Online Grocery Retailing in the EU and US 2011

Whilst only some of the profiled players are profitable, the real reason why grocers pile into online food is that their key customers, the very shoppers who spend the most (usually the older segments of the population, looking after a family and bigger household, usually from the upper socioeconomic background, the more affluent customers with the biggest basket size) expect online grocery capabilities and home deliveries or click & collect and being able to order on the go from their mobiles, home or work PCs.

Shoppers spending across channels are also the ones who show most loyalty to a multichannel grocer, when they are given the option to shop cross channel by this retailer. Indeed many retailers have found that the multichannel shopper is the most valuable customer to have and that online does add to rather than cannibalize existing sales. For most retailers it is all about keeping these customers and not losing them to the online competition.

That said with many technological changes in the pipeline or already available, online grocery is set to become a profit driver in its own right. Innovative cooling solutions, new storage initiatives, falling delivery costs, cheaper, more efficient fleets and falling customer acquisition costs are just some of the new growth ingredients combining to revolutionize the grocery sector.

Click & collect was viewed by many as a hybrid model that was destined to become obsolete in a few years time, but in fact click & collect is actually the fastest growing fulfillment model at the moment. Why? Because consumers value the convenience of having their order assembled and ready for pick up on their way back from work without having to wait at home at a specific time slot. Click & collect combines convenience and spontaneity. For retailers it eradicates costly home delivery and gets round the problem of keeping to dedicated time slots.

The report is comprehensive yet succinct and to the point. After having identified drivers of change in online grocery as well as sizing out the opportunity, it goes on to give detailed, strategic recommendations before delving into competitor analysis, highlighting success factors and addressing outstanding threats.

(Industry source, high level executive, Strategic Insight Department)