Much has been written about Nielsen & FMI’s prediction that US consumers will spend $100B a year on online grocery by 2022. As we have stated previously, we believe the majority of this growth will come from full assortment shoppers replacing their regular grocery trips.  Retailers see this shift as an opportunity to grow their share.  You can find our series on the major players here.  But what about the consumers who are the drivers of this shift?  This article will highlight some of the recent trends in consumer behavior along with predictions for what will unlock further growth.

According to FMI, 49% of US consumers shop for consumer package goods products online.  These shoppers span generations – 61% of Millennials, 55% of Generation X, 41% of Boomers and 39% of Greatest Generation.  Why are they choosing to shop online?

According to IRI, consumers state convenience, price, time saving, and reducing impulse purchases as the primary reasons.  But barriers remain – from the desire to choose their own groceries, to price, to not being home for delivery.  Let’s explore some of the barriers and what retailers can do to bust them:

  • Pick out the right produce and meats: Food is very personal.  Some like their bananas just ripening, others like them ripe.  Some retailers like Shipt are seeking to get to know their consumers preferences and choose the right bananas.  Others will segment their experience to allow consumers to pick out their own perishables while their car is loaded up with the rest of their order.
  • Give me Pickup and Delivery options: Some consumers find delivery convenient, others cringe at having to be available for an hour or two and want to pick up.  Retailers like Walmart and Kroger are providing both options.
  • Save me money: While consumers want the convenience of online grocery, they also want value.  Walmart and Kroger match in store prices.  Others like Shipt don’t, but likely will in the future as they continue to get feedback from Target Red Card holders & Cart Wheel shoppers.  Instacart varies by retailer.
  • Serve me personally: Shopping for 30+ items is hard.  Seeing what you buy frequently helps, but isn’t enough.  Retailers and brands will continue to invest in personalization to make this easier.
  • Enable Add to Cart at every point of inspiration: Less than half of consumers who buy groceries online make lists.  Instead, they prefer add products to their online carts at the moment they discover them.  For most discovery experiences, this is cumbersome, as the advertisement has no easy way to the cart.  Consumers are left to do the heavy lifting.
  • Answer “What’s for dinner?”: This simple, yet foundational question will get easier to answer.  Meal kit solutions like Blue Apron and Chef’d are moving to retail.  Recipe publishers will make it easy for consumers to buy ingredients with one click at a retailer of their choice.

Retailers are making a lot of investments in their online grocery capabilities.  We believe that those who break down the barriers above will capture a disproportionate share of consumers.  In our next write up, we will explore what Brands and Publishers should do to enable and benefit from breaking through these barriers.

What barriers do you see in online grocery adoption?