By Paul Weitzel
In technology, being “sticky” is critical to long-term success. Stickiness means the target audience has progressed along the adoption continuum by moving from the trial phase to the repeat phase. From here the audience begins to expand usage as they continue their recurring purchases and/or behaviors. A “sticky” solution becomes so deeply engrained that it’s hard to return to the way things were. In essence, stickiness changes the status quo. Can you imagine returning to a regular cell phone that only provides talk and text capabilities? Of course not, because smartphones, and their applications, are “sticky.”
Grocery Retailers are Extending Loyalty Online
While Amazon and Walmart commandeer media coverage, grocery retailers continue to win the hearts and wallets of their preferred shoppers. In fact, core store shoppers that have tried online grocery shopping are now spending 30 percent of their dollars online. In other words, the store’s most important shoppers are also the most digitally engaged, proving that grocery eCommerce is indeed “sticky.” Additionally, nearly 90 percent of all online baskets are stock-up trips (sessions), making grocery eCommerce even “stickier.”
While grocery eCommerce will impact every CPG manufacturer, only a few are truly capitalizing on the opportunity today. Those that are digitally engaged are expecting as much as 40 percent of their growth to come from eCommerce. In addition to growth, astute manufacturers are collaborating with retailers as they are now positioned to regain market share that has migrated to alternative channels. This new level of collaboration will also help to deliver a seamless shopping experience for millennials, the fastest-growing consumer segment.
Grocery eCommerce, growing at 15 percent annually, certainly provides new opportunities for CPG manufacturers and retailers. However, the rules of engagement are vastly different. Manufacturers understanding these nuances will capture disproportionate growth. For example: share of sales for paper goods is 81 percent higher online than in-store. Yet paper goods, with deep household penetration and high share of sales online, do not fall into the top 20 in terms of variety. Therefore manufacturers should work with their retail trading partners to optimize assortment. They should also weave these types of insights into their promotion planning activities as well as their pricing strategies.