Within a decade, in the current climate of technology adoption and evolution, consumer spend on online grocery shopping could reach $100 billion, or the equivalent of 3,900 grocery stores based on store volume.
That’s the conclusion of new research being released by the Food Marketing Institute and Nielsen, which offered a preview of their “Digitally Engaged Food Shopper” analysis Saturday at the FMI Midwinter Conference in Scottsdale, Ariz.
The findings were discussed by a panel that included Dave Bornmann, SVP of business development at Publix Super Markets; Benno Dorer, chairman and CEO of the Clorox Co.; Chris Morley, president of Nielsen USA; and Tom Furphy, CEO of Replenium. The discussion was moderated by Thom Blischok, chairman and CEO of The Dialogic Group.
The group stressed a need for greater collaboration between retailers and CPG suppliers, who need to operate “like one integrated company,” declared Mark Baum, FMI chief collaboration officer and discussion panelist. Success will come to those who collaborate effectively, embrace automation, understand consumers better and use the new research as a call to action, panel members said.
The introductory set of insights from this joint, multi-year initiative offer a comprehensive look into the behaviors, motivations and expectations of the digitally engaged food shopper. This first perspective offers recommendations on how food marketers and manufacturers should be preparing their strategies and managing the organizational change that will be required to engage those shoppers.
“While we are more connected than ever to influence what shoppers buy, the window to influence those moments is narrowing,” Baum said. “FMI and its members will need to seize the opportunity to harness new skills and collaborate more seamlessly than ever before to effectively reach these digitally savvy food shoppers. We’re building the tools to help our members assess where they are in their connected commerce strategies.”
Initial findings from this study show that within the next decade, online food shopping will reach maturation in the U.S., far faster than other industries that have come online before. Research also revealed that the center store is likely to shift online faster than other departments, suggesting a fundamental evaluation of the role the store plays in digital food shopping.
“The grocery business truly is at a digital tipping point, where every aspect of the shopper’s journey will soon be influenced by digital, and increasingly enabled by digital platforms,” Morley said. “The need for retailers and manufacturers to know the differences around how consumers shop online versus in-store is greater than ever before. Analytics will be key for retailers and manufacturers to understand the digitally engaged food shopper on a deeper level. Beyond unified insights that connect the dots across consumer interaction and platforms, the winning strategy will turn metrics into action steps towards effective digital engagement.”
Among the key findings of the research:
1. Multichannel shopping: More shoppers are buying more of their groceries across channels. In fact, 23 percent of American households are buying food online today. This upward trend continues - of those who will buy online, 60 percent expect to spend more than a quarter of their food dollars online in 10 years.
2. Digital experimentation: Grocery retailers and manufacturers are meaningfully experimenting with business models and technologies to find their way online. However, the road to success has not been paved.
3. Grocery saturation: Grocery shopping will reach digital maturity and saturation faster than other industries before, such as publishing or banking.
4. Center store migration: Center store categories are already migrating online and this migration is expected to continue.
5. Young & digital: Younger, newer and more engaged digital shoppers adopt grocery related digital technologies more quickly and will hasten the expansion of digital grocery shopping further.
With grocery as the next big retail sector that will be reshaped by digital, retailers and manufacturers need the tools to realize their connected commerce readiness in order to meet the needs of the digital food shopper. An FMI and Nielsen online assessment enables them to assess six areas that are most important to online grocery shoppers: trust, value, experience, assortment, convenience and personalization.