Online Grocery Shopping in 2021: Challenges and Opportunities Faced by Retailers
An interesting study from Statista shows that April/May 2020 saw a huge percentage change in internet food sales in the UK. This spike in sales most likely comes down to the COVID-19 pandemic, with the UK being forced into lockdown and therefore many individuals were left with no option other than ordering their groceries for online delivery.
With a decrease in demand for in-store grocery shopping, and a move to a digitised order and delivery process, supermarkets experience a significant opportunity in building upon a service where consumers receive their weekly shopping without having to leave the comfort of their home.
Unemployment
A major challenge posed by coronavirus is the rise is unemployment, therefore meaning that individuals have less income as demonstrated in a study by Statista, which shows 34% of individuals in the UK lost income due to COVID-19. For shops offering online grocery delivery, this may be challenging to overcome as there are often additional delivery fees that may go along with grocery delivery. In order to combat this, shops should offer some form of discount for return custom, where returning customers experience benefits such as reduced delivery costs and other discounts.
Old vs. New
Prior to the ‘stay at home’ message throughout the majority of 2020, supermarkets were still beginning to place serious investment into their online grocery offerings. As society comes to rely on a seamless, convenient experience with other services such as clothing retail and content streaming, it makes sense for supermarkets to follow this trend and provide an entirely digital experience.
However, having spoken to friends and family regarding this subject, I found a significant number of people would still prefer the tangibility of shopping in-store. Despite offering an online grocery service, it is likely there will always be demand for the offline alternative.
The Older Generation
A clear opportunity facing shops looking to adopt online grocery retail is capturing the elderly generation as a customer base, especially as they’re likely to be isolating due to the pandemic.
With 75% of adults over 75 using the internet each day, and as one of the wealthiest demographics, it would make sense for firms to place a focus here. Effectively marketing products towards these individuals, with effective SEO use for example, could result in increased profits. However, there may be an element of cognitive dissonance in relation to technology with some elderly individuals, therefore ease of use and accessibility should also be a focus.
The Younger Generation
A 2019 study found that students in particular felt more confident and relaxed in obtaining services online. The below statement also reflects this view:
“the internet is omnipresent in my life” — Anonymous student contributor (Digital Society, Week 3)
As students are already comfortable in utilising a variety of online services, seeing the internet as ‘omnipresent’, it is clear there is an opportunity for grocery retailers to target this market. With alcohol and food being a student’s biggest expense during Freshers’ week, perhaps online grocery retailers could offer student discounts during this period.
Ocado’s Downfall
Ocado, despite topping the rankings for online shopping last year, slipped to joint fifth due to delivery slot shortages. This just highlights the importance online grocery retail holds, and how vital it is to remaining competitive. If retailers are to compete with rivals in the market, sufficient investment must be placed within this sector. Yes, online grocery retail is a relatively new alternative to traditional in-store shopping, there is however clear evidence this digitised alternative is highly valued by customers. I believe that a retailer without a focus on the digital side of food shopping, may fall behind within the market.
Uber Eats
Due to the longevity of the CoVID-19 lockdown, firms such as Uber Eats are now also offering grocery delivery.
“grocery will be a large part of what we’re doing” — Raj Beri, Uber Eats
This therefore means an increase in competition for supermarkets. In order to combat this, supermarkets could reduce their delivery fees or expand upon the free delivery services they currently offer. Competition often boosts innovation, therefore Uber Eats entering the market may actually aid in the development of digital grocery retail.
Large vs. Small
With large supermarkets offering enticing services such as free delivery and same day delivery, the question can be asked, how are smaller independent shops supposed to keep up? It is unlikely that small grocery shops and butchers have the resources and infrastructure to offer a similar level of service.
These smaller shops could instead focus on selling higher quality products in order to remain competitive and differentiate themselves, adopting social media (a much cheaper way of adopting digital technologies) to advertise. Although online grocery services may provide an opportunity for many retailers, it may not be so feasible for all.
Going Forward
Without doubt 2020 was a great year for online grocery sales, with the sector seeing a 79.3% increase on the previous year. However, can retailers maintain similar levels going forward?
The COVID-19 pandemic catalysed this sharp rise in sales due to quarantine measures, however after experiencing the ease and convenience of having a weekly food shop delivered to our homes, many of us will undoubtedly opt for this service going forwards. With grocery shopping in particular, post-coronavirus UK will likely have very different norms to those seen at the start of 2020…
I Propose…
I believe it is important for retailers to incorporate new digital practices into their business model, in order to stay relevant. This is why I believe Search Engine Optimisation (SEO) should be a focus for retailers when targeting consumers. As stated previously, the elderly and students stand out as two demographics likely to continue adopting online food shopping, therefore marketing the service towards them specifically may prove profitable. Also, ensuring there’s sufficient investment in online grocery retail should be of high importance for any firm, as a lack of investment may mean demand cannot be met and therefore resulting in a downfall much like Ocado’s.
The future of grocery WILL be impacted by technology, but firms must be aware of the challenges these technologies bring…
