New York – Feb. 7, 2019 – Online grocery in the U.S. is on the cusp of a major increase in consumer adoption.  New research from Bain & Company and Google, Omnichannel Grocery is Open for Business – and Ready to Grow, predicts e-commerce penetration is expected to at least triple in the next decade.  Yet, grocers attempting to drive volume online face an uphill climb.  Online shopping is not yet a consistently more convenient experience than in-store shopping in the consumer’s mind – a gap that is limiting the broader adoption of online grocery shopping.  Grocers that can deliver higher levels of convenience through online grocery shopping and shape consumers’ digital habits have a rare opportunity to edge out their competition. 

Online grocery shopping has both a penetration and a frequency problem to overcome.  A Bain & Company survey of more than 8,000 grocery shoppers across the U.S. reveals that penetration hovers at a mere 3 percent.  According to the research, that’s because while just 25 percent of consumers surveyed said they used an online grocery service in the last year, only 26 percent of those users, or 6 percent of all consumers, say they have been placing online orders more than once a month. 

“Online grocery shopping in the U.S. trails that of other e-commerce categories in large part because our grocery shopping habits are so deeply ingrained, and online grocery retailers haven’t yet convinced customers that grocery shopping online can be a better experience,” said Stephen Caine, a leader in Bain & Company’s Retail practice. “Traditional grocers have decades of experience optimizing their physical stores to align with how shoppers think – training them to navigate store shelves to easily find what they are looking for, making it easy for them to make trade-offs between products, and providing inspiration when they want to try something new.  Online grocery shopping has not yet found a way to digitally replicate these cues simply and intuitively.”

Consumers also remain highly dependent on familiar ‘analog’ tools, such as written lists, to aid planning and shopping.

The Bain-Google findings suggest that changing these and other shopping patterns is not an insurmountable challenge for omnichannel grocery retailers. They can seize this opportunity by addressing three imperatives:

• Bridge the convenience gap between in-store and online shopping
• Capitalize on the incumbent advantage now  
• Invest to make digital an edge

Bridge the Convenience Gap

Convenience, in the context of buying groceries online, boils down to an experience that saves time while also creating an intuitive and frictionless shopping experience from start to finish.

By this definition, grocery retailers today are not yet consistently delivering a more convenient experience online. Among online grocery shoppers who say they have shopped online for groceries just once in the past 12 months, only 42 percent report that the online experience saved them time. This disappointment among the remainder of shoppers and the perceived convenience gap is a major impediment to regular adoption of online grocery in the U.S. today.

Consumers need to experiment with an online grocery service multiple times to begin to recognize the value of shopping online and understand how it can become an essential part of their routine.  Retailers must then invest, not just in acquiring the shopper once but three or more times to convince the customer of the benefits of shopping online. Bain & Company found that 63 percent of online grocery shoppers who have shopped for groceries online three times say that online grocery shopping saved them time compared to an in-store trip. That’s a jump of 20 percentage points above those first-time online shoppers.

Capitalize on the Incumbent Advantage

When it comes to building share online, traditional grocers have an unexpectedly powerful advantage, the Bain-Google research found. Consumers who had not used an online grocery service in the past year were asked which one they would select if they had to give it a try. Almost all (96 percent) said they would look first to a traditional brick-and-mortar retailer for home delivery, and 85 percent said they would select a store they already visit.

This home-store bias makes sense, since grocery shoppers have already made well-informed decisions about which retailers they trust. Unseating these habits is difficult. Only 17 percent of consumers surveyed say they have tried a new retailer in their area within the last three months, and only 25 percent said they are likely to try a new retailer for a routine grocery trip.

“Winning a first trial is so important because there is a general consumer ‘stickiness’ when it comes to online grocery: 75 percent of online grocery shoppers say they are still using the first online grocer they tried,” said Michelle Paratore, a member of Bain & Company’s Retail practice.  “Knowing that existing consumers are likely to try their online offering first, omnichannel retailers are well-positioned to keep these shoppers for continued visits and purchases as long as they deliver an experience that is convenient and meets shoppers’ needs.”

Invest To Make Digital an Edge

Traditional grocers have the opportunity to embrace digital tools to increase convenience for in-store shoppers, helping to strengthen customer retention. For example, the Bain-Google survey found that grocery shoppers who have not shopped online in the past 12 months say that building a shopping list and having ways to compare prices are the two features they would value most from an online grocery retailer. This contrasts with more advanced features, such as personalized recommendations and substitution algorithms that retailers could pour significant funds into but matter less to consumers. Voice assistants, such as Alexa, Siri, Cortana and Google Assistant, and grocery apps are two categories of tools well positioned to deliver on these urgent shopper needs.

Only 4 percent of grocery shoppers say they have adopted voice assistants on dedicated devices for grocery planning, much lower than the estimated 23 percent to 32 percent of U.S. adults who own smart speakers. But adopters are using them frequently – 66 percent of grocery shoppers who use voice assistants say they use the tool weekly or more frequently for grocery planning.

“Although the shift online will rapidly accelerate, we anticipate that the majority of grocery spend is still expected to occur in physical stores in 2030,” said Mr. Caine.  “The winners in this changing grocery landscape will be the retailers that can deliver frictionless omnichannel experiences, investing in digital experiences and tools that save time for consumers shopping online or in the store.” 

Editor's Note: To arrange an interview, contact Dan Pinkney at dan.pinkney@bain.com or +1 646 562 8102

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