From Sofa to Shelf and Beyond - The Influence of Digital on Grocery Retail

September 28, 2018

What's the last thing you purchased online? A quick poll in Recipe Guru HQ unveiled an even split between clothing and electronics, with just one vote for grocery. This is not a surprising result. Grocery has lagged behind other retail sectors in consumer adoption of e-commerce for many years. Coresight Research predicts that e-commerce will amount to approximately 2.5% of US food and beverage retail sales in 2018 compared with 17.5% of US non-food retail sales.

 

There are a number of reasons why consumers are slow to make the move to online grocery. Chief amongst them is that consumers prefer to choose their own fresh foods and don't trust grocery retailers to select the freshest products. Walmart is attempting to overcome this issue, filing for a patent earlier this year on a system that will enable shoppers to see the fresh produce they have ordered and accept or reject accordingly. Other issues include inconvenient delivery slots and the associated cost.

 

Interestingly, although online grocery conversions are low, the influence of digital channels on grocery is on the rise.

 

More than 51% of grocery purchases are influenced by digital. 

- Deloitte

 

This means that whether consumers complete the purchase online or in-store, more than half of those transactions begin on a digital device. This is a significant figure when you consider the low grocery e-commerce adoption figures mentioned above. When brick and mortar is king, where does digital fit in?

 

Grocery consumers are using a number of digital touchpoints to drive awareness, searching out recommendations, reviews, coupons and inspiration. 80% of consumers have used a digital device to browse or research grocery products, while 77% turn to digital touchpoints such as recipe websites and blogs to find inspiration. For grocery retailers, this is good news. While the end goal is to increase online grocery sales, retailers can position themselves as the trusted source of information for consumers who are still reluctant to embrace grocery e-commerce. Grocery retailers are the obvious first port of call for consumers in search of product information and for many, they also act as a reliable place to source fresh recipe inspiration. Many grocery retailers offer the recipe content consumers crave, as evidenced by the likes of Waitrose and Tesco who excel in this area. Not just that, but Tesco placed recipes at the centre of their recent Tesco Real Food marketing campaign, illustrating that grocery retailers understand the importance of leveraging their digital touchpoints. 

 

 

What's more interesting about the number of transactions that are influenced by digital is how grocery retailers are reacting. Take Kroger as an example. Their Facebook page is packed with seasonal recipe inspiration and digital coupons for customers to download and use online or in-store with their Shopper's Card. This illustrates recognition of the omnichannel approach to grocery shopping many consumers have adopted and the continuing dominance of brick and mortar.

 

Also interesting: More consumers use grocery apps than use apps from other retail sectors, yet other retail sectors outperform grocery significantly when it comes to e-commerce sales. While many consumers don't yet seem ready to make the move to online grocery, this interest in digital channels such as apps acts as a gateway and leveraging this interest is key. Click & Collect and shoppable recipes are just some of the innovative ways grocery retailers are attempting to convert the 51% of transactions that are influenced by digital into fully digital transactions. With grocery app usage set to grow by 50% this year, and 70% of US consumers expected to buy groceries online by 2022, grocery retailers that are investing in their digital channels now are set to grab a slice of this estimated $100 billion spend. 

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