More Private Brands Online Will Drive Shoppers to the Channel
A recent study of millions of grocery transactions shows 52% of shoppers have left the online
channel in a recent year-over-year comparison, and it’s causing a decline in e-commerce
revenue for retailers. However, that same research reveals having private brand products
available online can win back revenue.
Currently, many grocers only position select store brand products as part of their e-commerce
offerings, but the research shows retailers can benefit by making their full portfolios available.
The SymphonyAI Retail CPG research of more than 607 million transactions across 58 million
global households in the U.S. and Europe looked at private brand opportunities in the context of
declining online revenue. The research found that a retailer adding around a dozen leading
private brand products could generate an additional 1% increase in e-commerce sales.
This marks a huge growth opportunity, especially considering overall e-commerce revenue dipped 1% in Q1 2023 compared to a year ago, driven by a 14% drop in e-commerce customers.
Shoppers Leave the Online Channel
SymphonyAI Retail CPG’s research looked at Q1 2023 transaction data compared to the same
quarter a year ago and uncovered the startling degree to which e-commerce grocery shoppers have left the channel. Some notable findings from the study include:
● More than half of e-commerce customers (52%) are no longer buying groceries online compared to a year ago.
● Of the lapsed customers, 60% are reverting to the physical store to buy their groceries, but 40% are shopping elsewhere altogether — a significant competitive loss for affected retailers.
● Consumers who return to the store to buy their groceries spend 16% less than before, meaning they are buying more elsewhere.
Promotions, Private Brands and Omnichannel Shoppers Fuel Growth
To combat the downward trend of e-commerce grocery shopping, SymphonyAI Retail CPG’s study found opportunities to effectively engage shoppers with better promotions, stronger private brand coverage and more enticing omnichannel experiences.
The research showed the number of online shoppers buying private brands online has increased faster in proportion to in-store shoppers, with 35% of households seeking private brands online compared to 32% of in-store shoppers. Promotion-sensitive households are also on the rise online, with 37% of online shoppers seeking promotions and 31% of in-store shoppers.
Retailers can deliver relevant and personalized experiences to their shoppers, promoting private
brand products to private brand sensitive shoppers. Additionally, the study found that retailers
that focus on omnichannel shoppers can increase incremental sales opportunities.
For example, the study found more than seven out of 10 current online shoppers also shop in-store, and omnichannel shoppers drove positive online sales growth over each of the four quarters from Q1 2023 to Q2 2022.
Another opportunity, according to the research, is that more than 80% of in-store-only shoppers
still have not used e-commerce over the last five years. With predictive analytics, retailers can identify top prospects in the online channel, increasing their acquisitions strategy. The data shows turning 5.5% of online shoppers into omnichannel shoppers can drive nearly 1% growth in total retailer revenue.
AI and Personalization Drive Conversions
SymphonyAI Retail CPG’s robust data set of household transactions over the Q1 2023 period and before may show a drop in online grocery shoppers but it’s also clear there are opportunities to build back revenue through targeting omnichannel shoppers.
Retailers, specifically, can target omnichannel shoppers using AI and predictive analytics that delve deeply into shopper behaviors. The data-driven insights can help retailers build more
personalized product assortments in stores that meet the needs of their omnichannel customers.
Predictive analytics along with generative AI capabilities can help retailers accurately predict and create the promotions that will be most effective in reaching their shoppers. A grocer, for example, can identify shoppers that are loyal to an own brand frozen foods line and test and learn promotions that will get the most interest. The grocer can run a wide range of promotional scenarios inside the AI and predictive analytics solution to forecast with confidence which promotions will deliver the best returns.
Retailers also can leverage the technology to pinpoint categories where private brands are performing best and in what stores and regions. SymphonyAI Retail CPG’s study shows how promotions, private brands and omnichannel shoppers can lift retailers. With AI and predictive
analytics, brands can zero in on those strategies and adjust assortments and communications to reach shoppers.
E-commerce grocery spend may be under pressure, but with the right data and AI-based recommendations, retailers can find shoppers wherever they are and deliver the right products,
promotions and own brand offerings to generate more loyalty, increased unit sales and higher overall basket sizes.
Rather than suffering lost shoppers, retailers have the means for finding them in a shoppable
moment and increasing chances of conversion through targeted, customer-centric strategies.
Laetitia Berthier is a consulting professional with more than 20 years of experience in customer-centric strategies in Europe and North America. She’s currently head of customer success at SymphonyAI Retail CPG.
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