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[14 comments]

Grocers need to promote impulsive behavior online

June 16, 2014

In a recent survey of U.K. shoppers, 29 percent felt they make far fewer impulse purchases of grocery products online than in-store. In comparison, just seven percent said they make more impulse buys online than they do in a store, according to eDigitalResearch.

Shown by some studies over the years, more impulse buys are believed to be made in the grocery versus other channels given frequent shopper visits, the general appeal of food, as well as numerous in-store offers, from end-cap specials to the checkout aisle.

In a statement, Derek Eccleston, commercial director at eDigitalResearch, said the growth of online "has the ability to drastically hamper supermarkets, retailers and suppliers," especially as online grocery shopping continues to expand. Food retailers "need to be working closely with suppliers to understand this new breed of grocery shopper — they need to know how they shop and why, as well as what makes them buy what they do — in an effort to encourage online shoppers to spend more."

The survey of 1,154 online grocery shoppers in the U.K. also found that just 10 percent of online shoppers stick to the same brands for particular items. Price, not unsurprisingly, was one of the key drivers behind brand switches. eDigitalResearch said the findings suggest "promotions and offers are perhaps the best way to disrupt online grocery shops and encourage impulse buys. However, loyalty card promotions, search positions and product images all also have an effect on how people shop online."

Mintel's Online Grocery Retailing - UK report, based on a December survey of 951 internet users in the U.K. who buy groceries online, similarly found that 34 percent of all internet grocery shoppers believe they make fewer impulse purchases when buying online while only nine percent stated they make more impulse buys online.

Mintel said grocers should cultivate "serendipitous shopping" online to encourage more casual browsing and therefore unplanned purchases among internet shoppers. But it also warned that grocers "must strike a balance between capturing share of a growing market and protecting their interests: it looks to be more beneficial for them to follow customers online rather than lead them there."

Discussion Questions:

Do you agree that the shift to online carries the risk of reduced impulse buys for grocers? How can retailers increase basket size with this in mind?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How big a concern should lost impulse sales be for grocers selling online?

Comments:

Online shopping for groceries tends to be more mission-focused and as a result can reduce the opportunity for impulse buys that arise organically from the physical act of navigating store aisles. However, retailers have a much better opportunity online to use the medium to promote meal-planning and other basket-building activities that aren't necessarily focused around one-off price-based promotions.

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Kelly Tackett, Research Director, Planet Retail

Absolutely. Online shopping takes customers out of the store resulting in fewer unplanned or impulse purchases. With shopping lists available detailing online purchases it is difficult to change behavior to non-shopping list items or impulse purchases.

For combination "bricks & clicks" retailers, online purchases in combination with store pickup allows food retailers the best of both worlds. Planned purchases online, complemented by in-store visits to select fresh perimeter products, allows the shopper to leisurely browse the store and load up on impulse purchases. This is particularly relevant as consumers look at the shopping cart as a heuristic to gauge their spending. With the planned purchases already addressed, the shopping cart has less items resulting in the perception that impulse purchases are okay.

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Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

Even though online shopping is not yet a major force in the grocery business, (the survey is of early adopters, which represent a low, single digit percentage of all grocery shoppers) it does point to a change in the way online shoppers buy. Yes, there will be less impulse buying, so retailers will need to find ways to entice consumers to buy more.

This can be accomplished by combining loss leaders, recipes, promotions and loyalty programs. And that means that retailers will finally need to mine all of the data they've collected on consumers to tailor offers to each shopper, which can be an expensive proposition. Therefore, I don't see this happening in the near term. Most retailers will wait for more consumers to buy online before taking the plunge.

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Max Goldberg, President, Max Goldberg & Associates

The research and discussion on this topic point to the difficulty in dealing with the changing paradigm in retail. Comparing basket size and intent between store and online purchases has questionable validity. This isn't an 'either/or' shopping situation, it's absolutely an 'AND'. Furthermore, one of the scholarly research papers referenced for this article is from Wharton, which places a higher predictor for impulse purchases based on the consumer and not the in-store displays.

As we shift from physical to hybrid (physical + digital) retail, the notion of impulse purchases needs to adapt accordingly. Traditional store impulse buys are a 'mass' approach with a hit and miss simply betting on the volume of traffic. A more surgical approach based on actual consumer behavior can add to a redefined 'impulse' category in the store. Online, impulse purchases become the suggested purchases. If lettuce and tomatoes are in the basket, a salad dressing may be the right suggestion and based on historical purchases, the site can suggest the 'flavor'.

The store will always play a central role in retail—no doubt about it—it's the changing relationship between physical and digital that will evolve to accommodate people's lifestyles and needs. We are entering a personalized phase of retailing (deep consumer insight trumps product-driven retailing) and our definitions and measurements need to change accordingly. Until then, we will continue to apply the past to the future and wonder why it's not working as expected.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

Online shopping gets its converts from shoppers who seek more convenience and less use of their time, not the bargain hunters whose lives are enhanced by impulse scavenger hunts. In other words, impulse buying has a lower threshold with online buyers since their interest in "serendipitous shopping" takes time they wish spend on other higher profile matters.

In-store, increased basket size is influenced by the perceived benefits that retailers can offer shoppers. Good retailers know that already.

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Gene Hoffman, President/CEO, Corporate Strategies International

You will not get increased basket size, but you will increase overall volume from online sales. And at the very least, you will not LOSE volume. The basket size will come once more confidence is inspired, but I wouldn't call it a "problem." If so, it's more like a "good problem."

If customers are shopping with you online, they're not shopping at Amazon Fresh, so take that as a good thing and figure out the impulse ASAP.

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Lee Peterson, EVP Creative Services, WD Partners

Although the idea certainly makes sense—or not, as there are certainly ways to entice people online it's not called "the web" for nothing!—I'm reluctant to generalize based on one survey. People often don't behave as they think they do, and I'm doubtful that online (grocery) shoppers are representative of all shoppers.

'notcom'

There may be some risk of loss of impulse items, primarily because you can click away from offers too easily online. However, impulse items in the checkout lane seem to stare at you for hours!

The challenge is to provide compelling offers online that capture the shoppers' interest. Easier said than done, of course. However, shopper analytics tools can help take much of the guesswork out of your online merchandising and promotions planning activity. Take advantage of what's available out there.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

As a rule, I would say yes, it is rather stating the obvious. But with one proviso—when I shop online (as I now do regularly for basics I don't want or need to go to the store to see), at checkout, I'm reminded of things I may have bought before plus incomplete special offers. These do, sometimes, trigger an extra spend. On the other hand, I regularly walk through the store as well, looking only at the reduced shelves and refrigerated displays. How cheap does that make me?

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Bernice Hurst, Contributing Editor, RetailWire

In the absence of a grocer's online buying portal intelligently offering suggestions and new items based on previous purchase history, there will be no impulse buys.

I personally use a higher end, local community grocer's online option for the great convenience (just $6.95 to have my shopping done and ready for pickup at the front door) of easily re-ordering my standard, go-to grocery list every couple of weeks, and for the savings associated with not making impulse buys.

Online ordering keeps me disciplined. Now, if their ordering system were to prompt me with relevant special offers, or introduce me to products I'd likely be interested in, based on cumulative past history, I'd almost certainly increase my spend.

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Jeff Hall, President, Second To None

Retailers have to take the time to understand who is shopping online for specific product lines. Segmentation works. Not everyone who shops online is going to shop online for grocers.

Different consumers—human beings—are impulsive or non-impulsive in their actions in different ways, when dealing with different product lines, at different times. By determining who the existing consumers or target audience is, retailers can better formulate their message to move the best consumer closer to a purchase decision.

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Roger Saunders, Managing Director, Prosper Business Development

Since brick and mortar shoppers routinely use the store as a shopping list, it is unsurprising that online shopping falls behind in impulse purchasing. The online shopper is engaging in a much more "top-down" shopping experience, in which they are responsible for articulating a need before it can be met. This is exasperated by the use of search boxes and shopping list services that I have recently seen on the pages of online grocers.

Before launching headlong into an effort to increase impulse purchasing online, this seems like a good time to ask: who really benefits from impulse purchasing?

If retailers hope to profitably increase basket size and shoppers hope to be delighted by products without going over their budget, then only a specific type of impulse purchase should be encouraged: profitable and shopper-relevant purchases.

That said, the opportunity for profitable and shopper-relevant purchases seems to be greatly wasted in online shopping environments. Besides the home page of a retailer, I often only see suggestions once I have clicked on an individual item. Online retailers could ACTIVELY promote their best offerings to the shopper by making room on every page to highlight their best offerings. Or in other words, online needs to discover its "endcap." Dedicated space for targeted offers meant to delight the shopper, sometimes in a creative way (e.g., benefit rather than attribute based recommendations), could invigorate the online experience and close the impulse purchasing gap.

Jacob Suher, PhD Student, UT-Austin

Not really. I think there are a number of things a grocery retailer can do online to increase basket sizes. Reminders, others bought this, and known adjacent purchases can all be leveraged online to increase basket size. Big advantage to the retailer as online they will be able to leverage the buyer profile, loyalty info, and purchase history to improve targeting.

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Larry Negrich, Vice President, Marketing, nGage Labs

Yes and no. It all depends on how savvy marketers are being. I will need a lot more emphasis placed on sales and discount-buys as my eyes glaze over the computer screen to compensate for the sights and smells of the physical store.

If you want the consumer to engage, you need to engage the consumer. We all know how effective Amazon's up-sell efforts can be, and other retailers such as Staples have pages between final checkout and payment details with a list of suggested on-sale items to add-on to your cart.

At the end of the day, it comes down to personalization, and better understanding that unique shopper and their shopping habits to suggest offers that will appeal to them.

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Alexander Rink, CEO, 360pi

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