The digital age is transforming almost every industry and the food and drink sector is no exception. One might not immediately think about supermarkets when the topic of digital enterprises is raised; but, those in the industry are well aware of how e-commerce is changing the business landscape. Russell Redman reports a study by consumer target marketing firm SKUlocal found, “Grocery shoppers have come to rely on digital channels and now expect online access in their path to purchase. Forty-three percent of shoppers have subscribed to receive home delivery of grocery products, and 47% have done so for beauty and personal care products.”[1] Those numbers can’t be ignored.

The report notes, “While some adoption rates remain low and not all categories have shifted fully online, e-commerce now represents the opportunity for significant market share which must be considered in the strategic planning process. While accommodating the shift may be a challenge, it also presents a host of opportunities.” There may be opportunities, but, Clint Rainey (@clintrainey) notes, times are nevertheless tough for many grocers. He reports, “Iconic brands like Winn-Dixie have gone bankrupt. Amazon’s Whole Foods purchase annihilated Kroger’s market value and, recently, one Morgan Stanley analyst warned at an industry conference in Vegas, ‘There is no playbook for the change that’s happening.'”[2] On the other hand, Rainey notes, “It is a great time — arguably the best time ever — to buy groceries. In a climate of fierce competition, store owners are racing to roll out new technology, lower prices, and win, by any means necessary, consumers’ ever-elusive ‘stomach share’.”

Reaching all grocery shoppers

The rise of grocery e-commerce is being driven by several factors including the introduction of home delivered meal kits, younger generations’ desire for convenience, and older generations’ need for service. Home delivery of goods is nothing new. In decades past, local general stores employed delivery boys to serve their customers and milkmen were a common sight on early morning urban and suburban streets. As cars became affordable and ubiquitous, home delivery quietly faded and supermarkets prevailed. The rise of e-commerce has made online purchases and home delivery fashionable again. It has also introduced news way for consumers to shop, like click-and-collect schemes. The Food Marketing Institute (FMI) breaks down grocery shoppers into four types: primary shoppers; shared shoppers; self-shoppers; and secondary shoppers.[3] They explain:

• Primary shoppers: These shoppers represent 44 percent of all shoppers and 65 percent of primary shoppers are women. They are “responsible for all or most grocery shopping in multi-person households.”
• Shared shoppers: These shoppers represent 23 percent of all shoppers and 59 percent of shared shoppers are men; which makes sense considering most primary shoppers are women. Shared shoppers are people who split grocery buying responsibilities between adults in multi-person households.
• Self-shoppers: These shoppers represent 27 percent of all shoppers and 56 percent of them are women. Self-shoppers come from single-person households and are, therefore, responsible for all grocery shopping.
• Secondary shoppers: These shoppers represent approximately 7 percent of all shoppers and 70 percent of them are men. Secondary shoppers aren’t the principal grocery shopping decision makers in multi-person households but are still responsible for doing about half the shopping.

Although FMI analysts recognize that shoppers in these different categories likely purchase groceries in many different ways, they don’t specify channel preferences for shoppers in each category. They do note that most food retailers are selling groceries both in stores and online. “According to The Food Retailing Industry Speaks, 2018,” they report, “63% of food retailers sell food online.” They also note it’s not just younger shoppers selecting the digital path to purchase. “Gen X, Boomers and Matures,” they write, “are joining Millennials.” The most common fulfillment method for online grocery shopping is standard shipping via logistics providers like UPS, FedEx, or the US Postal Service. Other fulfillment methods in order of priority are: pickup at a local store; same-day home delivery from a local store; next-day delivery from a local store; and pickup at a drop-off location other than the store. In order to reach as many consumers as possible, FMI analysts note 69% of grocery retailers are experimenting with e-commerce models. To that end, about half of all retailers offer grocery delivery and about half offer click and collect as options for shoppers.

The future of grocery

The future of grocery sales will undoubtedly involve more technology. Kerry Liu (@kerryliu), Co-Founder and CEO at Rubikloud, observes, “For many of us, the most appealing factor about online shopping is the convenience. We’ve been able to purchase goods online and have them delivered to our homes for quite some time. As a result, there’s a certain level of experience we’ve come to expect. Now that we’re seeing many grocery retailers offer online ordering and delivery options as well, it makes sense that we would expect the same level of experience from this vertical.”[4] Unfortunately, Liu believes the grocery sector has room to improve when it comes to order fulfillment. He insists, “It’s imperative that grocers get better in order to ensure they remain competitive and keep up with consumer expectations.” He believes technology can help. For example he asserts, “Implementing an artificial intelligence solution [can] link the supply chain gaps through predictive measurements. AI can predict shopping preferences, prices and also forecast changing foot traffic and the increasing quantities of people turning to online orders. This means last-mile delivery services can better source and retrieve ordered items and predict better substitutions.” Liu is not alone in the belief that technology will play a significant role in the future of grocery sales. Steve Markenson (@MarkensonSteve), Director of Research at the Food Marketing Institute, suggests a few other ways technology will change grocery shopping.[5] They are:

• Grocery Lists. “Many of us still make that paper and pencil list, even online shoppers still do this. But we are now also using digital tools and services for lists in general and those specifically for groceries, along with list services offered by our grocery store’s website or app.”
• Sales and Coupons. “The weekly circular and the paper coupon are not dead yet. But that does not stop shoppers from searching online for discounts, doing price comparison online and using digital coupons.”
• Grocery Store Apps. “The proportion of shoppers downloading the app specifically for their grocery store increased by almost 50 percent since 2017. Grocery store apps are reported to be among the fastest growing categories of apps.”
• Smartphones. “Smartphone usage in [the] aisle ranges from coupons and price comparisons to stored grocery lists and recipes and many other things. Not to mention the text messages to and from the spouse and/or kids about what they want.”
• Google It. “Whether shopping from home or with their smartphone, technology provides a world of information right at our fingertips. Shoppers can easily get product reviews, recipes, price comparisons and nutritional information on any screen they have in front of them.”
• Payment. “Technology is having a growing impact in this area. We can now scan our own purchases (sometimes with our own smartphone) and we can pay with a wave of our device or a click of a button.”

Markenson concludes, “This just scratches the surface. We have just blown by some of the technology basics, such as your store’s website, customized e-newsletters, the expansive social media options, text messaging, etc. The customer touchpoint opportunities are numerous and continue to expand.” Liu adds, “At the end of the day, people will always need to purchase food, and physical grocery stores are not going anywhere. The major change is how grocers interact with consumers. As grocers race to simplify the way customers shop, we’re realizing this comes with extreme difficulty and requires key technology upgrades across multiple departments. Technology has the ability to fix many of the core issues affecting the grocery sector while minimizing risk, improving profitability and preventing food from being wasted.”

Footnotes
[1] Russell Redman, “Grocery shoppers demand digital,” Supermarket News, 9 April 2018.
[2] Clint Rainey, “Welcome to the Golden Age of Grocery Shopping,” Grub Street, 6 November 2018.
[3] Staff, “Grocery Revolution,” Food Marketing Institute, 2018.
[4] Kerry Liu, “Grocery 2.0: How Technology Can Improve The Grocery Supply Chain,” Forbes, 26 February 2019.
[5] Steve Markenson, “How Is Technology Changing Grocery Shopping?” Food Marketing Institute, 10 September 2018.