No matter where I’ve turned lately—industry conferences, newspapers, hallway chats—a common theme is how challenging the degree and pace of change is these days. Whether the conversation is about a major strategic shift under consideration or simply an individual trying to handle an ever-increasing workload, the challenges are real and felt by many. In the grocery space, the shift to online
is a big part of this conversation. After all, consumer
appetite is growing for online grocery. According
GROWING YOUR BIZ
to KPMG’s annual ;;;; Grocery Retail Consumer
Perception Survey—which this year was rolled out
to more than ;,;;; grocery shoppers across the
U.S. to understand their shopping behavior—;;; of
consumers do some or all of their grocery shopping
online, and ;;; plan to do so in the future.
The cost to get into the online game is signi;cant.
Whether it is the cost to add dark stores, distribution
centers, picking capabilities, logistics or a digital supply
chain, the investment can be substantial. Add the
complexity of last-mile delivery in a catchment area that
could be anywhere from ; miles to ;; miles wide, and
it’s not a particularly attractive proposition.
At the same time, given the extremely thin margins
of the average U. S. grocery retailer, missing out on
a market share shift could be a critical mistake. The
pro;tability of a grocery retailer is highly dependent
upon a stable and growing top line, and it doesn’t take
a signi;cant market share shift to wipe out a retailer’s
So if it’s expensive for a retailer to get into online
grocery—and to stay out of it—how does one with
already thin margins cope? There is no single cookie-cutter answer. However, we believe in three must-haves
to craft the right strategy.
1Really Get to Know Your Customers While not exactly a new insight, this is often overlooked and can lead to overinvesting in capabilities that won’t pay out. Our research shows that customers have very di;erent attitudes toward
online shopping. We have segmented buyers into four
main buying pro;les:
Online pioneers: This segment does the largest
portion of its shopping online and plans to increase it in
the future. On average, more than ;;; of their grocery
spend is online. These customers place the highest
importance on product quality and assortment and are
more interested in promotions than other segments.
Next-in-line adopters: This is the fastest-growing
segment. These consumers dabble in online shopping
but are not yet fully committed. They predominantly
live in the suburbs and favor a mix of traditional
grocery and warehouse clubs or big-box retailers.
Online dabblers: This segment shops online and
plans to shop a bit more online in the future, but
they have no plans for online to become the majority
of their spend.
The in-store crowd: This segment prefers to shop in
brick-and-mortar stores and shows no signs of shifting
spend online. Unsurprisingly, this is typically an older
consumer that is less tech-savvy and tends to be more
Katherine Black is principal
of consumer and retail
strategy for KPMG LLP.
of Online Grocery
Must-haves to help retailers mitigate the costly
proposition of online grocery. By Katherine Black
Expert views on retail strategy, talent management and leadership development