Today, we’re deep into an online revolution, but is grocery retail getting left behind? Trends suggest that consumers across Europe still prefer to shop in store, and it might just be thanks to AI.
In Western Europe, a fifth of all non-grocery retail sales may be made online by 2022, according to Forrester Research. Yet the gap between online grocery and all other ecommerce is still wide; the same report suggests that, with grocery sales included, the figure is only 13.9%. So, why do grocery consumers still prefer to shop in store?
Contrasting trends across Europe
Across Europe, online grocery retail preferences differ considerably. British online grocery sales make up 7.5% of the global total, whereas Germany — an equally powerful online retail market — contributes only 1.7%.
This reveals a clear preference for brick-and-mortar grocery shopping in Germany. While a huge 93% of consumers shopped online in 2017, the proportion choosing to buy groceries online is still small; only 6% of German consumers currently do, according to a report by Mintel.
Share of global online grocery sales based on value in leading European Union (EU) countries in 2017
Source: Statista 2018
Consumer age matters
There’s a unequivocal preference by Millennials for online grocery shopping compared to older consumers across Europe. In Spain, for example, 46% of consumers aged 16 to 24 have shopped online for groceries compared to 40% of consumers overall. In Poland, it is 44% of 16 to 24 year olds, compared to 41% overall. In France the figure is 33%, compared to 29%.
While Millennials are certainly a digital-first generation, choosing whether to buy their groceries online could be also be down to finances. On the one hand, one in three German, French and Polish shoppers aged 16 to 24 find it easier to stick to a budget when shopping for groceries online.
At the same time, 47% of German shoppers aged 16 to 24 don’t like having to spend a minimum amount. The same opinion is shared by 33% of Spanish, 25% of Polish, 23% of Italian and 19% of French consumers of the same age group.
Quality is a concern
Unlike in other retail categories, the ability to see, feel and select grocery produce is a primary driver for continuing to shop in store. Across Europe there is concern among consumers about the freshness and overall quality of online grocery shopping.
“The freshness of the products and lack of ability to choose products themselves is an important factor behind consumers not choosing online grocery shopping. This needs to be addressed by retailers by putting extra efforts into delivering the freshest products and possibly cutting delivery time.”
Regina Haydon, Food & Drink Analyst, Mintel
Focus on fresh
More importantly, by paying close attention to produce freshness and optimal stock levels, traditional retailers can effectively position themselves in the current grocery market. With consumers continuing to cite this as a key driver to buying in store rather than online, we may see an elevated position of farmers and other fresh produce suppliers.
What’s more, with more grocery retailers like Morrisons using data insights to get the best selection of fresh produce in their stores, customers know their local store is a better destination for the products they need. Grocery retailers across Europe are substantially optimizing their grocery stock freshness by analyzing local demographics, assessing buying patterns, and reading other circumstantial data with AI, and translating that into heightened service levels.
Demand forecasting and other machine learning technology, like that by Blue Yonder, provides the opportunity to streamline and optimize key merchandising decisions, as well as offer highly personalized in-store experiences, comparable to online.