Understanding the Online Grocery Shopper
Shoppers are test driving the new digital cart, and slowly converging the online and offline worlds
As we’ve experienced and watched other industries evolve into the e-commerce age, it’s impossible not to contrast those more rapid evolutions with that of online food and grocery’s slower transformation. Depending on the measuring stick you use, online food and grocery is hovering around 4-7% of all US grocery sales. Contrast that with 14% of all retail sales worldwide occurring through e-commerce1, and it begs the question on why the level and pace of transformation doesn’t match (yet). Our point of view is that we are rapidly approaching an inflection point, but to date we haven’t reached that extreme acceleration point because of three types of headwinds: physical, experiential, and behavioral ones. Supply chain innovations continue to chip away at the incredibly complex physical logistics problem, and the resulting convenience it unlocks. How consumers experience the digital aisles and shelf through UX, retailer options, and digital merchandising is also evolving. The last of the three–consumer behavior–seems to get less press. Despite the lack of air time, it’s the most critical to understand in order to unlock growth. Forcing consumers into a new paradigm will inevitably face resistance. In order to create the best shopping solution for your business we need to meet people where they are and dive deeper into their behavior patterns.
Consumers are more than just dipping their toes in online grocery. 65% of smart-phone carrying grocery shoppers have shopped online at least once in the last 30 days. Over a quarter of them are now Consistent & Loyal online grocery shoppers as of December 2019. A large conversion opportunity lies in the Cautious shoppers (1-2 times in last month), who make up the biggest slice of those checking out online today at nearly 40%2. The transition from, and in between, offline and online grocery is still active.
Retailer Loyalty is Fickle. Only 13% of consumers were loyal to just one banner in the last month. Almost half shop at two banners, while over a third shop at three or more stores3. The multi store trip is apparently still very much alive despite the pressures for convenience, one stop shopping, and efficiency. It remains to be seen if this will moderate or accelerate as penetration increases. Our hypothesis is that choice will continue to become easier and multi retailer behavior will only increase; stay tuned for future comparisons.
Why do Consumers Store Hop? Price & Product Selection. For those who frequent multiple banners, Price is quoted as being the single biggest motivator, followed not far behind by Product selection and availability. Quality & Experience follow in a distant third and fourth place respectively4. Allowing consumers local store choice so that they can then make a decision using price and product selection is top of mind. With online access to local grocer options continuing to expand, more choice in the market would seem to indicate price and product continuing to play a big role in driving multi-retailer habits. And with the average shopping trip taking 41 minutes6, achieving multi-retailer convenience in a faster way from the comfort of your own device should further accelerate online grocery as a whole.
The Wild West of Meal Inspiration. Online meal discovery is now well established, with 44% of consumers using it for idea generation. The means are numerous and varied: whether that’s Pinterest, Recipe sites, Facebook, Instagram, or just search engines. That higher tech and image rich world of food ideas is contrasted by the upside-down world of the offline, which still rules the industry. Nearly ⅔ of consumers still get some of their meal inspiration literally from the top of their head: they just think of it. 35% get some of their weekly meal ideas by consulting with the rest of their family on what they’d like. And the old world of recipe boxes? Still alive. Nearly a quarter still reference offline paper recipes for their meal planning.5
A lot of distractions, yet a common basket. Representing a physical store shelf as a digital one presents it’s own set of challenges. The average consumer purchases <1% of what an average grocery store has in distribution7. Allowing consumers to quickly get what they need, but yet tempt them with new items and replacements without it being noise, is a delicate balance. That’s where shoppable content comes in; any digital impression can now serve a dual purpose of both awareness and direct conversion. They can be used to showcase meal solutions and product innovation in a meaningful and targeted way–plus offer a direct avenue into their online cart that feels helpful. Show consumers shoppable content that is useful and worth the add to their selective basket, versus endless rows of end caps, pallet promotions, and display shippers.
Untapped convenience & richer carts. Unsurprisingly, online grocery remains a convenience opportunity. The number one reason people shop online is because they can do so at anytime of the day. The reward of that convenience is real: the online grocery cart can be 30% to 65% larger than the brick and mortar equivalent8. Male shoppers alone spend 68% more online than women9.
It Starts & Ends with the Shopper. A consumer first mindset can go a long way, particularly in an industry with complex and dynamic consumer behaviors. We believe going to market with these learnings, and keeping the varied behaviors top of mind, will connect the consumer to cart more effectively.
1: Statistica, 2019 E-Commerce share of total global retail sales
2-5: Basketful December 2019 study of 500 Smart phone carrying, Primary Grocery Shopping, US residents.
7: Catalina, Engaging The Selective Shopper Study, 2013
8: Global Data Consumer Survey, Aug 2016 – Aug 2017