The Future of Online Grocery in Western Europe
Initially due to logistical reasons, as well as consumer proximity to physical stores, groceries were not a natural fit for digital buying. However, many consumers find the convenience of online ordering, payment and delivery options, preferable to shopping in physical stores.
Similar to other ecommerce trends, digital grocery has seen greater popularity in the UK than in comparison to the rest of Europe. Adobe Digital Insights data from June 2018, indicated that 52% of UK adult internet users shopped online for groceries in the year prior year. In France and Germany, the comparable shares were 39.8% and 32.5% respectively.
So what’s preventing a greater adoption of digital grocery shopping in Western Europe? And moreover, what does the future hold for digital grocery?
BARRIERS TO DIGITAL GROCERY SHOPPING
According to a research conducted by RichRelevance in March 2018 the barriers to the wide adoption of digital grocery by consumers include:
- The inability to touch and feel fresh produce
- The actual freshness of produce
- Lack of trust in other people to pick the best or freshest items
- Delivery costs.
But it’s not just shoppers that struggle with online grocery shopping, grocers too, have difficulty with very limited net margins on products and high logistical and distribution costs. Which essentially means retailers investing in digital grocery are likely operating at a loss hoping to build a strong and loyal customer base.
In areas like Germany with very strict laws on food storage, handling of fresh food, and different temperature requirements for different types of meat and produce, the impact is even more pronounced.
Given all of these obstacles, it comes as no surprise that until now, consumers have been more open to purchasing long shelf life items and household products online over fresh fruit, vegetables and meat.
So exactly where does digital grocery go from here?
ENABLERS TO FUTURE ADOPTION IN DIGITAL GROCERY
Considering the logistical issues cited above, there’s a greater adoption of digital grocery shopping in urban environments. The reason being that it is easier to overcome delivery hurdles in urban environments with high population density and organic preference for delivery services. In urban environments, consumers are less likely to negatively react to delivery costs as many prefer the convenience of delivery to transporting groceries on public transportation. This makes way for retailers to market more creatively with differentiated services like one-hour delivery windows which are highly attractive to busy shoppers looking for on-demand service.
Generational preferences also play a large role in digital grocery adoption. Many experts suggest Millennial and Gen Z generations, which are most accustomed to trying and trusting delivery and internet services, are signing up for digital grocery services much faster than previous generations. Digital grocers would be advised to invest in awareness and services specifically for this slice of society in order to accelerate future adoption.
Newer on the scene, are voice-activated assistants such as the Amazon Echo and Google Home, widely adopted in the US these are now entering Western European households. These devices are expected to loom large for grocery ordering and purchases in the future as they allow consumers to add items to their carts while they are quite literally looking in their cabinets and refrigerators or making meals in their kitchens simply by speaking.
According to the Online Grocery Survey conducted by RichRelevance in 2018, convenience is one of the main attractions of shopping online. Enabling frictionless experiences that save time and reduce obstacles will be the key to fostering growth in digital grocery. Incorporating personalization is an essential foundation to ensure consumer behaviours are understood and incorporated into the shopping experience, ultimately improving the journey and long-term relationship.
However, with the entry of Amazon into the US grocery market, it won’t be long before the master of convenient digital shopping experiences, extends its’ reach into Western Europe (Amazon Fresh is already available in Berlin, Hamburg and Munich in Germany).
To combat the threat of Amazon in the future, digital grocers should consider how they can create an experience that is memorable and differentiated. For inspiration, see our library of articles on how retailers are competing on experiences.
Ultimately, it will be the experience offered by digital grocers that will make, or break, their ability to compete and succeed in creating widespread adoption of digital grocery shopping in Western Europe. With technologies like personalization available to craft meaningful and unique experiences relevant to individual tastes and preferences, digital grocers can find many ways to elevate themselves above (and apart) from the likes of Amazon. Consider the benefits of understanding each individual shopper nuances on a granular level and leveraging that data to surface unique content appealing to their senses in the form of recipe inspiration, meal bundles, frequent purchases and favorites. The keys to the future of digital grocery lie in becoming an essential and indispensable part of daily life. Read more about what RichRelevance CMO, Mike Ni, says about Digital Grocery in eMarketers’s Western Europe Ecommerce Trends in 2019 here.