While online ordering appears regularly across the supermarket industry as a hot topic, the reality is that today it remains in the early stages. Some of the latest research illustrates the challenge of accepting any single number as a measurement of adoption, and provides retailers with a number of considerations to contemplate as they consider engaging shoppers in this growing space.
In our 2019 U.S. Supermarket Digital & Social Engagement Study, 1,200 shoppers were asked if they order groceries online for pickup or delivery. In total, 12% indicated that they do so. However, this number is deceptive in that there are many ways to segment the findings that illustrate different levels of adoption.
First, let’s look at generational differences. Perhaps not surprisingly, just 6% of baby boomers indicated they are ordering online, compared to 14% of Gen X shoppers and 18% of millennials. So age indeed has a bearing on adoption. This makes sense given the proclivity of the younger generations to engage in online shopping in greater numbers due to comfort with and use of technology. However, there is also a smaller market for boomer shoppers who may be homebound and need to have food delivered. This may be, in part, the reason fresh department purchases showed growth in the online shopping space in some of our recent research. Older shoppers are going to “shop the store” online, not just focus on certain categories, out of necessity.
Next, consider market size. About 7% of smaller town or rural market shoppers indicated they order online. Shoppers in suburban markets came in at 11%, while urban areas and large cities registered at 18%. These results mirror the findings of local consumer research I have conducted in various sized markets around the country.
Larger markets have many more options for online ordering, while rural and smaller markets may only have one or two offerings. Plus, the frenetic pace of urban life, including factors such as longer commuting times, congested roads and time-starved shoppers, may make online shopping more appealing (and thus more highly adopted) in an urban setting as compared to suburban and rural markets.
While the findings when considering generational differences and market size make intuitive sense, digging into household income and household size reveals some interesting findings.
Higher income shoppers ($100,000+) show the highest adoption, at 15%, which matches some of the traditional thought processes assuming that higher income shoppers may be more likely to shop online. Interestingly, however, is that shoppers with income of less than $50,000 show higher adoption (13%) than households with an income of $50,000-$100,000 (9%). I would speculate that this may be due to the large push that Walmart has made in the online ordering space in the last year or so, making it a much more visible and viable option for their customer base, thus driving up use, not only for its own stores but also for other retailers who offer online ordering.
Household size was also examined in the study. Larger households (three or more people) had the largest adoption at 17%, while two-person households had the lowest at 8%. Single person households fall in between at 12%. The results here illustrate that larger, likely busier, households engage in more online ordering than other household sizes. Two-person households perhaps show the lowest adoption as they can divide and conquer the in-store shopping as needed, while the single person household has finite time so online ordering offers valuable relief.
In the end, even the segments with the highest levels of online ordering adoption register slightly less than 20%. That means 80% of shoppers (or more) are still visiting food stores to fulfill their shopping needs.
Based on the market(s) they operate in and the blend of shoppers patronizing their store(s), retailers need to consider how online ordering strategically fits their organization and move forward to meet shoppers’ needs. At the same time, given the high percentage of food shopping still conducted offline, it will be imperative for grocers to keep their eyes on the in-store experience that remains critical today.
Brian Numainville is a principal with the Retail Feedback Group and may be reached at firstname.lastname@example.org.