Online grocery sales have been ramping up for the past five years, and 2017 promises another year of double-digit growth. As consumer adoption continues to escalate, retail- ers are seeking another point of differentiation in a segment hat seemingly has unlimited sales and earnings potential.
Amidst all the hype, online grocery has reached something of a
watershed moment. Quality and freshness remain major obstacles
to growth, and integrating digital offerings with physical stores into
some type of click-and-collect model is a prerequisite for success.
Some industry observers question the major investments needed
to be made by retailers in the digital world, unsure about its long-
term viability. As one retail analyst asks, is it simply a case of The
Emperor’s New Clothes While online retailing may be glamorous,
it is estimated that online grocery sales still grew at half the rate of
discounters like Aldi and Lidl, which do not have online strategies,
suggesting that consumers value lower prices over home delivery.
One of the major concerns consumers have with buying groceries
is quality and freshness. These concerns have impacted online buy-
ing decisions and many consumers still prefer to shop at brick-and-
mortar locations for items like produce and other fresh foods.
However, most observers are overwhelmingly positive about the
future. It is estimated that online grocery sales will generate $24
billion this year, up from $17 billion a year ago. The gain is largely
attributable to click-and-collect options by major retailers like
Kroger and Walmart, creating a shift from small purchases online
to larger basket sizes.
A recent report from the Food Marketing Institute and Nielsen
projects that online grocery spending could reach as much as $100
DEVISING A DIGITAL GAME PLAN
For grocers, online retailing is more of a defensive play; but that
will soon change for those that can integrate effectively. BY LEN LEWIS