The Future of Online Grocery Shopping in the United ... - Kantar Retail

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© 2012 Kantar Retail WHY Buy Groceries Online? The Shopper Perspective In general, shopping online is thought of as a way to either purchase goods in a very convenient way OR purchase them at a lower price. While this is obviously a false dichotomy as both reasons influence online purchasing, it is informative to ask shoppers to choose which is more important: time or money. When asking shoppers to indicate which side of the “save time vs. save money” issue best describes why they shop online, online grocery shoppers are decidedly more likely than the average online shopper (56% vs. 46%) to fall into the “save time” camp—suggesting that these shoppers may be willing to pay a small premium for the convenience of online grocery shopping. Based on the fee structure of most online grocers in the United States today, particularly the “traditional grocers” who offer home delivery, this is how it is currently playing out in the marketplace as grocers charge an additional fee to cover delivery costs. More broadly taking a look at the retail landscape and reasons why shoppers are drawn to online purchasing, there are three main (and intersecting) driving forces behind why shoppers choose to shop and purchase online: convenience, price, and assortment (Figure 7). Figure 7: Reasons for Purchasing Groceries Online Type Online Grocery Shopper Kids in HH Age Income* Gender Under Have Total Dedicated Casual No Yes 45 45+ Nots Haves Male Female Sample Size 275 95 160 179 93 178 97 160 115 156 119 Convenience Convenient to have groceries delivered to my front door 44% 43% 51% 47% 42% 46% 41% 54% 31% 51% 36% Saves time 36% 54% 31% 39% 30% 34% 38% 31% 41% 36% 35% I don’t have to carry heavy items home 30% 28% 29% 28% 36% 28% 34% 36% 22% 27% 35% Easier to find what I need 26% 24% 31% 18% 43% 27% 26% 27% 26% 30% 23% Easier to purchase groceries online when I’m already researching product information online 15% 19% 18% 9% 28% 17% 11% 16% 14% 18% 12% It takes me longer than expected to shop in stores 10% 18% 11% 12% 6% 8% 12% 12% 7% 10% 9% Price Saves money 41% 40% 54% 39% 45% 42% 40% 43% 38% 46% 35% Special promotional deal (e.g., $x off delivery fee or next order) 30% 29% 32% 31% 29% 32% 27% 33% 25% 30% 30% Helps me stick to a budget 21% 16% 26% 17% 30% 26% 12% 28% 13% 26% 15% Easier to browse deals and coupons 16% 19% 20% 17% 17% 14% 22% 13% 22% 17% 16% Assortment There is a wider variety of grocery products available online Quality of produce and fresh items is often times better than that in stores 30% 20% 41% 27% 35% 29% 32% 34% 24% 31% 28% 15% 22% 20% 15% 18% 19% 10% 14% 17% 19% 12% *Kantar Retail groups US households into 2 segments based on household income that also closely correlates with divergent shopping and spending behavior: “Haves” > $60K per year, and the “Have Nots” < $60K Note: Bolding/highlighting indicates significantly greater vs. all shoppers (95% confidence level) Source: Compete Online Intelligence Study, Spring 2012; Kantar Retail analysis - 9 -
Convenience. In terms of why shoppers buy groceries online, the ability to have groceries delivered to one’s door is the most frequently cited reason: 44% of online grocery shoppers do so because of the convenience of having the groceries delivered to their doors, while better than one-third say online grocery shopping saves them time. Males (51%) and lower-income households, “Have Nots” (54%), are significantly more likely to cite home delivery as the reason for online purchasing. Dedicated online grocery shoppers also are particularly keen on the convenience factor of online grocery shopping, with 51% citing the ability to have groceries delivered to their door as a reason for buying online, compared with only 43% of casual online grocery shoppers. The time of day and day of the week when shoppers say they do their online grocery shopping also speaks volumes about the convenience motivation of online grocery shopping: it’s most likely to happen in the middle of the week during work hours (Figure 8)! This is consistent with figures reported by U.K. retailer Tesco, which show that the retailer’s online business’s contribution to its total sales peaks during the morning hours (Figure 9). Shoppers are likely to be squeezing online grocery shopping into their busy days, and online grocery retailers that are easily navigable, help shoppers quickly fulfill their lists, and offer a consistently competitive price (eliminating the need to shop around) will thrive under these conditions. Figure 8: When Shoppers Do Their Online Grocery Shopping 16% 16% 5% SUN 6:00- 8:59 a.m. Source: Compete Online Intelligence Study, Spring 2012; Kantar Retail analysis Source: Kantar Retail analysis, Company presentation © 2012 Kantar Retail 23% MON 9:00- 11:59 a.m. 8% 22% TUE Noon- 2:59 p.m. 24% 16% WED 3:00- 4:59 p.m. 8% Day of Week Time of Day 14% 13% 14% THU 5:00- 7:59 p.m. 13% 8% FRI SAT 8:00- 11:00 p.m.- 10:59 p.m. 5:59 a.m. - 10 - WHY Buy Groceries Online? The Shopper Perspective The time of day and day of the week when shoppers say they do their online grocery shopping also speaks volumes about the convenience motivation of online grocery shopping: it’s most likely to happen in the middle of the week during work hours. Figure 9: Tesco.com Contribution to Sales by Hour of the Day Dotcom as % of Hourly Sales% Dotcom Contribution to Sales Across the Day Sales 12% 35% 10% 30% 25% 8% 20% 6% 15% 4% 10% 5% 2% 0% 0% -5% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Hour DocCom Store DotCom Sales as % of Hour
Page 1 and 2: State of the Industry: The Future o
Page 3 and 4: Foreward © 2012 Kantar Retail The
Page 5 and 6: Despite the limited penetration of
Page 7 and 8: Online grocery shoppers are on the
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Page 15 and 16: In addition to saving money and sti
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Page 19 and 20: © 2012 Kantar Retail WHY NOT Shop
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Page 25 and 26: Gen X and Y shoppers and households
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The Future of Online Grocery Shopping in the United ... - Kantar Retail

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