Online grocery takes off

11 October 2013
BOSTON: Consumers around the world are ready to embrace online grocery shopping in a way not seen before, with new research indicating that some would use such services at least once a month.

The Boston Consulting Group (BCG) surveyed 4,325 people in eight countries, including two well-developed markets for online grocery shopping – France and the UK – and six nascent markets in Brazil, China, Denmark, Germany, Russia, and the US. It predicted that the total market for online grocery shopping would reach $100bn by 2018, compared to today's figure of $36bn.

BCG identified significant pent-up demand, especially among young families and affluent couples, a group it said were grocers' most important customers.

The average number of expected shopping transactions per year was 13.5, but this was significantly higher, at around 22, in Brazil and China, while Russia, on 17.9, also exceeded the global average. Denmark was at the other end of the scale, on 8.6.

In the US, where the number of expected transactions stood at 10.8, half of respondents indicated they would be willing to try a home delivery or click-and-collect service.

The difference in penetration rates among markets was, BCG suggested, more about supply than demand. It noted that those markets in which two or three grocers were fighting for online custom had seen rising online penetration as the competing companies invested in building and marketing their offers.

It further warned that too many grocers were adopting a wait-and-see attitude when the advantages of being a first mover far outweighed any disadvantages.

BCG highlighted four key elements for online grocers, including the need to act now and lock in customers, starting with click and collect before moving on to home delivery once scale was achieved.

Grocers should also look at affordable differentiation – the right range and quality of products, consistent and punctual delivery – and be prepared to evolve along with the market and customer base.

This issue was addressed separately at the World Retail Congress in Paris, where Tim Steiner, CEO of UK internet grocer Ocado, said the industry was experiencing "a major channel shift" to online.

"As the customers migrate from stores they are creating cannibalisation in those shops, which is going to cause bricks and mortar to have a long-term headache," he warned.

Data sourced from BCG, just-food.com; additional content by Warc staff
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