Digital Resistance: Will U.S. Warm To Online Groceries?

by , Jun 5, 2013, 3:57 PM
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For all of America’s enthusiasm for e-commerce, when it comes to groceries, most U.S. consumers still shop in the Stone Age. And while many experts have argued that it isn’t a matter of if -- but when -- this style of food shopping takes hold, there still aren’t many options. 

But that may be changing, with news that Amazon is expanding its six-year “test” of AmazonFresh, and with Walmart still tinkering with its Walmart To Go, now reportedly in San Jose, Calif., and five other markets.

“The issue is not consumer demand,” Rich Tarrant, CEO of MyWebGrocer, which manages digital connections for retailers, tells Marketing Daily. “We know through the success of businesses like drugstore.com and diapers.com that people want to shop this way. It’s about access. Unless you live in a market with ShopRite, Ahold’s Peapod or Fresh Direct, you just don’t have access to online groceries.”

And it’s not as though Americans are not immersed in other digital food options: Nielsen says 38% of grocery shoppers spend at least 50% of their planning time online, and that 18% spend at least 75% of their time online. And 80% of digital planners check store circulars online; 62% of Generation X and 73% of Millennials say they rely on smartphones for product information while in grocery stores; and 22% of digital planners preload coupons onto their phones.

To more fully understand how connected U.S. shoppers see their digital options, MyWebGrocer and FGI Research surveyed 30,000 consumers, and discovered five distinct profiles:

* The largest segment -- 35% -- are what it calls the New Digital Shoppers. These younger urban professionals are the most ethnically diverse, and early tech adopters. They are also prolific online planners. While they prefer shopping for groceries in stores, they are open to online ordering.

* The second-largest group, Traditional Grocery Enthusiasts, account for 24% of all digital shoppers. They are older, with 63% falling into the Baby Boomer demographic, and while they are likely to review specials online (and 67% do), they are less interested in other digital tools. Many are empty nesters, and they spend the least on groceries per month.

* Passionate Planners account for 17% of digital food shoppers, and because they earn the least and live furthest from stores, are likely to leverage every digital tool possible to save money. “They are 22% more likely to review circulars, build lists, review meal plans, recipes, and product reviews online,” the report says, “and 34% more likely to use a mobile phone for help.

* Affluent shoppers make up 12% of the segment, and are a combination of young professionals and urban retirees. They aren’t particularly budget conscious, and say they prefer online ordering options.

* Reluctant shoppers, who also account for 12%, find everything about food shopping painful, and use online tools to minimize the discomfort. They shop in stores, but wish they didn’t have to. They are 17% less likely than other groups to use online planning tools outside of viewing the online grocery store weekly specials.

Tarrant says he expects to see more innovation, as Amazon and Walmart size one another up, and continue to work out the logistical complexities of  local delivery. “No one is making monstrous strides in this vertical, so I think they’ve thought they had time,” he says.

But that is changing, he says, as food offerings around the globe become more sophisticated. Tesco, for example, is testing a mobile-shopping experience at Gatwick Airport, which allows consumers to scan items they want before boarding a plane, with delivery scheduled for the precise time they return from vacation. And in South Korea, Tesco shoppers can scan items in a subway station as they leave work, and have them arrive just when they get home to prepare dinner.

“And all four of the leading brands in the U.K., for example, offer this service,” he says. “They are heavily advertised, and everybody knows about it.” Once more e-shopping options are available, they’ll respond, he says. “Americans just aren’t that fundamentally different than people in other parts of the world.”

5 comments on "Digital Resistance: Will U.S. Warm To Online Groceries? ".

  1. Jim Thompson from Temple University
    commented on: June 6, 2013 at 9:18 a.m.
    The biggest barrier to online grocery shopping in the US is that it is competing with the most efficient distribution and retail system in any business sector in the world. As an off-shoot of this distribution system, online shopping benefits from most of the same cost efficiency. But for the vast majority of US consumers, online grocery shopping is LESS convenient than driving a few minutes to the local supermarket. As a side bar, I had to laugh at the example of a "monstrous stride" cited in the article. Mobile grocery shopping for travelers about to board an airplane. Really?! How did retailers miss this opportunity for so many years.
  2. Reg Charie from DotCom-Productions
    commented on: June 6, 2013 at 5:03 p.m.
    I do not see online grocery shopping as anything to laugh at. My small town has 2 grocery stores that offer online shopping and delivery. I have been doing all my grocery shopping online for over 3 years.
  3. Paula Lynn from Who Else Unlimited
    commented on: June 6, 2013 at 5:50 p.m.
    When you have to pay for someone else to squeeze your tomatoes.....
  4. Reg Charie from DotCom-Productions
    commented on: June 6, 2013 at 10:46 p.m.
    I do at one store as they charge $10 for the service, including delivery. At the other store shopping is done by volunteers and delivery is $5.
  5. Paula Lynn from Who Else Unlimited
    commented on: June 7, 2013 at 7:53 p.m.
    Volunteers to bag. May you earn so much in your life as they do.

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