Return of the Milkman

The milkman is back, but this time he’s gone digital. Thirteen (13) percent of U.S. respondents say they are already ordering grocery products online for home delivery and more than 55 percent are willing to do so in the future.

The good news for brick-and-mortar retailers is that clicks won’t be replacing bricks any time soon. Online shopping has a number of benefits, but physical stores also have strong key advantages over e-commerce — especially for fast-moving consumer goods. In fact, the majority of U.S respondents (58 percent) reported that going to the grocery store is an enjoyable and engaging experience. A similar percentage (47 percent) thinks grocery shopping in a retail store is a fun day out for the family.

However, clicks do lead to bricks, and this is an important takeaway for retailers and manufacturers if they are to engage the consumer early on the path to purchase. There are many touchpoints along this path, including finding the store, making shopping lists, checking prices, researching products, sharing reviews and manufacturer and retailer social media content and, finally, purchasing.

Retailers have a lot of room to grow when it comes to in-store digital enablement options, including mobile coupons, lists and shopping apps, and in-store Wi-Fi availability. Online or mobile coupons (27 percent) and mobile shopping lists (19 percent) are the most cited forms of in-store digital engagement in use today among U.S respondents, with more than half willing to use them in the future (54 percent and 52 percent, respectively). Sixteen (16) percent of U.S. respondents use a downloadable retailer/loyalty program app on their mobile phones to receive information or offers, and 52 percent say they’re willing to use one when it is available.

Who is shopping online?

The growth of online consumer packaged goods (CPG) sales has been driven in part by the maturation of digital natives, the consumers who grew up with digital technology (the millennials and now Generation Z). These consumers have an unprecedented enthusiasm for — and comfort with — technology, and online shopping is a deeply ingrained behavior. Current usage of six e-commerce options (home delivery, in-store pickup, drive-through pickup, curbside pickup, virtual supermarket and automatic subscription) is greatest among the youngest respondents, and these respondents are also the most willing to use all of the e-commerce options in the future. For example, 17 percent of millennial respondents say they’re ordering groceries online for home delivery, compared with 10 percent of Generation X, 13 percent of baby boomers and 2 percent of Silent Generation respondents. Younger respondents are also the most willing to use all of the e-commerce options in the future.

Increasingly, retailers are introducing e-commerce models that make it even easier for tech-savvy time-crunched consumers to get the items they need. Eight (8) percent of U.S. respondents say they use an automatic online subscription service in which orders are routinely replenished at a specified frequency, and more than half (55 percent) are willing to do so in the future. A smaller number of consumers are using “click and collect” services in which they order groceries online for pickup at a store or other location.

What are we buying online and offline?

Virtual baskets don’t necessarily mirror physical ones. In fact, the relationship between the two is often an inverse one. In the United States, for example, the mix of online product sales is roughly 60 percent non-food to 40 percent food, the exact reverse of the total in-store CPG picture.

So which categories have the most potential for digital success, and which are best suited for in-store?

Generally, stock-up categories such as personal care and household products are prime selections for e-commerce inventory, while immediate-use items such as fresh and frozen foods, condiments and beverages will be slower in adoption.

The path to purchase is changing, and traditional retail will continue to evolve. With this comes the opportunity to engage and reach consumers before they reach the store and beyond the store.