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Online Grocery on the Rise as Consumers Seek Value: IRI Study

Despite steady consumer confidence, some shoppers are turning to the web to save money on groceries

Internet grocery shopping is growing in part because consumers feel they can save money by doing so, according to a new study by IRI.

IRI's Consumer Connect Survey revealed that more than one-quarter of shoppers regularly buy grocery items online. According to the survey, consumer confidence is holding steady, with 53% of U.S. households feeling they are in good financial health in during the fourth quarter of 2017 compared with the same figure in 2016. Despite this stable outlook, consumers still appear to be turning to the Internet in hopes of saving a few bucks. 

Results from the IRI survey also examined consumer confidence according to age and found that 47% of millennials, 45% of Generation X, 51% of baby boomers and 68% of seniors are feeling good about their financial health. Nonetheless, 31% of consumers in the fourth quarter of 2017 said they are struggling to buy needed groceries compared with 30% in in the same period in 2016.

“While consumer confidence has improved during the last few years, consumers can still be a bit shaky about their job and financial prospects, so we’re seeing some mixed signals in our survey results,” Susan Viamari, VP of thought leadership for IRI, said in a news release. “Many, especially younger consumers, say they think the Internet provides money-saving opportunities, so we wanted to dig further and find out what role online shopping is playing in consumers’ CPG spending. Consumers are certainly not going to do all of their CPG shopping online, but marketers must keep in mind that 76% of all shopping trips begin online and 50% of CPG category growth is predicted to be online in 2018.” 

Online Shopping Trends

The following showcases how consumers shop online to find lower-priced options (sentiment for total, millennials, Generation X, baby boomers and seniors, respectively, listed below):

  • Home care options: 30%, 44%, 39%, 27%, 18% 
  • Beauty/personal care options: 32%, 46%, 42%, 28%, 18%
  • Over-the-counter medication options: 21%, 28%, 25%, 20%, 16%
  • Food and beverage options: 20%, 30%, 26%, 18%, 11%

The IRI survey also revealed that consumers think shopping online provides the added benefit of reducing their impulse purchases. Overall, 51% of total shoppers, 54% of millennials, 55% of Generation X, 52% of baby boomers and 46% of seniors say they make fewer unplanned purchases online. 

According to the survey,  convenience also plays a big role in online shopping, with 20% of consumers saying it is easier to find needed grocery items online. By age, 32% of millennials, 28% of Generation X, 16% of baby boomers and 12% of seniors say they find items more easily.

 Ordering online with in-store pickup (click-and-collect) provides convenience without the added shipping fee. While 40% of total shoppers like this convenience, 55%of millennials, 52% of Generation X, 36% of baby boomers and 25% of seniors specifically like click-and-collect options.

 In the upcoming year, the Internet will play an integral and growing role in the CPG purchase process:

  • 55% of consumers will download coupons from retailer/manufacturer websites 
  • 51% of consumers will compare prices on retailer websites to find the lowest prices on needed items 
  • 24% of consumers will order online for home delivery 
  • 22% will order online and pick up in store 
  • 12% will use online subscription services for some grocery purchases 
  • 6% will use online meal kit delivery services 

 As e-commerce gains steam, consumers are looking for a variety of offerings that will enhance and/or simplify their shopping experience. Delivery—free and/or fast—is quite popular, but desires go beyond that, particularly among younger consumers (sentiment for total, millennials, Generation X, boomers and seniors, respectively, listed below):

  • Online purchasing with free delivery: 50%, 58%, 57%, 49%, 39%
  • Online purchasing with fast delivery: 36%, 45%, 43%, 34%, 25%
  • Online purchasing with in-store pickup: 33%, 44%, 43%, 30%, 22%
  • Online purchase of freshly prepared items: 28%, 42%, 34%, 24%, 17%
  • Subscription services for frequently purchased items: 22%, 31%, 30%, 20%, 11%

 “When consumers think about online CPG shopping, they have specific ideas about what is helpful in their lives,” added Viamari. “There really is no one-size-fits-all answer, so it’s critical to understand what it is that makes your key shoppers tick.”

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