How can grocery retailers capitalize on the ‘e-commerce customer’?

Why aligned on and offline assortment are key to gain loyalty and retain online customers

Recent lockdowns and changes in shopper buying behavior have contributed to a significant growth in e-commerce sales for grocery retailers. To capitalize on these changes and to build both loyalty and profitability, requires an understanding of the key characteristics and motivations of this new customer.

Download executive overview of findings from 44 million households*>>

A customer who shops online is not a lost customer

Customer’s total spend (online and in-store) increases by 15% when they become omnichannel
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2020 marked a turning point for grocery purchases in retail, with online sales increasing from between 43% and 100% during the first lockdown (*). While non-food retail purchases were common at the beginning of 2020, only a minority of shoppers were shopping online to fill their refrigerators. The pandemic has shaken things up and accelerated this transformation by several years.

However, retailers are on the whole unfamiliar with this new customer and may have an unbalanced view of them, starting with the fear that a customer choosing to shop online is a lost customer for the physical supermarket or store. In fact, the situation is precisely the opposite. Studies show that a customer’s total spend (online and in-store) increases by 15% when they become omnichannel. More specifically, we have seen through our own sales and customer insights analysis that basket size increases by 9%, and purchase frequency increases by 6% (*)

When a customer shops online, it is good news for the retailer. The two channels complement rather than cannibalize each other.

A new customer is not a loyal customer

The first challenge is not so much acquiring a new customer online but making sure that they return.  From our analysis we see that of every ten new online customers, six do not return (*). There is therefore a great deal of room for improvement and retailers must do everything they can to retain customers who have shopped once for online groceries.

Making online shopping a habit should be a strategic objective. To do this, we need to facilitate the experience. For example:

  • Set up a series of offers that encourages the customer to return after the first and subsequent purchases. According to our studies, it takes at least three months of regular purchases for a new shopping habit to be formed
  • Facilitate navigation around the site by taking into account the customer’s profile and preferences, e.g. classify products according to the customer’s price sensitivity or lifestyle
  • Offer each customer a personalized shopping list
  • Make recommendations for products to place in the basket, through cross-promotional activity or personalized recipes
  • Facilitate access to promotions and deals, which online shoppers love
  • And of course, ensure the availability of products and plan substitutions, because out-of-stock items are a hugely irritating part of the online experience.

Assortment is key

To gain loyalty and retain online customers, the right assortment is key. For many retailers, online assortments are significantly more limited than those in the brick and mortar stores. Products absent from the online store can strongly reduce customer satisfaction, and therefore their likelihood to remain on the site and to adopt online shopping habits.

Failing to offer discounted products is a common mistake and will scare away price-sensitive customers. The principle is the same for high-end products too: if you don’t offer them you run the risk of not attracting customers who care about quality.

It is also important to offer a wide range of fresh produce and to include this in online assortments.

Customers are no longer reluctant to buy fresh items online, along with seasonal and everyday purchases of non-food products. This includes items such as batteries, light bulbs, charcoal for barbeques in summer and wood pellets for wood stoves in winter, paper goods, and home office for example. This not only makes it possible to grow basket size but also avoids sending customers into the arms of the e-commerce giants.

Online food shopping represents a huge source of growth for large retailers. The pandemic has delivered many customers to this channel: now it’s up to the retailers to work out how to keep them.

(*) Source: Symphony RetailAI global study (carried out on 44 million retail households from January to March 2021)

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