Survey says grocery has reached its digital tipping point

Discussion
Photo: RetailWire
Sep 13, 2017
George Anderson

Has the grocery industry finally reached its long anticipated digital tipping point? A new survey report from Deloitte answers in the affirmative.

Grocery shoppers are making decisions on what they are going to buy before they get to the store and their choices are increasingly influenced by their online and mobile experiences, according to Deloitte, which found that digital’s influence has nearly doubled year-over-year. Today, 51 percent of grocery purchases are digitally-influenced.

“The majority of food and beverage purchases still happen in the store, but consumers’ online or mobile experiences impact those purchases much earlier in the shopping journey,” said Barb Renner, vice chairman, Deloitte LLP and U.S. consumer products leader.

Digital’s influence on other channels, including apparel and consumer electronics, has been well established, but its role in grocery has been less developed. According to Deloitte, digital’s influence in all retail stores has grown from 14 percent of all purchases to 56 percent today. The influence of mobile has also grown dramatically in recent years, going from five percent in 2013 to 37 percent now.

Among retail channels, purchases of consumer electronics are most influenced by digital (69 percent), followed by automotive (59 percent), home (58 percent) and apparel (56 percent).

Deloitte’s findings show significant room for grocers to improve on the digital front. Only 31 percent said that digital experiences offered by grocers makes shopping easier for them.

Grocery shoppers are using digital in various ways:

  • Seventy-seven percent are using recipe websites and blogs;
  • Eighty percent are using a digital device to research products from retailer and manufacturer sites;
  • Twenty-nine percent are trying products based on online reviews and searching for information from blogs and social media sites along with loyalty apps.

Shoppers who use digital options (home delivery, in-store coupons, etc.) either before or after going to a store are also more likely to make purchases than consumers who do not use them.

“Consumer products companies and retailers who create those digital touchpoints have a much better shot at getting the shopper’s attention and loyalty before competitors, many of whom aren’t even in the game yet,” said Ms. Renner.

DISCUSSION QUESTIONS: Do you agree that the grocery channel has reached a digital tipping point? How are digital interactions changing the way consumers shop for groceries? What are the most effective ways grocers can use digital touchpoints to make shopping easier?

Braintrust
"Grocers are clinging tightly to their old ways, refusing to embrace the new reality. With Amazon more in the mix now, this won’t end well for them."
"If I were running a grocery chain and had the choice of investing digitally OR in a brighter, well-merchandised store, I'd choose the latter."
"Are you kidding me? The “digital tipping point” happened at least five years ago, if not 10 or more years ago. "

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14 Comments on "Survey says grocery has reached its digital tipping point"

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Dr. Stephen Needel
BrainTrust

I would expect the survey results to be overstated, probably by a lot. Seriously, how many people are spending their time researching toilet paper, toothpaste or pasta sauce, except perhaps looking for coupons? As for making decisions before going to the store, shoppers have been making lists for as long as I can remember. That doesn’t mean in-store merchandising won’t influence those decisions.

Max Goldberg
BrainTrust

Digital is touching every aspect of our lives. Grocery is no exception. Grocers and manufacturers need to ensure that consumers have access to the information they want, in the format they choose, without a lot of selling. Grocers should look at what’s essential to the majority of their shoppers and make shopping easier. This is not rocket science, but it does entail communicating with shoppers in a new light.

Phil Chang
BrainTrust

I think we’re just getting started. You want the consumer to do their homework before they get to the store. There’s no better way to be an expert than when consumers understand that you can take what they know and “blow it up.”

Digital partnerships hopefully are the next step for a grocery store. We’re getting into in-store execution from a technological standpoint that should be really exciting for consumers and retailers.

I see collaborations coming — imagine Big Oven or Epicurious partnering with a grocery store and having beacons to flag where ingredients are for a particular recipe that somebody wants. Imagine the complimentary flags that might come with that so a consumer knew — this dessert or this wine would with the recipe they’re putting together, etc.

Grocery just needs to take what it knows and move it into the digital age. It’s in the industry’s DNA to entertain and look after consumer!

Art Suriano
BrainTrust

Today it’s all about convenience, and there is no doubt that grocers offering shopping online are providing just that. However it is also true that most shoppers still prefer in-store shopping. Using digital is smart especially if you use it with methods and promotions to get the customer in-store because that’s where the impulse buying takes place. As technology continues to expand, it will continue to change our buying habits. In the meantime, grocers need to do everything they can whether it be in-store or digitally to stay connected to the customer in hopes of keeping them loyal to their brand.

Peter Fader
BrainTrust

From a consumer standpoint, groceries reached the digital tipping point around five years ago. But the grocers themselves are clinging tightly to their old ways, refusing to truly embrace the new reality. With Amazon more directly in the mix now, this won’t end well for them.

Cathy Hotka
BrainTrust

The Deloitte findings are fabulously overstated. Sure, we look at online recipes and we have digital options … but that’s true for every non-grocery purchase as well. If I were running a grocery chain and had the choice of investing digitally OR in a brighter, well-merchandised store, I’d choose the latter.

Neil Saunders
BrainTrust

Based on our own quantitative and qualitative data, this figure is far too high. There’s no way that, by value, this percentage of sales are influenced by digital. Common sense validates this: how many of us research our bacon, bathroom cleaners or baked beans online before we buy?

The methodology used is opaque and the survey itself is conducted online, which biases results. I’ve no doubt the trajectory is right, but the value is questionable.

Herb Sorensen
BrainTrust

Are you kidding me? The “digital tipping point” happened at least five years ago, if not 10 or more years ago. People are paying Amazon drop-outs hundreds of billions of dollars to help them “digitize” their retail sales. And the entire commentariat steadfastly refuses to address the reality that Amazon has built/is building a DIGITAL, single-item DELIVERY system, to the shopper? Meanwhile, brick-and-mortar is considering using employees to deliver to their shoppers, on their employees’ ways home from their brick-and-mortar jobs: THERE IS MASSIVE WHISTLING IN THE DARK!

Phil Rubin
BrainTrust
6 days 5 hours ago

Digital influence in retail, grocery included, is nothing new. Grocers face many of the same challenges that other retail sectors do, as noted by Peter Fader with his comments here.

Some of these challenges are self-inflicted as, like other retail sectors, grocers are not terribly customer-focused. This is the primary challenge. Other challenges, which follow this primary one, include being myopic relative to the threats posed by Amazon and others (such as meal providers like Blue Apron).

Doug Garnett
BrainTrust
A Shakespearean study — much ado about nothing. And it is based on the classic digital study over-reach. All we know is that anyone who answered “yes” to an influence had it influence them once sometime in recent months (maybe the last 12). So the “one in two” needs to be hedged to 10 percent – 20 percent of the time. It gets even flakier. How did they determine how much information consumers use in order to calculate one in two? It’s a silly number — they don’t know how much is used. Consumers need to know whether the apples are fresh or whether the grapes are from the U.S. and the cantaloupe local. Is that part of what they include? No. Humans gather incredible amounts of information in highly interactive moments at the grocery store. What I recommend we take away is this. Recipes are important drivers (sometimes). We have known that for decades — and found it a difficult way to market. Some types of new products are studied and researched online. But that’s not usually “new pasta” but bigger ticket items. Reviews impact shopping. That is seriously true but not at all new. There’s not even the… Read more »
Ricardo Belmar
BrainTrust
Two of the top retail segments influenced by digital to date are electronics and apparel. Look at how those brands are doing today. The majority of them waited too long to realize they had passed the digital tipping point with shoppers and reacted too slowly. Grocery retailers are just hitting that point now but still have time to react in this increasingly hot market. While traditionally very slow to innovate and embrace new technology, this segment is rapidly trying to improve its image. With Amazon now fully embracing the segment with their Whole Foods acquisition there is no time to spare for grocery brands to think about how to incorporate new pickup and delivery capabilities, and how to leverage other technologies in the store to enhance the shopping experience. Mobile will be key, both for shopper apps used for product search and with in-store technology that helps shoppers find what they want more quickly. Use of digital signage in-store will increase, but not to overwhelm the shopping experience. Earlier this year I wrote an article giving a report card on the use of digital in the grocery segment — it will be interesting to see how the segment fares next… Read more »
Craig Sundstrom
Guest

What exactly does that mean “tipping point”? I really saw nothing here that suggests that “digital” means anything other than “yeah, everyone is influenced by everything” … one might as well talk about “optician influenced grocery” since they let people see better.

Kim Garretson
BrainTrust

Some are saying the results are overstated, and they may be. But you just have to look at increasing convenience in the digital and mobile world to imagine that we are on a path for shoppers to save time and make smarter decisions in easier ways. You only have to look at AllRecipes.com, which Meredith Corp purchased, and then added next to the recipes a button for listing which of the recipe ingredients are on sale at a variety of nearby stores to help shoppers build a quicker list, with the best basket savings.

Manish Chowdhary
BrainTrust

Is there any retail category or channel that is not affected by “digital?” No.

Are services like Fresh Direct and Amazon Pantry growing? Yes.

Has a trip to the grocery store changed substantially? In my opinion, no.

“Tipping point” is a strong term. It implies that now everyone will alter their way of shopping within the next 10 years. We might have asked this question about smartphones in 2009/2010, and the answer would have been yes.

If there is a digital tipping point, what are we tipping towards? With smartphones that answer was clear — “higher smartphone penetration.” In the grocery channel, the answer is still quite unclear.

Perhaps, in five or 10 years, we’ll be talking about how every trip to the grocery store starts with an online pre-order. Or that more and more grocery stores will look like Amazon Go. In the meantime, until we know what we’re tipping towards we have not reached a tipping point.

wpDiscuz
Braintrust
"Grocers are clinging tightly to their old ways, refusing to embrace the new reality. With Amazon more in the mix now, this won’t end well for them."
"If I were running a grocery chain and had the choice of investing digitally OR in a brighter, well-merchandised store, I'd choose the latter."
"Are you kidding me? The “digital tipping point” happened at least five years ago, if not 10 or more years ago. "

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