Grocery retailing is rapidly changing. The change is powered by evolving consumer needs. Time allocation is a bottleneck for individuals. So food manufacturers, retailers and hard-ware providers all strive for one thing. To satisfy the modern consumer need for great tasting nutritious meals easier. There’s never been more change in the retail business.
Food retailers are leaving the starting gates in the online trade.
There is a gap between consumer expectation and current online experience. Therefor there has been slow growth in penetration, compared to other retail categories. From planning, buying to preparing a meal consumers experience pain-points and bottlenecks. Consumers are scanning online services searching for more efficient ways to accommodate grocery needs.
There’s no doubt about it. Grocery sales is moving online.
Starting from low actual numbers the penetration rate of online grocery shopping is exploding. Some groups stick out. Household penetration in the US is 23% (2,53 pp/HH 2016), that number is 27% for Millennials, and has grown by 7% the last two years. Millennials, as with many things online, are in the front line pushing the trend. Study the behavior of Millennials to understand the consumer demand tomorrow.
So, what should a retailer do to close the gap to consumer expectation?
From an industry standpoint, grocery is still in the infancy but swiftly developing. Many have not started to develop their online presence yet. Believing that you can go at it alone will lead to failure. To overcome the mind-set of being able to do everything in house is the first hurdle. It’s easy to think that corporate size equals competence to develop the e-business. Not when it comes to technology, to move the business forward. Retailers need to adjust to a mind-set of not knowing everything but know where to find the knowledge that do. Assign resources to understand services and technologies that can add value to consumers. This will free resources to focus on core business sales initiatives. Partnering with others in the future is key to success.
Underestimating the real cost to try filling the gap is easy pitfall plaguing many traditional retailers entering the online industry. E-commerce systems, delivery services and “personal shopper”-style technology is expensive to develop. And even more to maintain. By adding technology you add complexity. Which increase likeliness of being overrun by new market entrants or agile retailers. Take grocery retail change seriously and work hard being top of changes, or the world is going to pass you by.
Partnering open possibilities to close the consumer gap faster. To a lower cost. With higher level of satisfaction.
Traditional retailers have an advantage. Food retailing is getting increasingly complicated due to more individualized consumer needs. Having an omni channel approach will win in the long run. Mix of in-store, click & collect and home delivery will cater the same customer. With different needs throughout the week and occasion. This puts traditional retailers in a great spot. As long as they move out of the starting gates of online retailing.
In the future, consumers won’t separate online and offline. The supermarket will offer a lot more curated content. This will be a hard for brands. Because it opens up the possibility to accommodate shoppers with simplified assortment. Lower number of brands and products, but with an increasing number of categories. The online convenience will become transferred to stores.
In conclusion, the field is wide open in a market that is undergoing tremendous changes. There will be winners and losers. We will see dominant market players fall behind and disappear, and new companies rise.
Do you have what it takes to prepare your recipe?