Erik Wallin2020 saw a new reality for online grocery shopping with accelerated growth, well beyond pre-pandemic estimates and rapidly changing consumer needs. As the year comes to an end, what have we learnt in 2020? What are the opportunities for grocery retailers’ in 2021, in rising to the challenge of meeting customer expectations and delivering customer-centric, frictionless shopping experiences? Retailers will have more urgency to invest and adopt digital strategies and processes. If anything, we must all continue to learn and adapt, as Eric Hoffer says “In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists.”
2020 has been a crazy year with the COVID-19 pandemic, which has impacted many individuals, families and communities across the globe. Our thoughts are with everyone that has been affected.
As the pandemic continues to put new and unforeseen pressures on us all, it is important to take a step back and share our appreciation and gratitude to all essential workers who are the real heroes of the coronavirus crisis.
This includes all those who work in grocery retail who are the hidden heroes, an industry that has been absolutely critical throughout the pandemic and dealt brilliantly with extraordinary and historic challenges.
Before the pandemic, online grocery was already growing steadily and the outlook was set to continue growing. However, it has literally jumped 5 years ahead, surpassing growth analysts anticipated seeing in 2025. (Anne-Marie Roerink, 210 Analytics)
When listening to grocery retailers earnings from around the world, we have heard CEOs from the likes of Walmart, Kroger, Target, Tesco, Sainsbury’s, Aeon, Carrefour and Woolworths, all share the view that online grocery is here to stay and growth is expected to continue.
To put things in perspective, in 2020 the global online grocery market is expected to reach US $198.5 billion, up from US $135 billion in 2019. By the Year 2027, the global online grocery market is expected to reach US $550.7 billion. (ResearchAndMarkets)
But that growth is dwarfed in comparison with the US, the largest online grocery market with 28.8% of the global market share, where online grocery has a projected CAGR of 24% from 2021 to 2025. US online grocery is expected to more than double market share from 10.2% in 2020 and reach 21.5% of total US grocery sales by 2025. (Mercatus and Incisiv) This truly is a game changer in the evolution of the US retail landscape.
Over one third of the global online population say they have purchased a grocery item online in the past month during 2020. (GlobalWebIndex) But what is even more striking is that 40% of online grocery retail shoppers say they will continue to shop online post pandemic with 100% of spending. (Incisiv) In the US, research from Aki Technologies and TapResearch echoes these sentiments and found 68% of new grocery ecommerce shoppers will continue to shop online in the future.
Grocery retailers are now viewing themselves differently. A study into how the pandemic has transformed grocery retail by Panasonic and Harvard Business Review Analytic Services shows one in four retailers now view their company as tech-forward early adopters, up from one in eight prior to the pandemic.
Before the pandemic, online grocery targeted young, tech savvy professionals who are time poor and unable to visit the shops. Today, retailers find themselves catering to a much wider range of consumers.
Shifts in grocery shopper habits means retailers are in a constant state of evolution. Consumer expectations are constantly changing and adding technology, to aid and improve the shopping experience, is a great way to innovate and experiment to keep pace with customer demands.
Consumers expect seamless, convenient and personalised experiences, irrespective of platform. Grocery retailers will need to adjust their omnichannel strategies to ensure that they not only meet customer expectations online and offline, but also differentiate themselves in the market while building efficiencies to drive sales and profitability.
Grocery retailers will constantly seek out ways to build an edge in e-commerce and meet customer needs. As Mark Burton at Inside Retail puts it, ‘retailers who don’t embrace and compete in e-commerce risk becoming a DVD in the age of Netflix with a shrinking market all around them. Retailers who do embrace and win in e-commerce will grow their customer base and market share.’
Adaptability and agility are essential to navigating change and business success. Agility and adaptability is your ability to show flexibility, openness and a willingness to respond according to the situation and using digital transformation as a major enabler.
Retailers will invest in transformational technologies poised to help enable retailers gain a significant competitive advantage. Incisiv 2020 Grocery Digital Maturity Benchmark report found that success in this market is predicated on adopting the right technologies and processes to meet a new shopper journey and different set of customer expectations.
Most grocery retailers are making investments but not necessarily addressing the highest priorities, such as convenience, nor the solutions that will deliver the best maximum ROI.
Jeff Wells at Grocery Dive helps bring a sense of reality that whilst we have witnessed tremendous disruption and growth in 2020, 2021 will be a critical year for supermarkets with the same structural and competitive forces that rattled grocery retailers pre-pandemic still lurking.
Ultimately, it is all about customer centricity and creating the right experiences.
Grocery retailers will have a greater sense of urgency to make key investments and adopt transformative technologies to support online grocery experiences that are customer-centric, frictionless, convenient and deliver features and services that are most important to shoppers.
Bill Bishop from Brick Meets Click said he ‘expects retailers, spurred by the great leap forward in online shopping, to make significant improvements to both their online experiences and fulfillment operations. Seamless integration for online shopping is finally going to get top priority.’
Phil Lempert (AKA The Supermarket Guru) and Bill Bishop shared their outlook for 2021 and that ‘supermarkets will inspire shoppers with technological innovations and that technology is in place for retailers to provide personalized meals and food recommendations.’
The team at Northfork could not agree more and are immensely proud of their partnerships and fortunate to call Walmart, ICA, Coop, Orkla, Tasty customers. They have bravely invested in customer-centric solutions and moved the needle in building deep technology integrations to unlock value for content to commerce initiatives and created convenient seamless shopping experiences both on and off retailer platforms.
There is an exciting opportunity for grocery retailers to collaborate and build deep, integrated partnerships with publishers and platforms. As retailers move further up the funnel to recreate, online, the experience of walking down the aisles, finding inspiration and enabling customers to manage their cart real-time from their smartphones. Retailers (and publishers/platforms) will look to invest in developing the right strategies and processes to deliver seamless, convenient and personalised content-to-commerce experiences, irrespective of platform.
It is a privilege to be part of such a dynamic and exciting industry. There is never a dull moment. As we look towards the future, I cannot express how excited Northfork are about the development opportunities and our ability to share our deep expertise in order to constantly innovate and experiment and help one another develop and grow.
Goodbye to (a crazy!) 2020, hello 2021!
Happy New Year!
Erik Wallin
Louise Taylor