ONLINE GROCERY
BEYOND COVID-19

THE UPWARD TREND OF ONLINE GROCERY: BEFORE THE PANDEMIC

Since its creation two decades ago, e-commerce has drastically changed consumer shopping behaviours and exerted its presence across every retail sector, grocery included.

The data shows that the online grocery sector has been growing steadily and recent projections predict that profits will increase even more in the next years:

• In the U.S., the online grocery market has grown from $12 billion in 2016 to $26 billion in 2018 (Source: Business Insider)

• In Italy, the online grocery sector has risen by 39% in 2019. (Source: Netcomm Observatory Politecnico di Milano)

• A study from the Food Marketing Institute conducted by Nielsen projected that online grocery sales would reach $100 billion and make up as much as 20% of total grocery retail by 2025.

However, despite the upward trend and substantial investments from leading grocery chains, until recently the market has grown surely but quite slowly.

The industry has historically seen a low household penetration, with only 10% of US consumers regularly shopping online for groceries. Most customers still prefer shopping in brick-and-mortar grocery stores, which lowers the adoption rate significantly. (Source: The NPD Group)

ACCELERATED GROWTH DURING THE PANDEMIC

The COVID-19 pandemic has shaken up every industry around the world in unprecedented ways and retail is no exception. While there has been a significant reduction of demand in some industries such as electronics and cosmetics, sales for essential goods and personal hygiene items have doubled. (Source: McKinsey)

Due to lockdowns, many consumers have tried grocery home delivery or click-and-collect models for the first time, as confirmed by data collected in the last months.

• Research by consulting firm Bain & Company says that online grocery sales now make up 15% of all grocery sales (Source: CNBC)

• Household penetration of online grocery e-commerce has increased from 13% before the pandemic to +31% at the end of March. (Source: McKinsey)

• In Italy, the food & wine sector has registered overall growth of 227% and a 70% rise in digital transactions from 9th March to 5th April, according to Osservatorio dei Consumi of Payback, from the American Express Group. (Source: Repubblica)

WILL THIS SHIFT REMAIN?

According to experts, the answer is yes, the shift in consumer buying behaviours will remain long after the initial impacts of COVID-19.

The pandemic is the catalyst that accelerated the process of growth, which was already set in motion before the crisis. Movement restrictions and the closure of physical stores lowered many of the adoption barriers, and as a result grocers and delivery services have seen a rise in app downloads and sign-ups. (Source: CNBC)

In the upcoming “new normal” phase that we are about to enter, it is likely that people will keep purchasing online in order to avoid long queues and limited access to supermarkets.

Moreover, customers have now discovered the benefits and the convenience of these services and will be familiar enough with them to keep up the habit. If this shift sticks, there would be a huge opportunity for grocery retailers to go even more digital.

ARE YOU READY TO SATISFY NEW CUSTOMER DEMANDS?

Retailers however were not fully prepared for this shift. Retailers with e-Grocery systems already in place showed difficulties in meeting the overwhelming amount of orders, with limits in the speed of order picking and delivery capacity. Others did not yet have these types of services available and looked for ways to quickly activate an in-store fulfilment solution.

Some of these companies turned to Logistics Reply and our latest supply chain application, LEA Reply^TM In-Store Picking, the ideal solution for retailers and grocery chains with multiple stores and varying order volumes, that want to sell their goods online and prepare orders directly in-store.

LEA Reply^TM In-Store Picking is a mobile-based solution that simplifies the preparation process of an online order in-store, from distributing orders to operators, picking and scanning items, to pick-up/delivery to final customers.

The App guides users step-by-step through the picking process by scanning and confirming barcodes, to ensure fewer picking errors.

This solution supports the Click&Collect model: customers can pick-up their orders directly at the store or at convenient lockers and totems. Home deliveries can also be supported via a native integration with the solution LEA Reply^TM Last Mile.

What are the benefits of LEA Reply^TM In-Store Picking?

1. Easy to use: The solution is designed to be intuitive and requires minimal training, with a user centered design and a mobile-first approach, that makes operations simpler and more effective.

2. Cost-effective: LEA Reply^TM In-Store Picking has zero start-up costs: it can be used with consumer smartphones following BYOD principles and has been designed so that it requires no other dedicated assets.

3. Fast roll out: The fast roll out of new stores is guaranteed with a simple 3-step setup process that the customer can implement autonomously.

LEA Reply^TM In-Store Picking manages the whirlwind after your customers click and makes them come back for more.

To learn more about LEA Reply^TM In-Store Picking or book a demo, visit our website or contact us at