The Food Marketing Institute recently released a study claiming that grocery is the next big retail sector being re-shaped by digital processes. Additionally, the group predicts that 20% of grocery sales could be online by 2025.
That study, which was mentioned in an Internet Retailer article earlier this week, highlights the expected rapid growth of the online grocery market as well as the big opportunities for food retailers. However, it also warns of potential challenges.
The report found that 23% of U.S. households were already buying groceries online in 2016, up from 19% in 2014. Those sales represent about 4.3% of U.S. consumer retail food and beverage spending. Based on the research, FMI and Nielsen expect online grocery penetration to grow quickly.
Among millennial consumers (those defined as ages 18-34 in the study), 28% were buying groceries online in 2016, up from 21% in 2014. The findings of a recent Internet Retailer report show that online food shopping, although most popular among younger consumers, cuts across demographic lines and is quickly picking up adoption in many different groups.
Consumers are going online more and more to buy their goods and they are seemingly quite aware of the online grocery trend, as 70% of all shoppers say they expect to buy groceries online during the next 10 years, according to the FMI report.
Despite the online growth now and in the very near future, challenges are rapidly presenting themselves. For starters, retailers that are planning on going online will need to develop a clear and concise strategy before investing in technology or changing their company structure.
The report says that overall, tactics should include a deep understanding of online shopper behavior, creating supply chain and logistics capabilities that support a digital strategy, integrating marketing investment and measurement, and shifting the merchandising focus from the shelf to reaching the individual consumer. Furthermore, “the cost of digital collaboration between grocers and technology providers will need to be significantly reduced, in particular, the costs associated with digital platforms. Retailers and manufacturers will also need to work together very closely – almost as if they are one company,” said Mark Baum, FMI’s Chief Collaboration Officer.
Going forward, one thing is for certain: shopping in general, including shopping for groceries will more than likely head in a digital direction. As a merchant, you’ll want to be sure that your business stays ahead of the curve and creates an online solution for your hungry customers. National Merchants Association can help you realize that solution by providing expert merchant and payment processing services. Contact us today to get started!