The two cultures of online grocery

Majjor shifts are occuring in the types of products shoppers are willing to buy online and the frequency with which they purchase certain categories.

Shoppers are revealing more venturesome attitudes and behaviors when it comes to digital purchases of shelf-stable products compared with fresh products. In response, retailers are trying to accommodate shoppers that are embracing the convenience of online ordering for non-perishables, but still enjoy the experience of selecting fresh foods.

Online grocery is growing across all major departments, albeit at varying rates. What makes omnichannel grocery a complex business are the segment’s many food barriers that don’t exist in other retail channels.

These are among the actionable insights from the IDCreport, commissioned by Precima, Personalization in Digital Food Retail: Shoppers Expect More. The report compiles data from web-based surveys of 4,000 consumers and 445 retailers in North America, France, Italy, Spain and United Kingdom.

Findings delve into shopper preferences and how past, present and planned online shopping behaviors are significantly different for shelf-stable and non-food products as compared to fresh and perishable items. This behavioral distinction between shelf-stable and fresh foods — while intuitive — carries several strategic implications for grocery retailers and their suppliers in driving their omnichannel strategies.

Recognizing how shoppers split their decisions and form different habits for different types of goods is crucial for retailers and their suppliers going forward. This is where data plays a critical role. Retailers with loyalty programs better understand individual shopper habits and the role of the store versus online to deliver the best integrated shopper experience.

Better knowledge of customers and the ability to identify priority shoppers enables retailers to provide online incentives — first for shelf-stable items, and then moving to perishables. For example, offering a personalized promotion for a shopper to buy online, may be the key needed to drive omnichannel behavior.

Shoppers indicate more experience purchasing of shelf-stable products and a greater willingness to purchase these items online versus perishable products. According to the survey, more than a third of all respondents (33.9%) said they routinely purchase half or more of their non-food grocery items online for home delivery [Fig. 1].

Source: The IDC Consumer/Shopper Digital Retailing Survey, sponsored by Precima

Trust is key to getting customers to shop online and the bar is set highest in the fresh category. Retailers need to build trust by focusing on non-food grocery as a starting point to help overcome any barriers to establish comprehensive online shoppers. Companies with loyalty data can go one step further by segmenting customers based on value, needs and shopping habits across bricks-and-mortar and e-commerce. By evaluating all shopping patterns, retailers are better positioned to personalize the omnichannel journey.

Clearly, the stakes are high when it comes to ordering perishable products online. But online growth is happening across all major categories to varying degrees. Drilling down into purchase intent of online shoppers across 10 major supermarket departments reveals a clear break between the three non-food departments and six perishable departments [Fig. 2].

Source: The IDC Consumer/Shopper Digital Retailing Survey, sponsored by Precima

Retailers reveal they are responding assertively to these trends, although they may be underestimating the pace at which they are happening. When asked which departments will migrate to online in the next three-to-five years, retailers cited home products and health and beauty most often [Fig. 3].

Source: The IDC Consumer/Shopper Digital Retailing Survey, sponsored by Precima

A second broad finding is that two cultures require (at least) two fulfillment skill sets —distinct department strategies for physical stores, as well as a strategy for digital grocery. For example, when preparing online orders, there is certainly a need to specify a set of service criteria and quality points for products that require expert selection, like ripe, fresh produce, meat or fish.

Until now, it has been far easier for shoppers to experiment with shelf-stable, general merchandise and health and beauty products when ordering online. Trust is harder to earn when it comes to allowing a retail associate to select a fresh fish filet or a properly ripened avocado.

(Don't miss the webinar: Personalization in Digital Food Retail: Closing the gap between shopper expectations and retail reality, Oct. 17)


Online ordering and fulfillment of mixed household grocery orders that contain fresh, refrigerated, frozen, shelf-stable and prepared food items require retailers to build specific competencies in item-selection, temperature control, order staging, timing and scheduled delivery. Shelf-stable products are better suited for automated fulfillment that employs robotic picking for store pickup and/or third-party package delivery.

The opportunity for retailers is to focus on establishing trust by managing the online journey, starting with health and non-food grocery and then migrating to the rest of the store. Amazon Prime started by removing variable delivery cost and committing to delivery at specific times, and now Amazon Fresh is building momentum in price. This is proof that trust can be established and lead to the creation of loyalty and retention.

Finally, size, space and assortment norms are due for changes in the digital grocery era. As supermarkets adjust their operations to support in-store order fulfillment, click and carry, micro-fulfillment centers and dark store fulfillment centers, they are already weighing changes in store formats. These are important considerations for the designers of the next generation of supermarkets.The trend toward smaller-format grocery stores and hard discounting means something has to give.

Suppliers will be tasked to adjust their go-to-market strategies to make the most of this changing environment. CPG manufacturers find the competition for center-store shelf space intensifying, while new opportunities are becoming available to distribute a broader range of products from a long-tail assortment that is available only through digital ordering.

There is a clear divide between ordering shelf-stable and fresh grocery products online, and retailers have their work cut out for them to bridge the gap. However, there are ways to take advantage of the opportunities:

  • Learn from what makes selling self-stable merchandise online “easier.” The major inroads of online grocery sales so far have been made in non-perishable products,  because online shoppers have more experience with them. Retailers have found it less challenging to start their digital journeys by learning how to fulfill orders that are less at risk of spoilage or other problems.
  • Two cultures require parallel skill sets. Online shoppers are clearly determined to do more online ordering in the perishable categories now that they have attained a comfort level with center store and non-food products. Retailers need to build dual capabilities to satisfy shoppers’ demands for digital efficiency of packaged items and perfect fresh items.
  • Stores will evolve for digital. For retailers, this means setting aside floor space and personnel for picking, staging and storing orders with temperature control to meet click and carry and home delivery requests. And it means creating new store formats, reconfiguring existing stores, dedicated micro-fulfillment facilities and new ways of serving omnichannel grocery shoppers.
  • E-commerce will continue to grow in all retail segments -– especially food. Shoppers have high expectations for quality fresh food and convenience. Retailers, especially those with loyalty data, need to quickly ease the transition to omnichannel by curating the online experience and building trust toward fresh.

Brian Ross is President of Precima, a global retail strategy and analytics company.

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