There was an urgency among independent grocers to enable online shopping during the pandemic. Should it remain a priority for them in 2024? What factors should AWG members consider when deciding whether to invest in online shopping? Ecommerce programs require a committed effort not only to launch but to maintain and continuously promote for retention and new shopper acquisition. Not to mention, peak demand has subsided since the pandemic. Is it worth the hassle? The hesitation is understandable. Understanding the present state of online grocery shopping in 2024 will help answer these questions.
State of the Industry
While total U.S. online grocery spending has declined year-over-year since the pandemic, total sales still represent a significant share of the market. According to data from Brick Meets Click/Mercatus Grocery Shopper Surveys, 2023 digital grocery sales ended at $95.8 billion compared to $97.6 billion at the end of 2021. Curbside pickup and delivery have both remained steady or gained ground, while ship-to-home sales have experienced a significant decline.
However, this doesn’t tell the whole story with regards to future outlook. Shopper surveys found that around 4 in 10 Millennial and Gen Z shoppers buy groceries online weekly, with more than half of respondents stating that they increased online grocery shopping in 2023. Primary drivers for these shoppers were convenience, price, and accessibility. The number one retailer identified by these shoppers for placing online grocery orders was Walmart.
What does this data mean for the independent grocer? Now that younger generations are coming of age and increasing their purchasing power, it is critical to secure the future of your business by offering a seamless and affordable online shopping experience, especially if you have young families in your area. As retail giants such as Walmart invest in online shopping infrastructure and continue to capture the largest share of online grocery sales, new customer acquisition and lost shopper reacquisition will become increasingly difficult for independent grocers who are left behind.
Taking Action
While industry data is useful, ultimately the decision to invest in an online shopping platform should be driven by local factors. Here are some points to consider when making that decision..
Competition
First, how many competitors in your market are offering online shopping? Do they have a “white label” (i.e., retailer-branded) digital storefront, are they on a marketplace such as Instacart, or do they offer a combination of both? Have they recently invested in physical infrastructure such as curbside pickup? If the answer to any or all of these is yes, the bad news is that you have likely already lost shoppers. The good news is that it is entirely possible to win these shoppers back!
Consumer Demand
Understanding your competitive market is one way to gauge consumer demand in your area, but there are other strategies to consider. Social media platforms can be used to poll your customers. Boosting posts makes follower engagement more likely. AWG’s marketing team can help you with this if needed! Additionally, loyalty and shopper marketing platforms such as AppCard and Givex, AWG’s preferred partners, have shopper segmentation and email capabilities to help you communicate with your customers in customized ways. For example, polls sent via email could be tied to rewards points to entice shoppers to respond.
Capability to Execute
Finally, what capacity do you have to fulfill customer orders and maintain an ecommerce platform? There are pros and cons to both retailer-branded “white label” platforms such as Freshop, as well as full-service marketplace solutions like Instacart. A retailer-branded platform allows for full control over and retail media space, customer data, and pricing. However, order selection and occasional technical troubleshooting will require ongoing effort at the store-level. Marketplace solutions provide contractors for both order selection, staging and delivery, reducing store-level involvement, but may ultimately cost more because of the transaction fee-based pricing as opposed to fixed monthly costs.
Next Steps
Developing an ecommerce strategy is not a decision that should be made lightly. The first step is to schedule a time to meet with the ecommerce team at AWG to assist you in analyzing your market and overall digital strategy. Work with them to develop a plan of attack to grow your customer base, drive shopper engagement, and compete in your market. For more information, please contact Logan Bayless at [email protected] or (816) 680-2260.
