Commentary

Online Grocery To Reach $100Bil

Food and beverage retail is the next big sector that will feel the influence of digital shopping. 23% of U.S. shoppers bought groceriesonline in 2016, an increase of 20% versus just two years prior, and adoption has only accelerated since then. At this rate of growth, Nielsen and the Food Marketing Institute (FMI) estimate that Americans’ total online grocery spending will reach $100B between 2021 and 2023

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In order to support this growth of online food shopping, companies are pioneering new ways of getting orders into their customers’ hands. Home delivery is currently Americans’ preferred fulfillment option, with 69% of households saying that it appeals to them in a recent Nielsen and FMI survey. The emerging “click and collect” model (pickup from your local store or other location after placing an order online) is one to watch. In fact, Millennials, who can be a leading indicator of future trends, prefer click and collect over home delivery.

As Millennials’ incomes and household sizes grow, are all retailers ready to offer these consumers’ their preferred fulfillment model? According to Nielsen and FMI’s survey of brick-and-mortar FMCG retailers, the answer is no. One-third of retailers surveyed indicated that they are not equipped to support click and collect. What’s more, 36% don’t have a website or mobile app that enables online purchases.

Retailers can address this gap and take advantage of the demand for click and collect by focusing on three areas: who to target, what to offer them and where to reach them. Let’s take a closer look at these areas.

Today, four out of 10 online shoppers in the U.S. are using click and collect, according to Nielsen Homescan data. On average, they make a pickup trip every six months and spend $58 per trip. Click and collect attracts a broader shopper base than online shopping in general, and it skews highest among middle-income families and consumers aged 18-44.

Nielsen Homescan data shows that, compared with all online shopping, the typical click and collect shopping basket is heavy on edibles like meat, produce, dairy and frozen foods. Dry grocery is important too: it’s included in 50% of click and collect shopping trips. Across retail store types, shoppers are clicking and collecting the basics: bread, snacks, cheese and milk. A few unique categories stand out: household appliances and school supplies are popular click and collect items for mass merchandisers, and vitamins are important items for pickup at club stores.

Mass merchandisers are today’s most popular click and collect retailers, with the highest combination of online shopper penetration and sales dollars. Nielsen Spectra mapping reveals that those locations benefit from high concentrations of nearby click and collect shoppers and are likely to deliver the best return on investment.

As digital technology becomes a pervasive part of food and beverage shopping, click and collect is one of many models retailers should explore to build a more seamless online-offline experience. 

 

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