by 2023, according to data presented by Inmar at the Food Institute's annual Future of Food Retailing webinar, sponsored by BMO Harris Bank. Inmar's Jim Hertel and Craig Rosenblum took a deep dive into the growth and contraction of retail in 2018 and projections on the future of food retailing amidst Amazon's expanding online and brick-and-mortar stake in grocery.read more
Jennette has been with The Food Institute since 2013. As Marketing Director, she is responsible for promoting all Food Institute books, seminars and webinars, as well as writing and editing the Food Institute’s annual publications. Additionally, she writes for and edits the daily news update, Today in Food, and contributes to the weekly Food Institute Report. She has a background in non-profit and environmental marketing, programming and writing, and graduated from Rowan University in 2012 with a degree in Communication Studies.
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