The Future Of Grocery Shopping

Ten years ago, if you had a shop selling books, airline tickets, music and video and consumer electronics, you probably weren’t too bothered by e-commerce. Sales on the internet were a marginal thing; there was little evidence to suggest the mass market was going online. Today if you still own a shop in these areas you are either highly specialized or going out of business. Nobody can argue that, in these categories, online shopping has not radically changed the retail landscape. Today this is far from being true in grocery retail. So should CPG marketers worry that the future of grocery shopping might be radically different to what we have become accustomed to today?

 Is this the future of grocery shopping?

Today online grocery retail is marginal

Not a lot of people buy food and packaged groceries online today. Estimates suggest that in the US ‘non-traditional’ channels account for between 3 and 5%, in Australia maybe 5% and in most of Asia, less that 3%. So today internet sales are still a marginal thing – like they were 10 years ago for book retailers.

Whether you believe that grocery retail will stay offline or not, an un-arguable fact is that the likes of Walmart and Tesco are working hard to figure out how to create a great online offer and create a more enticing in-store offer. But despite all their efforts, progress has been slow.

Imagine my surprise then to find a great example of where I think grocery retail is going in Kuala Lumpur, Malaysia. My colleagues in KL recently took me to Ben’s Independent Grocer (BIG) in the Publika shopping mall.

BIG – A picture of the future

BIG is not so much a grocery store as a foodie’s theme park. The store presents an interesting case of what is likely to become the norm in leading stores globally. Here are four things I believe we are likely to see happening:

Focus on fresh 

Focus on freshWhat BIG does really well is to draw shoppers into large and diverse fresh offer with great merchandising, lighting and signage. Fresh food will become more important in the future because the physical experience of handling choosing and learning about fresh product is difficult to duplicate online. A strong fresh offer will give shoppers a reason for visiting real stores.

Focus on specialties

Focus on specialtiesAt BIG you can get things that aren’t generally available in the mass market or that aren’t necessarily practical to buy online – like organic baby products. Sure some concerned and very organized mums will take the time and effort to seek out these products. But most mum’s live in the real-world where they have to the juggle the needs of a family, a work life and a social life – stores that can bring the latest specialty products to these shoppers win kudos and make a trip all the more worthwhile.

Focus on giving more

Focus On Giving moreAt BIG you can buy a great range of booze – but here the added value is in the experience of buying – not just the act of doing so. Nothing that’s on offer in Ben’s could not be bought online in the future, but there’s something about a carefully curated range, set in a different and comfortable environment with a specialist on hand to advise, that makes visiting this liquor store just a little bit more fun than browsing online.

Packaged groceries are for service

Packaged Goods Are A ServiceThere’s plenty of CPG product available at BIG and much is pretty well done but it’s for service only – not the prime purpose of the store. BIG is trading on the experience you get from buying fresh food and specialties, not trying to differentiate itself on a range of packaged groceries that can be bought just as easily elsewhere.

Is this the future of grocery shopping?

There’s no way of telling whether BIG will be a successful retailer in the long-term, certainly it’s long on high-priced stock and short on deep-pocketed shoppers. BUT there’s a lot to be learnt here about where multi-channel grocery retailing could end up.

The biggest implication for me of this is the role that real stores might play for the CPG industry. If CPG products become more marginalized in the store, brands will have to fight harder to make an impact both off-line and online. This is going to take some deeper thinking about the role that physical stores should play and the relationships brands need to create with shoppers and retail customers in the future. This is not a ‘sales problem’ – it’s a total marketing problem that requires marketers and sales people to work together to come up with new ways of engaging with consumers, shopper and retailers.

Here are some practical steps to take now:

  1. Research the roles physical stores currently play and the propensity of your shoppers to use online channels
  2. Learn more about those shoppers who already buy products online via CRM or digital analytics platforms.
  3. Learn more about what draws shoppers back to stores regularly.

If you’ve already taken these steps and can share what’s been learnt or if you’ve found other great examples of really engaging grocery environments – please do post them here!


6 thoughts on “The Future Of Grocery Shopping

  1. This is a very interesting article on what tomorrow weekly shopping might look like.
    It would have been interesting to see the percentage of online grocery shopping in Europe too.
    As well I am wondering about the difference of penetration between large cities and less densely populated areas. I am not sure an average for Australia is representative of the situation in Sydney or Melbourne.
    I think that BIG’s strategy is a good one for busy, city dwellers: get the basics CPG products via online delivery and get the fresh ones at BIG as a per need basis.

    From this assumption, the large FMCG companies have a lot to do to engage the shoppers online and adapt in-store merchandising and promotions to online. How do you make your products visible in a category when you don’t have shelf? Shopping online today gives you a list of items often sorted by what you have bought before or popularity. New entrants will have an even tougher time…

  2. The article is very informative. I can tell something about Australian grocery shopping online, people here are getting enticed by the online shopping a lot, specially the grocery. The reason is what I guess, the increasing amount of social media, which have made people sitting in front of a digital assistance and surfing in web.
    The products which are packaged and from good brands are easily picked up by the consumers for online shopping. So the future of grocery shopping depends largely on the products information online and brand image a lot. Go with good products online, you are sure to success.

  3. Very thought provoking. Interesting comparison between airplane tickets, music and video, books, etc 10 years ago and grocery shopping today. There are certainly some products that are more readily lend themselves to online selling; like you mention, consumers are never going to be able to inspect the quality of a piece of fruit over the internet. But I do think part of what has made shopping online so popular is the fact that consumers are able to compare prices so easily (airplane tickets is a good example). If consumer begin to trust the quality of online groceries more, then I think there’s a lot of room for growth in this area.

    • You know I totally agree with you. What surprises me about the success of online grocers in China is that the Chinese are traditionally very selective about fresh produce and yet they seem to be the fastest adopters of online grocery shopping.

      Best Toby

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