By Richard Thompson
Consumers are getting more comfortable about purchasing groceries online, and retailers who sell groceries both online and in-store are reaping the benefits. Across all demographics, consumer perceptions over increased costs and perishable product risks have declined, and as more retailers offer online services, more consumers are taking advantage of them, according to the recent A.T. Kearney report, “Capturing the Online Grocery Opportunity.”
Retailers who have adopted omnichannel messaging – engaging customers both in-store and on electronic devices – have seen more customers order groceries online for delivery or pick-up, says Michelle Cote, Vice President of Data & Insights at MyWebGrocer, a digital solutions provider that offers the most technologically advanced grocery solutions to brands and retailers.
“Today’s omnichannel experience [for consumers] is the 21st century version of catalog shopping,” says Cote. Combining in-store advertising with online services, omnichannel solutions take shape as digital marketplaces that bring small-batch stores into the consumer limelight, provide apps like Allrecipes.com on mobile devices to let consumers shop on their own time and create virtual landscapes that compliment traditional brick and mortar experiences.
“Grocery is one of the last verticals to go omnichannel, but growing consumer adoption is occurring because online services are becoming more widely available and, as a result, consumers are using it more reliably,” says Cote. She notes that consumer adoption of online services has grown by double digits (15 to 20 percent) in the last three or four years.
As the entire e-commerce market develops, grocery shoppers have grown past the need to show up in person to pinch the produce with many preferring to shop on their smartphones. “Consumers are ready to use shopping alternatives that are habitual and work for them.” says Cote, “As retailers offer flexible options like click and collect, delivery and email alerts – and become more digitally active – people are becoming trained in using grocery retailers online.”
Even for hesitant consumers who say they avoid online shopping because of perceived higher costs and questions over freshness, the A.T. Kearney study found that those views are softening and that paying more for home delivery was worth the price of convenience. “What we found is that now, around 80 percent of respondents surveyed would be willing to pay for home delivery instead of going to the store for pickup – even though the majority still visit stores to shop,” says Randy Burt, Co-author of “Capturing the Online Grocery Opportunity” and Partner at A.T. Kearney.
Burt and his colleagues at A.T. Kearney have studied consumer participation in online grocery purchases and noted that while the online market currently represents around two to three percent of the total food industry, that number is projected to increase to around 16 percent by 2023. As retailers interact with omnichannel shoppers with personalized offers, pricing and promotional strategies tied to shopping preferences and past purchases, they will create integrated experiences for every shopper regardless of where and when they shop or what device they are using, according to the report.
“The market is starting to appreciate the value of buying groceries online.” says Lior Lavy, Co-founder and Chief Operating Officer for Artizone, a specialty grocery delivery company. “And at the same time, the market is also starting to appreciate buying sustainable foods from local vendors.”
Artizone is an online farmers market and home delivery service whose mission is to provide farmers and small store owners a direct connection to consumers who are looking for a diverse selection of locally produced groceries that can be delivered straight to their home. “We do whatever it takes to keep artisan shops from having to rely on the mainstream market.” says Lavy, “Even though walk-in marketing is still significant, our site can reach customers 30 or 40 miles away.”
When asked about the company’s biggest purchasers, Lavy pulls no punches and simply says, ‘Everyone.’”
“The elderly population uses us because they need the help; the [Millennials] use us because of the local sustainable movement and, of course, foodies,” he adds.
Lavy has watched the development of his artisan delivery service grow for the last five years, originating in Dallas at the end of 2010, opening a second facility in Chicago in 2012 and, most recently, opening a third facility in Denver earlier this year. Its success, he says, comes from the delivery logistics and online placement that his company focuses on, allowing the local producers to focus on bringing the best quality product to the table. “Currently we work with about 100 different local farmers and stores in the Dallas area, 120 in the Chicago area and around 13 or 14 in the Denver area.” says Lavy, “It takes some time to get to 100.”
While dried groceries and packaged foods still represent the majority of online purchased products, the share of purchased perishables is continuing to grow, according to A.T. Kearney. Currently, Artizone offers a selection of products that range from Holy Cow Beef – extra lean, grass-fed ground beef – for $8.79 a pound to Inglehoffer Dijion Stone Ground Mustard for $6.72 a bottle, providing gourmet products at prices that compete with brick and mortar specialty food retailers. “We are proud to say we don’t have any uplift on the prices for the consumer, I think we are better than Whole Foods,” say Lavy.
Earlier this year, Artizone received the Tech Titan Award, a technology adaptation award, in Dallas for its use of current technology services that keep delivered food prices similar to the cost groceries would be if purchased at a brick and mortar store.
Cote sees the recent adoption of buying groceries online as a positive sign that will not go away anytime soon. As long as customers have a wide range of choices on how they purchase groceries, there will always be a market for anyone selling food products online.
Burt understands this as well: “Shoppers want to transact when, where and how they want to…it’s the current incarnation of the ‘customer is always right’.”