Online Grocery Shopping
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Disruption Report ONLINE GROCERY SHOPPING by Table of content Disruption Report - Online Grocery Shopping About the report 2 Part 1: Online grocery market overview 4 Online sales: the main challenges 5 Conclusions on consumer attitudes from our survey 8 The impact of COVID-19 on grocery retail 9 Part 2: How to adapt to the changing reality 11 Industry predictions 11 Effects of the pandemic on the digital world 12 What’s missing from existing solutions 13 Part 3: Recommendations for frictionless online grocery shopping with 15 Click & Collect Why Click & Collect? 15 Online shopping reinvented 18 Summary 24 About Netguru 25 Partners 27 Contributors 31 Online Grocery Shopping - Report 1 About the report We hope that this report will be a source of interesting insights for retailers and changemakers alike while inspiring them to reimagine online grocery shopping in a way that boosts their business While regulators around the globe are huddling to contain the spread of COVID-19, consumers are towards profitability and brings delightful experiences to end consumers. trying to adapt to the new normal: severe social distancing and self-isolating measures. Retailers that want to accelerate out of the economic downturn need to be very Given the dawn of this new reality, many aspects of online shopping behavior will alter in the customer-centric in their decisions and investments. During discussions with retail leaders coming months. Preparing for these changes will become a basic necessity for the retail industry. from Delivery Hero, Zabka, and Ebay during our last Disruption Forum Retail, it became clear that customer-centricity is the way to win during the next normal. This ‘Disruption Report’ on online grocery shopping is aimed at Product Owners, Head of Moritz Spangenberg, Strategy & Transformation Leader, Netguru Innovations, and C-level executives from the retail industry who are working on the implementation of cohesive customer journeys. It will enable key decision-makers to have a bird’s eye view of the current market trends, prevailing challenges around sales and delivery, existing gaps within present solutions, and the aftereffects of COVID-19 on the online grocery market. The report also touches upon our reimagined digital shopping solution, i.e. Click & Collect, which allows consumers to order online and pick their groceries up from a designated spot. It is also a way for retailers to tackle issues around last-mile delivery. We built the report by doing thorough secondary research into existing data sources. We collated data from Statista, Forbes, Barclays, and Gordon Haskett, to name a few. The desk research was followed up by performing qualitative competitor analysis of top solutions from the European and the US markets, in which we examined the top retail chains including Walmart, Amazon, Tesco, Instacart, Żabka, and Glovo to understand their best online practices and digital sales touchpoints. To delve deeper into online shopping behaviors, we also conducted an exploratory survey with 75 respondents from Germany. The aim of this was to grasp and identify problems with existing online shopping solutions. We used the responses as a foundation for our reimagined Click & Collect solution that we discuss in detail later in the report. Online Grocery Shopping - Report 2 We hope that this report will be a source of interesting insights for retailers and changemakers alike while inspiring them to reimagine online grocery shopping in a way that boosts their business While regulators around the globe are huddling to contain the spread of COVID-19, consumers are towards profitability and brings delightful experiences to end consumers. trying to adapt to the new normal: severe social distancing and self-isolating measures. Retailers that want to accelerate out of the economic downturn need to be very Given the dawn of this new reality, many aspects of online shopping behavior will alter in the customer-centric in their decisions and investments. During discussions with retail leaders coming months. Preparing for these changes will become a basic necessity for the retail industry. from Delivery Hero, Zabka, and Ebay during our last Disruption Forum Retail, it became clear that customer-centricity is the way to win during the next normal. This ‘Disruption Report’ on online grocery shopping is aimed at Product Owners, Head of Moritz Spangenberg, Strategy & Transformation Leader, Netguru Innovations, and C-level executives from the retail industry who are working on the implementation of cohesive customer journeys. It will enable key decision-makers to have a bird’s eye view of the current market trends, prevailing challenges around sales and delivery, existing gaps within present solutions, and the aftereffects of COVID-19 on the online grocery market. The report also touches upon our reimagined digital shopping solution, i.e. Click & Collect, which allows consumers to order online and pick their groceries up from a designated spot. It is also a way for retailers to tackle issues around last-mile delivery. We built the report by doing thorough secondary research into existing data sources. We collated data from Statista, Forbes, Barclays, and Gordon Haskett, to name a few. The desk research was followed up by performing qualitative competitor analysis of top solutions from the European and the US markets, in which we examined the top retail chains including Walmart, Amazon, Tesco, Instacart, Żabka, and Glovo to understand their best online practices and digital sales touchpoints. To delve deeper into online shopping behaviors, we also conducted an exploratory survey with 75 respondents from Germany. The aim of this was to grasp and identify problems with existing online shopping solutions. We used the responses as a foundation for our reimagined Click & Collect solution that we discuss in detail later in the report. Online Grocery Shopping - Report 3 Part 1: Online grocery market overview According to Statista, online grocery sales in the United States reached $29 billion in 2019. The prognosis for the following years, as stated by Forbes, is even more optimistic - $34.4 billion in 2020 and $41.3 billion in 2021. The numbers may seem even more impressive taking into consideration the fact that online sales’ share of the grocery market worldwide was 4.4% in 2016 and is forecasted to increase to 9% in 2025 (source: Statista). It is worth noting that the share of the online channel in grocery shopping differs depending on the market. In South Korea it’s around 20%, which is the highest level worldwide. The US is at 4% and European markets range from 0.3% to 7%, with the UK in the leading position (source: CNBC). There may be many reasons for such differences, but one of them is related to the specifics of each food retail market. For example, countries such as the UK or France have highly consolidated grocery markets, which means less price competition and fewer hard discount stores. This opens the door for “high value service” retail concepts, such as online grocery shopping. Online Grocery Shopping - Report 4 Taking into consideration an increased need for social distancing, huge mobility & internet’s presence in people's lives, I expect a great increase in online sales in the grocery shopping market. Commercialization of 5G and IoT will boost it even further. More and more people, especially among 20-to-40-year-olds, are changing their shopping habits towards the online experience. This is because of time savings, convenience, simpler logistics, and automation. Additionally, I am observing a change in the way people do grocery shopping. They avoid malls and go shopping less frequently, but at the same time they buy more. Marcin Smelkowski, Presales Lead, Devoteam Cloud Services The online grocery market will only rise since it's beneficial for both the businesses and customers. Customers will be able to manage their spending more carefully, while business es will be able to offer discounted products on online platforms thanks to the savings made on staff, rent, and shrinkage. I believe that businesses will use AI in the nearest future as well. This will allow them to build predictable revenue flows by diving deeper into customer behavior. Yevhen Vavrykiv, Engagement Manager, OGD Solutions Consumers are discovering the convenience that online grocery stores provide. The notion that shopping online is more expensive due to additional service costs like delivery fees is being replaced by the notion that saving time is saving money. Younger generations are not interested in visiting large warehouse-like stores. What used to be entertaining for previous generations has turned into a chore. Atanas Sechkov, Founder, Ufleet According to Statista, online grocery sales reached $29 billion in 2019. The prognosis for the following years, as stated by Forbes, is even more optimistic - $34.4 billion in 2020 and $41.3 billion in 2021. The numbers may seem even more impressive taking into consideration the fact that online sales’ share of the grocery market worldwide was 4.4% in 2016 and is forecasted to increase to 9% in 2025 (source: Statista). It is worth noting that the share of the online channel in grocery shopping differs depending on the market. In South Korea it’s around 20%, which is the highest level worldwide. The US is at 4% and European markets range from 0.3% to 7%, with the UK in the leading position (source: ). There may be many reasons for such differences, but one of them is related to the specifics of each food retail market.