Online Grocery Shopping: New Trends and COVID-19 Impact
Traditionally, consumers mostly preferred doing grocery shopping offline and physically. So when COVID-19 hit, and lockdown policies were about to be implemented, the first thing people did, mainly in Europe, was to go to supermarkets and stockpile non-perishables. As a result, in April 2020, “food delivery” was the highest search word on Google.
COVID-19 Impact On the Grocery Shopping Industry
Changing Consumer Habits Due to COVID-19
In 2019, 81% of American consumers had never shopped online for groceries; whilst after the pandemic in 2020, 79% of American consumers have done online grocery shopping at least once. With a 40% sales growth in the online grocery shopping industry, new businesses emerged to fill in the demand.
An interesting consumer habit emerged after the pandemic: Consumers tended to have larger orders and higher basket values. With the closure of restaurants and consumers staying home, they have started to cook more, which resulted in ordering more groceries. Another habit is that consumers buy more nonperishable food items. They wanted to spend less time ordering online and buy it all at once; therefore, gravitating towards longer-lasting food.
Additionally, consumers have also started to care much more about speed and convenience. With both physical and online stores, consumers prefer to spend the least amount of time possible. Due to their impatience, they make bigger purchases and pay high delivery fees just to save some time.
Market Transition to Online Grocery Delivery
Since, prior to the pandemic, online grocery stores were not as common, the majority of the online grocery stores opened during the pandemic. Amazon Fresh, which previously operated mainly in the US, has become available in major European cities like London, Milan, and Berlin. The US already had major online grocery stores such as Walmart, Costco and Target. These stores doubled their sales rates over the last year, and since they were already available, they didn’t face many logistics problems. On the other hand, Europe lacked online grocery stores; therefore, Amazon Fresh quickly dominated the market.
New Trends in the Online Grocery Industry
The Rise of Fast Online Grocery Delivery
In the UK, supermarket chains such as Tesco, Sainsbury’s, Waitrose quickly adapted into building online stores or improved their already established online stores. These supermarkets allowed deliveries to come in the next few days or a week after the purchase. As a result, all of their online revenues increased over the last year. However, consumers are always looking for faster deliveries.
Therefore, new companies with faster grocery delivery apps and websites entered the market, and one of these is “Getir”. Getir is a Turkey-based company that provides its customers with 10-minute grocery deliveries. It started operating in 15 cities all around Europe to close the quick online grocery shopping deficit in these cities. As a result, consumers who prefer fast delivery and convenience have become satisfied with the newly established businesses and try different online grocery stores.
Social Media’s Involvement in Online Grocery Shopping
Many online grocery stores focus on a younger demographic as their customers, and their marketing strategies involve social media and influencer marketing. As a result, online grocery stores have increased their social media presence, additionally advertisements and collaborations.
Recently, Pinterest has announced its partnership with Albertsons to facilitate online grocery shopping within their app. Pinterest, an image and video sharing social media platform, has added new functions to its websites, such as multi-page video format, creator articles, and Idea Pins. With the new updates, Pins will allow people to buy the relevant products. In addition, Albertsons currently has 2200 supermarkets among 34 states in the United States, which will make the integration quicker and available in many regions in the United States.
Another marketing strategy that online grocery stores used was influencer marketing. Big brands such as Walmart, Target and Kroger have worked with influencers mainly on Instagram and Youtube to promote their new services as online grocery delivery. However, this strategy was also used by medium brands such as Foodspring, Bob’s Red Mill, and Hello Fresh. These brands created more brand awareness and provided coupons and discounts to get new consumers. As a result, influencer marketing has worked for both big and smaller brands to increase their online grocery sales.
The Success of Meal Kit and Pre-Packaged Food Companies
A sub-industry that has boomed within the year 2020 was the meal kit and pre-packaged food industry. Meal kit services allow customers to select from a variety of recipes available online or via an app, which is then delivered to their door with instructions and pre-measured materials.
The lockdowns and restrictions prevented customers from going to restaurants. As a result, Meal Kit services were convenient and provided nutritious meals, especially to busy working professionals and young families. Over the last decade, an increasing number of companies have entered the market, with essential market participants such as HelloFresh and Gousto among them.
According to GlobalData, HelloFresh had a 122.6% year-over-year sales increase in the 2nd quarter of 2020, a trend the business expects to continue throughout the year. Similarly, Gousto had a 129% increase in sales year over year, having lost profit the previous year.
Customer Personalisation in Grocery Apps and Websites
Technology has become a significant determinant of the online grocery shopping industry’s growth among its competitors. Businesses that emerged during the height of the pandemic have seen a market space to establish online grocery stores. However, with the ease of the lockdowns, brick-and-mortar stores are opening up, creating a higher competition level in the industry. Therefore, online grocery stores are obligated to provide the best quality products and customer service.
Customer personalisation has started to be used by many online grocery stores. As previously mentioned, the pandemic has changed consumer habits, and it has shifted towards having quicker and more convenient shopping experiences. For example, 10-minute grocery apps and the success of meal kit businesses have proved this habit.
Each and every customer has their own grocery shopping habits. Therefore, using personalisation and segmentation tools within the online grocery shopping apps and websites help the customer to find the products faster and easier.
Personalising customers’ experiences will help businesses understand more about their customers. For example, if a customer is searching for vegetarian products, personalisation tools will show them other vegetarian options that will increase the basket value rate.
The Future of the Online Grocery Shopping Industry
During the COVID-19 pandemic, the highest offline to online transition occurred within the grocery shopping industry. Even though some consumers still prefer physical stores for grocery shopping, with COVID-19, they have seen the convenience of online grocery shopping. And this has led the industry to grow faster than expected.
Online grocery stores are still growing and keeping pace with technological advances. Online grocery businesses that integrate speed, convenience and customer personalisation to their apps and websites will step forward within the industry.
Segmentify offers AI-based smart personalisation tools for online stores that will increase sales and conversion rates significantly. Online grocery store businesses can Book a Free Demo and try out Segmentify’s personalisation and segmentation tools to provide your customers with a better, faster, and more convenient shopping experience!