SymphonyAI Retail CPG has released new global research highlighting the rapid decline in online grocery shopping, making business agility more imperative than ever.
The analysis of more than 58 million shopper baskets of actual purchase data across the US and Europe found that 52% of e-commerce grocery shoppers left the online channel over the last year. Further analysis of those lapsed customers reveals that while 60% are reverting to the retailer’s bricks & mortar sites, 40% have left the retailer altogether.
The study notes that the loss of former online customers has had a significant impact on e-commerce revenue growth. While total online revenue growth only dipped by 1% in the first quarter of 2023 compared to the same period in 2022, held up partly by inflation, the data showed a 14% net decline in the total number of online shoppers (departing shoppers offset by new shoppers).
“The overall decline in online customers and their impact on e-commerce growth is significant,” said Laetitia Berthier, head of client engagement, SymphonyAI Retail CPG.
“Contrary to expectations, the losses are coming not from shoppers who were forced online during the height of the pandemic, but rather those shoppers who had moved online after the pandemic. It’s critical for retailers to understand those customer dynamics and their fast-changing needs to succeed in the critical online channel.”
The research shows that not all those online shoppers are returning to the same retailer’s bricks & mortar sites to do their shopping. What’s more, when they do, the shoppers were found to be less valuable. Lost online customers that did revert to the physical stores reduced their overall spend by 16%, indicating they are fulfilling their grocery needs elsewhere.
IRI notes that the changes are providing new opportunities. The study found that shoppers who buy groceries online and in-store, deemed omnichannel shoppers, have become the most important customers to retailers. More than 71% of online households in the first quarter of this year were considered omnichannel households, and they are actively growing sales for the retailer.
Omnichannel shoppers are said to be vital to e-commerce, driving positive sales growth online over the last four quarters. Customers who formerly shopped only in-store, and who subsequently became omnichannel shoppers delivered 15-18% in incremental sales over the last three years for retailers and purchase a basket size that is 9% higher than that of strictly in-store shoppers.
Interestingly, more than eight in 10 in-store shoppers have not used e-commerce for grocery shopping over the past five years, meaning retailers still have an opportunity to grow an omnichannel shopping base.
IRI suggests that predictive models and AI can help retailers identify potential omnichannel customers, and the research finds converting just 5.5% of those in-store shoppers identified as top prospects into omnichannel users could lead to an additional 1% growth in retailer revenue.
The research identifies big opportunities for retailers to increase digital engagement, drive incremental growth and build customer loyalty. For example, the number of households seeking own-label products online delivers revenue growth of more than 10%, with 35% of households in the study buying own-label online.
NAM Implications:
- This research appears to identify omnichannel users as a valuable source of future business…
- …a discovery that will not be lost on most retailers.
- Behold a new battleground?
