Top 7 Trends Shaping the Future of Online Grocery Industry in 2022
At A Glance
- Despite the massive e-commerce boom, grocers had remained more or less immune to digital transformation until the pandemic
- Many powerful forces will bring about massive transformations in the grocery business industry in the upcoming years
- Grocers are now actively learning from other countries and retail sectors to recognize opportunities
- Some will successfully catch on to the wave of profitability, while others may struggle or even disappear
- With grocers working hard to keep up with the challenges, here we look at some of the top 7 trends that will shape the future of the online grocery industry
Even as e-commerce disrupted the entire retail landscape of the US and transformed the customer shopping behaviors at large, grocers had remained more or less immune to this digital transformation - until recently.
Powerful forces, such as technological disruptions, new competitive forces, and evolving customer attitudes, will bring about massive transformations in the grocery business industry in the upcoming years.
Until quite recently, grocers had remained largely sheltered from the waves of e-commerce for many reasons. However, grocers are now actively learning from other countries as well as retail sectors to recognize opportunities and catch on to the wave of profitability, while others may struggle or even disappear.
As retailers head into 2022, they find themselves faced with challenges. The shelves remain battered due to the supply chain shortage and grocers struggle to keep their warehouses and stores staffed due to foundational readjustments in the labor market. With grocers working hard to keep up with the challenges, here are some of the top 7 trends that will shape the future of the grocery industry in 2022:
Online Grocery Shopping will Continue to Expand
As COVID restrictions subside, online habits formed during the pandemic will continue to advance. Convenience and habit have helped sustain the growth of online shopping beyond the regulations of the pandemic. 30% of shoppers have purchased more categories online in 2020 vs 2018. In fact, it is likely that ~ 75% of shoppers would have purchased groceries online by 2025.
As shoppers begin to return to normal life after a year+ of restrictions, most will increase in-store purchases. However, this will not cause digital sales to go down as habits formed with online shipping will remain. In addition, retailers have added digital capabilities that appeal to shoppers, young and older alike. With these factors, we see the share of the market for online shopping to reach close to 21% in the next five years
Stores May Return to Primary Shopping Channels
As shoppers look to get back to their normal lives, stores will return to the primary shopping channel, especially as delivery fees rise. The trend will persist for the next 3-5 years. Shopper preferences for the fulfillment of online orders would also vary in the upcoming years. In an Incisiv Survey, less than 10% of shoppers said they found value in paying for expedited delivery, especially 2 hours or less. Moreover, 25% of shoppers mentioned that they prefer membership-based delivery options.
Importance of the Research & Discovery Phase of the Shopper Experience Will Grow
Search, inventory visibility and promotions are critical yet very underwhelming aspects of most grocery websites. Shoppers look at online shopping as a substitute for in-store shopping. However, the experience of searching for products online can be frustrating. The grocery segment lags other industries as they fail to provide visibility into detailed product information for substitutes that are available. In addition, they lag in maturity around their online promotional offers.
With ~90% of shoppers checking the website even before planning store visits, the research & discovery process of digital channels becomes the most crucial element for success. 75% of shoppers actively seek promotions while shopping for groceries online. 80% of shoppers will leave a website if it fails to offer convenient navigation with relevant results. 71% of retailers have cited real-time inventory call-outs as a major hurdle in onsite inventory management. Keeping such statistics in mind, it becomes evident that the research & discovery phase will become extremely critical in the coming years to make shopper experiences satisfactory.
Ability to Filter Products by Fulfillment Channels
With ~75% of online orders set to be fulfilled from stores via in-store pick-up or curbside pick-up, easy navigation of fulfillment options is a requisite for smooth shopping. Currently, only 8% of retailers offer this capability to filter out the products’ basis fulfillment options.
Target offers shoppers an entire section of fulfillment filter options, with the ability to get expedited same-day delivery. The variety of options reflects the level of choice and convenience available to the shopper.
Seamless Ordering and Checkout Experience Will Gain Momentum
Loyalty in online shopping is low; 50% of online shoppers defect for better deals. Retailers have to make the value tangible for the shopper beyond the product and make checkout an easy and frictionless process. 1 out of 5 shoppers would abandon a cart if the checkout process is long/complicated. 56% of retailers cited inventory accuracy as a problem for their omnichannel program.
Shoppers are increasingly seeking personalization and recommendations in their shopper journey. Helping this acceleration is the surge in the adoption of digital wallets, e- gift cards, and QR codes that are simplifying the online ordering shopper experience. A major investment area for retailers should be to maximize real-time inventory visibility. Shoppers want to know both the availability of in-store inventory as well as the exact location of the product in-store.
Many brands are now even offering a plethora of digital payment options to make the checkout experience seamless for shoppers. For instance, Rewe offers multiple digital payment options including cards, Paypal, Rechnung, and SEPA.
Convenience of Placing and Receiving Orders Will Become Even More Critical
Availability of omnichannel fulfillment options has become widespread with 86% of retailers now offering BOPIS and 71% offering curbside pick-up. However, it is the ease and experience of ordering and receiving the products that will determine winners and losers. 85% of shoppers prefer to receive their grocery orders in 2 hours or less. 65% of shoppers use BOPIS to avoid paying shipping fees.
What was visionary a year ago, is ordinary today. Retailers such as Target and Walmart, which had mature omnichannel fulfillment capabilities pre-pandemic, saw 200%+ growth in digital sales. Retailers who lagged were forced into action and introduced new experiences such as BOPIS and curbside pick-up in record time.
Going forward, operational execution (speed, ability to customize, and real-time order visibility) will drive differentiation and provide a competitive edge. Many brands are already working on this to differentiate themselves from their competitors. For example, Walmart enables shoppers to coordinate the pick-up via the Walmart app or by calling up the store to inform them about the status, this ensures immense efficiency for the entire process.
Customer Satisfaction and Issue Resolution Will Become of Utmost Importance
With the pandemic massively disrupting supply chains and product availability, customer service evolved beyond complaint resolution to a medium of trust-building. In an increasingly digital world, transparency, convenience, and personalized communications are pillars of trust and satisfaction.
In the absence of physical interactions, customer satisfaction has to evolve from a call-center resolution function to a proactive customer engagement and satisfaction engine that will directly contribute to shopper loyalty. 89% of shoppers are more likely to make another purchase after a positive customer service experience. 60% of shoppers who subscribed to the loyalty programs highlighted that they end up spending more with the brand due to the program incentives incurred.
Hence, brands are now innovating and coming up with different ways to offer personalization to their customers. For example, Tesco has a host of options mentioned in the account section that a customer can easily update to get a personalized experience as per their diet/health preferences.
While a silver lining seems to be on the horizon as we move towards 2022, the pandemic is still constantly changing shopper behavior. Hence, grocery companies, be it large or independent retailers, cannot afford to overlook how these trends will shape the future of the online grocery industry.