Online Grocery Shopping vs. Physical Stores

In recent years, online shopping has grown significantly, with customers now used to buying travel, clothes, books, DVDs and other goods online thanks to their PC, tablet or Smartphone. It is estimated that the global market for e-commerce in 2012 was $4.2 trillion – an impressive figure that is growing every year. Now slowly, consumers are turning to other digital shopping categories such as groceries in a quest to save time and effort.  

[protected]A survey from February estimates that 15% of American adults have already shopped for groceries online while 19% say they plan to do so in the future i.e. a third of the American population are current or potential online grocery shoppers, while in the UK, 22% of the population bought groceries online last year. “The combination of high food prices, busy families and easy Internet accessibility has led to an increased interest in online grocery shopping” said Jackie Warrick, Advisor at CouponCabin.com. This could explain why Amazon, the global e-commerce leader initially made famous for selling books and DVDs, has recently trialled a grocery delivery service called AmazonFresh.   

AmazonFresh – in LA and Seattle exclusively for the time-being – lets customers order their groceries online and get delivered the same day for spends over $35. This covers a gap in the market for customers unwilling to wait the 24 hours most retailers currently require for deliveries. This service, along with other online grocery stores (popular firms globally include Walmart, US, Carrefour, France, and Morrisons, UK), are favored by customers who are looking to save time, plan meals and shopping ahead of time, and avoid the hassle of going to the shops. Though obvious drawbacks for customers include the lack of choice of products (this can prove problematic for fruit, veg, meat…), some manufacturers – especially in the confectionary industry – will be disappointed by the reduced occurrence of impulse buying.

Despite the inevitable growth of the online grocery segment, this does not spell the end of brick-and-mortar shops, though clearly, they are also being affected by changing customer needs. Not only is there the issue of the choice for certain products, but shoppers are now favoring small, convenience stores over megastores. For last minute essentials, it seems unlikely that customers will forget about physical stores anytime soon, meaning “convenience will be a source of growth for retailers for a good while”, says Dorsett, Kantar Worldpanel Director.

In the UK, large grocery stores such as Morrisons and Waitrose have understood this positioning and are currently opening up small facilities across London and the country to cater to this new need – it is basically the expansion of the “corner shop”.

Though there is a clear tendency towards online grocery shopping, it still only represents 5.1% of online spend and it is estimated it could take another 10 years before it reaches 10%, meaning brick-and-mortar stores will have time to adapt to the market while fine tuning their online strategy. [/protected]