Grocery eCommerce could triple in household penetration, but are Grocers ready to deliver?
Grocery eCommerce sales accelerated during the pandemic and are expected to continue to grow. McKinsey’s Apr’22 report says it could potentially triple to 35% penetration, fueled by consumer demand — but, they find many Grocery retailers don’t yet have strong capabilities to manage this.
Their Dec’21 research found:
“The main drivers of e-commerce’s growth during COVID-19 were safety and convenience, but … consumers also value the channel’s unique features—such as product comparisons, assortment, and personalized promotions.”
To win in eCommerce, Grocers have a lot to manage, including catering to different Shopping Trip Missions:
Consumers make shopping trips based on need states, e.g., “Stock up” (accounting for 41% share of monthly grocery spend), “Shop for a few items” (24%), “Buy the meal for the day” (16%), and “Shop for a specific item” (19%).
How shoppers fulfill each of these has evolved over time as new channel options arose, including digital. E.g., 15% of stock up trips are now fulfilled through online order delivery.
These shopping behaviors “compels retailers to offer a full portfolio of e-commerce options (such as same-day delivery, two-hour delivery, instant delivery, and click and collect). As demand spreads across different trips, the result is smaller baskets.”
They recommend: “consumers are looking to save money, be healthier, build on their (rediscovered) joy of cooking, and find the best promotions more easily. For each of these needs, an evolved digital presence (both app- and web-based) can help grocers highlight their assortment, personalize their promotions, and engage consumers in a more meaningful manner—something that a purely brick-and-mortar offering cannot do.”