2010.01.21 - Turning online grocery sales predictions into reality
The results from the 2009 IGD Online Shopping report have been widely publicised this week in the retail media, with the key finding from this study being the suggestion that online grocery sales will increase to £7.2bn by 2014 (almost double last year’s total).
http://www.thegrocer.co.uk/articles.aspx?page=articles&ID=206580
This prediction is heavily based upon the finding that although just 13% of consumers shopped online for groceries last year, more than a third (34%) expected to do so over the next five to 10 years.
A big question related to this statistic is the extent to which this increase in “expected” online grocery purchasing is driven by an assumption that retailers will significantly evolve the channel over this time period, compared to what is currently being delivered? Within market research it is a common challenge that stated behaviour can differ significantly from actual behaviour. When asked to think about their behaviour five to 10 years in the future, a generation which has seen more technological advancements in the last 10 years than in the previous 100 may assume that the landscape will change so significantly over this period that they simply assume that their behaviour will change in line with this. A greater proportion of consumers may “expect” that they will purchase groceries online on this basis, but unless retailers actually provide an online experience which develops beyond the current offer, these expectations may not be fulfilled.
With an anticipated £7.2billion market anticipated in 2014, it is critical that retailers get closer to their customers and better understand the developments which may see the proportion of the population shopping for groceries almost triple.
Having considered further findings from the IGD report, it can be suggested however that a more immediate concern for retailers should be focussing more on driving increased value and frequency from the 13% of active online grocery purchasers, rather than on the “expected” growth in this area.
The report highlights that almost one in three of current online grocery shopper’s purchase less often than once a month, with a further 34% doing so every 3-4 weeks. Clearly a significant proportion of individuals who are actively engaged in online shopping are only doing so on 12 or fewer occasions during the year. A further challenge related to this is that of these, 61% use more than one online store for their food shopping, with a quarter stating that they intend to try an alternative online supermarket in the next three months. Based on these figures, individual retailers may be better served thinking about the “infrequency” of their current online shoppers rather than efforts to entice broader penetration.
Clearly consumers are as promiscuous online as they are on the high street, so for the majority there is no “niche” feature currently being offered which prevents switching. Half of respondents in the report actually indicate that they would like to try other supermarket websites but many are “put off by the perceived effort involved”. Clearly rather than being true “loyalists”, a large number are merely bound by apathy or a lack of a significant reason to switch.
All in all, it appears that there is a significant opportunity for a retailer to step up over the next five to 10 years and “own” this market. The current online consumer base shops relatively infrequently through this channel, and appear to have little reason to be loyal to one outlet. If one retailer can get close enough to their existing online customer base to offer a radical and niche development that truly enhances the customer experience in line with their needs, they could positively impact the frequency, spend and loyalty of the existing online customer base. This could be the catalyst to generating wider penetration and potentially turn 2014 expectations into reality.
