Grocers need to develop an integrated value proposition that meets consumer needs

GROCERY ECOMMERCE GROWTH

Excelling in The Next Horizon of E-Commerce

PROTECTING PROFITABILITY

Consumers will increasingly shop for groceries online in the years ahead. E-commerce in the North American grocery industry has continued to mature and scale, and retailers must make a series of strategic investments to keep pace. The industry is now on the edge of the next transformation in e-commerce – with grocery executives expecting e-commerce penetration to more than double for their own organizations in the next three to five years.

The main drivers of e-commerce’s growth during COVID-19 were safety and convenience, but consumers have come to embrace the value of the channel’s unique features – such as product comparisons, assortment, personalized promotions, home delivery, reliability, assortment breadth, and flexibility.

Consumers Shift Toward E-Commerce

CUSTOMIZED SHOPPING

As consumers have shifted toward e-commerce, some retailers feel some trepidation because they do not feel prepared to meet the dual challenges of delivering on growth while achieving profitability.

To enhance their capabilities in the short term, grocers have responded by implementing three specific strategies:

  • Building partnerships with technology companies to expand fulfillment capabilities, and to introduce artificial intelligence in replenishment and commerce – ie: to enable consumers to build grocery lists while shopping online
  • Continuing to rely on third parties to manage costs and expand their e-commerce offerings and to provide new and innovative value propositions to customers
  • Implementing capabilities across the e-commerce value chain, from in-store digitalization and pricing and promotion to trade spending and media and advertising

New And Innovative Value Propositions

CONCLUSION AND RECOMMENDATIONS

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.

However, simply redefining the value proposition will not be enough. To draw more consumers to e-commerce, retailers must offer lower costs, reduce minimum order requirements, protect quality and freshness, and enhance the breadth and discoverability of their assortments.

The role of the store will continue to be significant with improved experience and through self-checkout and grab and go.