WASHINGTON, DC — Think about how the grocery shopping experience has evolved over the past 12 years: Instacart was founded in 2012, and Amazon acquired Whole Foods in 2017. Now compare that with how the grocery shopping experience has evolved over the past 12 months.
In early 2020 — prior to the pandemic — online spending accounted for 14.5% of grocery sales according to the Food Industry Association’s annual US Grocery Shopper Trends report, a significant increase from the previous year of 3 to 4%. In March and April 2020, however, that number spiked to 27.9%.
As Gary Hawkins, founder and CEO of the Center for Advancing Retail & Technology (CART) stated on a May 2020 episode of the American Bakers Association’s Bake to the Future podcast, “The pandemic has accelerated nearly everything that’s been happening across retail over the last several years.”
There are considerable advantages to omnichannel grocery shopping. Online and click-and-collect streams allow consumers to do their research by comparing prices and finding the best product to fit their needs — especially for those whose income or spending has been upended by the pandemic. According to Nielsen data, in September 2020, 56% of online shoppers put careful consideration into every purchase at the point of sale, compared with 51% of brick-and-mortar shoppers.
“Constrained consumers are becoming more active and astute online users, tapping into these resources to source products, pricing and promotion to match their reduced spending ability,” said Ailsa Wingfield, executive director, Nielsen Intelligence Unit, Global Connect. “They are searching and shopping more regularly online to obtain the best deals without having to incur travel costs.”
And for many consumers, shifting to delivery or click-and-collect for center-aisle purchases, in which standardization and brand loyalty are major driving factors, was an easy switch at the outset of COVID-19. “Online shoppers initially buy products they’re familiar with and use routinely; that applies to both branded and private label,” said Bill Bishop, chief architect and co-founder, Brick Meets Click. “Omnichannel has the biggest initial impact on non-edible groceries and other center-store products. Frozen and refrigerated products also sell well online as long as the retailer can maintain the coal chain over the last mile.”
Although retailers have made considerable progress in adapting to the changing omnichannel shopping environment over the past year, there is still room to innovate and grow consumer loyalty across channels.
And although commercial baked goods like bread tend to fall in the center-aisle category, Bishop said consumer reports indicate that many stopped buying bread online because items they didn’t want were being substituted for the items they’d ordered.
In a presentation during the BakingTECH 2021, Sally Lyons Wyatt, executive VP and practice leader, client insights, at IRI cited data that highlighted some of these fulfillment gaps. In an IRI Weekly Survey in April 2020, 62% stated that some of the items they wanted were not available to order online, and 48% said that items ordered were not delivered due to changes in availability.
Although retailers have made considerable progress in adapting to the changing omnichannel shopping environment over the past year, there is still room to innovate and grow consumer loyalty across channels.
“It’s clear from the data that retailers will face a challenge in holding onto a lot of online shoppers as experience is not meeting expectations,” said Sylvain Perrier, president and CEO, Mercatus. “To remain competitive with mass merchandisers, regional grocers need to enhance the digital shopping experience so as not to give consumers a reason to spend their money elsewhere. Grocers have to look at where they can improve operationally, how they can efficiently scale to meet online demand and which services will be most effective at revenue protection going forward.”
For bakery, Hawkins suggested packaging is one such area that needs to innovate and adapt to omnichannel shopping. “Think about packaging of baked goods such as cookies, breads, other things. Their package was designed to sit on a shelf. That may no longer be the best design if the product now has to go in a tote for pickup at the store parking lot, for delivery to a home or into a box to be shipped somewhere,” Hawkins said.
