Insights into Grocery eCommerce 2016

Insights into
Grocery eCommerce
2016
R E P O R T
Insights into Grocery eCommerce 2016
identiﬁes critical trends, reveals key ﬁndings
about consumer preference and highlights
next steps for today’s retailers.

Executive Summary
03
Methodology
05
Adoption and Activity: Key Findings
06
Grocer Spotlight: Price Chopper
18
Transitioning to Digital Checklist
23
Conclusion
24
T A B L E O F C O N T E N T S

Imagine walking into your local grocery store and receiving personalized offers and
recommendations the moment you step inside. Imagine checking out in seconds, and paying for
your groceries without even having to pull out your wallet. Imagine buying your grocery staples
—from fresh produce to prepared foods, and even items that aren’t available in your local store
—all from the comfort of your own home with a single click of the mouse. These things might
seem far out for the average grocery retailer, but we’re edging closer to this redefined vision of
the grocery experience than you might think.
Technology has revolutionized the way in which consumers purchase goods and services, and
it’s fundamentally transformed the way businesses operate. Companies like Amazon and Netflix
offer shoppers access to an extensive catalogue of products, user reviews and personalized
suggestions based on search and purchase history, and as consumers become more
accustomed to these benefits in other digital settings, they’re beginning to expect them to be
incorporated into the grocery experience as well. To meet this growing demand, savvy retailers
are leveraging technology to enhance the shopping experience and meet modern consumers’
evolving needs.
This study is designed to assess how retailers can serve the growing demands of today’s
shoppers while reaching larger and more diverse markets online. The findings have been
summarized to offer insights into how businesses can leverage digital technologies to improve
their customers’ shopping experiences, increase store visitation, boost sales across all channels,
and become market-leaders in grocery e-commerce.
Digital is redefining the grocery experience
E X E C U T I V E S U M M A R Y 03
1. Females remain the primary shopper for the majority of U.S. households.
2. There is significant shopper interest in home delivery for online grocery orders.
Key findings in this report include:

E X E C U T I V E S U M M A R Y 04
3. Your customers, regardless of age, are online, consider themselves to be technologically
savvy, and are making more digital purchases than ever before.
4. There is considerable consumer demand for grocery chains that can provide personal
shopping and packing services, along with direct-to-vehicle delivery.
5. Consumers are willing to order groceries from locations other than their favorite store
for the convenience of click-and-collect shopping.

The research on which this study is based was conducted in the ﬁrst quarter of 2016, and
involved surveys of 1197 female shoppers across the United States. This provides interesting
context, and opens up more opportunities for future research into the growing role of the male
shopper and the rise of the shared shopper.
The purpose of this report is to explore exactly how female shoppers are using digital
connections in 2016, and the questions within it have been formulated to oﬀer grocers unique
insights into how they can better connect with their female shoppers in a rapidly evolving retail
landscape.
M E T H O D O L O G Y 05

of those surveyed in this study shop at their favorite grocery store
once per week or more, while almost all (89%) reported shopping at
their favorite store at least once every two weeks.
The process of how shoppers buy their food is being reshaped by modern lifestyles, changing
family dynamics, and the advancement of digital technologies. With fewer traditional rules to
control consumer choices and purchasing habits, shoppers are shifting their buying criteria to
demand more value, better service, and greater convenience. As a consequence, grocers are
being forced to adapt their products and services to meet these evolving consumer desires and
encourage brand loyalty.
70
DID YOU KNOW?
%
E-Commerce Appetite and Adoption in 2016
06
For decades, the primary grocery shopper has typically been the female head of the household,
and our research indicates that the same still holds true today. In this study of female
consumers, the overwhelming majority of those surveyed (93%) still claim to be the primary
shopper for their household.
While this finding is in keeping with traditional household dynamics, the results also indicate
that many of today’s households differ significantly from the idealized image of the “nuclear
family”. One of the key changes is the rise in single-person households—the number of adult
females living alone.
When asked how many people reside in their household (including themselves), nearly one fifth
(19%) of respondents claimed to live in a single-person household. This can likely be attributed
to changing lifestyle trends and shifting attitudes to marriage. However, the notion of the
“traditional” household, consisting of two or more individuals, is still alive and well. In fact, 80%
of households in 2016 are comprised of between two to six people.
The American Household in 2016

While they may only account
for 20% of all households
surveyed in this study, the single-
person household trend is one
that is only predicted to grow,
and is likely to have interesting
and profound implications for
many businesses—including
grocery retailers.
Research suggests that it costs a business as much as 5-10 times more to acquire a new
customer than it does to sell to an existing one. It is also estimated that current customers
spend 67% more than new customers.
In light of these statistics, loyalty programs that reward buyers for sticking with brands have
grown in popularity, and the findings of this survey suggest that respondents are reaping the
benefits by becoming members of such programs.
In this study, 72% of those surveyed belong to some form of grocery rewards program. These
findings suggest that if grocers can meet consumer demands by offering incentives and better
value for shoppers, they will ultimately be rewarded with greater customer allegiance.
39%
2 PEOPLE
14%
4 PEOPLE
6%
5 PEOPLE
3%
6 PEOPLE
1%
7 PEOPLE +
18%
3 PEOPLE
19%
SINGLE PERSON
Customers Seek Rewards for Brand Loyalty
07
How many people
reside in your
household, including
yourself?

A growing number of retailers are introducing e-commerce models to make it easier for the
tech-savvy, time-crunched consumers of today to buy the things they need. For these
consumers, online shopping has become a deeply ingrained behaviour due to an
unprecedented enthusiasm for technology and adeptness in using it.
In all, 97% of respondents have made online purchases, and most of those individuals (89%)
buy products and/or services online at least once per month.
More interesting still is the fact that, of the 97% of respondents who have purchased online,
69% are between the ages of 40 and 60 years old, or 60 and above. This suggests that the lion’s
share of today’s e-commerce adopters are from Generation X.
Surging Online Retail Adoption
08
Of the 97% of respondents who have purchased online, 69% are
between the ages of 40 to 60 years old, or 60 and above. This
suggests that the majority of today’s e-commerce adopters are from
Generation X.
97
HIGHLIGHT
%
Have you ever made
any purchases online?
How often do you buy products or services online?
Yes
97%
3%
No

How interested in online grocery
shopping are you?
SHOW INTEREST
Approx.
49%
VERY INTERESTED
20%
SOMEWHAT INTERESTED
29%
ARE NEUTRAL
23%
NOT INTERESTED
16%
NOT AT ALL INTERESTED
12%

In the era of connected commerce, consumers no longer wish to shop for the items they need
entirely offline. Instead, they prefer a blended approach where they can utilize whichever
channel best suits their unique needs at that precise moment.
When asked to state their interest in online grocery shopping, nearly half of those surveyed
(49%) expressed an interest, while 23% remained neutral on the subject.
These findings indicate that in order to generate more interest in online grocery shopping in
the neutral cohort, it’s important for grocers to place a focus on the features and
functionalities of their offerings.
If grocery retailers can provide a service that is in line with what shoppers experience in-store
but with the benefit of added conveniences, many of those in the neutral camp are likely to
express interest in the future.
Growing Appetite for Grocery E-Commerce
When considering the potential features and functionalities of online grocery shopping,
respondents ranked content navigation—the ability to quickly search for products, and browse
products by department, category, brand and price—as most important.
Features that enable shoppers to order fresh produce (like fruit and vegetables) by quantity
and weight with accurate pricing was also considered important, as were similarities between
online and in-store product pricing.
When considering the potential features and functionalities of
online grocery shopping, respondents ranked content navigation—
the ability to quickly search for products, and browse products
by department, category, brand and price—as most important.
Functionality is Key

The ability to quickly search
for products
The ability to browse products by
department, category, brand and price
The ability to order fresh produce by
quantity and weight with accurate pricing
Online product pricing similar to
items currently available in store
The option to be able to pay
for an order online
Ability to add items from
a list to a shopping cart
When considering the potential features and
functionalities of online grocery shopping,
rank the following by order of importance.
Based on these ﬁndings,
the features ranked above
—along with others, such
as convenient collection
options once items have
been ordered—can oﬀer
online grocery retailers a
competitive advantage.
11

12
Home Delivery Gives Grocers an Edge
Of the 70% of respondents who expressed an interest in home
delivery, 63% would be willing to pay for the convenience
of having their order delivered to an address of their choice.
Going forward, the most successful retailers will be those that sit at the crossroads of the
physical and virtual worlds and leverage technology to satisfy their shoppers however and
whenever they choose to buy—and receive—their groceries. When asked how interested
respondents were in having orders delivered to an address of their choice, more than 70%
expressed interest.
Of the 70% of respondents who expressed an interest in home delivery, 63% would be willing to
pay for the convenience of having their order delivered to an address of their choice. Price was
a particularly important motivator, with the top two groups (90%) stating that they would
prefer to pay a delivery fee of between $0 and $15.
27%
$10-$15
8%
$15-$20
63%
$0-$10
How much would you be
willing to pay to have
your groceries delivered
to you?
When considering submitting an online grocery order, the segment with the highest percentage
of respondents (45%) would expect their groceries to be ready for pick-up or delivery the same
day the order was placed. Just over 39% said they would expect
pick-up or delivery the next day, and the remainder said they
would expect their order to be ready within two days or
the same week of placing the order.

How quickly would you expect to have your
groceries ready for pick-up or delivered to
an address of your choice?
Another important motivator behind interest in home delivery was
timeliness: 85% of those who expressed interest would expect to receive
their delivery within a day or two. The same expectations were also true for
click-and-collect shopping services.
SAME DAY
46%
NEXT DAY
39%
TWO DAYS
5%
NOT SURE
6%
SAME WEEK
4%

7%
$10-$12
28%
$5-$7
25%
$7-$10
4%
$12-$15
5%
$12-$15
As shoppers’ purchasing habits continue to evolve, they expect to be given the option to shop
online when they crave convenience, in-store when they want immediate gratiﬁcation, and
sometimes even a combination of the two.
Click-and-collect services, in which groceries are ordered online for pickup at a store or other
location, are becoming increasingly popular in many retail verticals—including grocery. Of
those surveyed in this study, nearly 60% of respondents expressed an interest in having the
ability to order online and pick up their order from their favorite store location.
But much like grocery e-commerce delivery, cost is an important factor when it comes to
consumer interest in click-and-collect services. Almost a third of respondents (33%) would be
willing to pay for the convenience of having their grocery order picked and packed by a
personal shopper, ready for pick-up at their favorite store location. When asked how much they
would consider paying for this service, nearly 70% would pay at least $5.
An interesting ﬁnding is that less people are willing to pay for click-and-collect services than
they are for home delivery. 63% would be willing to pay for the delivery of their online grocery
order, versus 33% who would be prepared to pay for click-and-collect.
How much would you
consider paying to have your
order picked and packed
by a personal shopper,
ready for pick up at
your favorite store?
Consumers Call for Click-and-Collect Shopping
SHOP
31%
$0-$10

How much would you be willing to pay
to have your order picked and packed
and brought out to your vehicle by a
personal shopper?
These numbers suggest that today’s consumers
seek comfort, convenience and control.
$0-$5
41%
$5-$7
21%
$7-$10
22%
$10-$12
7%
$12-$15
5%
OVER $15
4%

When presented with the option to have their entire order picked and packed by a personal
shopper and then collected from a pre-determined location that wasn’t their favorite grocery
store location, 31% expressed an interest, indicating that almost one third of respondents would
be open to switching stores. What’s more, at least 63% of those who showed interest were
willing pay for the convenience.
These results indicate that, with busier schedules and growing comfort with e-commerce,
today’s consumers are choosing brands that provide the most convenience, and they are willing
to switch from their regular grocery provider to an alternate one for a more user-oriented
experience.
These numbers suggest that today’s consumers seek comfort, convenience and control. It
comes as no surprise, then, that when picking up groceries from their local store as part of a
click-and-collect shopping experience, more than half of those surveyed (54%) would
appreciate the convenience of having their groceries brought out to their vehicle.
For direct-to-vehicle, click-and-collect shopping services, the largest proportion (41%) of
respondents in this survey stated that they would be prepared to pay between $0 to $5 for the
service. Approximately 55% would pay between $5 and $15, and the remainder would be willing
to pay $15 and above.
Shoppers Willing to Switch Stores for Convenience
When picking up groceries from their local store as part of a click-
and-collect shopping experience, more than half of those surveyed
(54%) would appreciate the convenience of having their groceries
brought out to their vehicle.

How much would you consider paying to
have your order picked and packed by a
personal shopper,ready for pick-up at a
pre-determined location that is
not your favorite store?
$0-$5
37%
$5-$7
25%
$7-$10
22%
$10-$12
9%
$12-$15
3%
OVER $15
4%

Find out how Price Chopper, a chain of 130-plus stores in the Northeast,
embarked on a process that led to a new digital strategy for the grocery
chain. The strategy included the implementation of a digital platform
that would allow for new mobile applications and a new website,
among other features.
G R O C E R S P O T L I G H T
Price Chopper’s transition to digital wasn’t done just for the sake of using advanced tech-
nologies, but instead to better connect with shoppers to deliver what they want, allowing
the company to make the shift from its position as a primarily value-driven grocer to an
experience-driven one.
The changing retail landscape has shifted priorities and created the need for regional grocers to
embrace digital maturity. “Price Chopper knows that the digital space is where our customers
are trending towards for convenience and value. Therefore, we are working to transform our
commerce, merchandising and advertising platforms to support a ubiquitous digital experience
for our customers,” explains Thom Riley, senior applications architect and digital strategist for
Price Chopper. “It’s no longer a matter of if, but rather how quickly, we can deliver a relevant,
comprehensive digital experience that our customers deserve.”
“It’s no longer a matter of if, but rather how quickly,
we can deliver a relevant, comprehensive digital
experience that our customers deserve.”
Price Chopper’s Digital Journey

19
Glen Bradley, VP of marketing analytics at Price Chopper, agrees that digital technologies
provide an eﬀective means to deliver to increasingly discerning, tech-savvy shoppers and reap
the beneﬁts. But Price Chopper had its sights set on taking its digital strategy beyond e-
commerce—the company was also looking for a solution that would enable it to create
personalized content tailored to shoppers at an individual level.
“We believe personalization is important today and will be even more so in the future,” he says.
“Younger generations have come of age experiencing and expecting personalization in the
digital world, and they extend that expectation to other facets of life. While digital is not the
only area in which we use personalization, it is the fastest growing in usage and capabilities.”
Looking Beyond E-Commerce to Personalization

Price Chopper’s journey to digitization consisted of three distinct
phases, affecting various elements of the company’s online
shopping experience:
The Journey to Digital
PHASE ONE: Price Chopper launched a personalized email
newsletter, featuring offers tailored to individual shoppers
based on their shopping history. This personalized shopping
experience would then be carried across all digital touch points.
1
PHASE TWO: Other features implemented included the digital
availability of weekly flyers, recipes, store locators, and the ability to
create shopping lists online.
2
PHASE THREE: The final phase in the process was bolstering the
grocery chain’s e-commerce capabilities, such as the online ordering
system for custom prepared foods.
3
Through these channels, shoppers receive useful tools to make their
shopping experience easier and more relevant, allowing them to place online
orders for food items, receive tailored email offers and digital coupons based
on purchasing history, and then redeem those coupons online.
S T R A T E G I C R E S U L T

By overhauling its digital properties, Price Chopper was able to
offer a compelling digital experience through its website and
mobile applications, increasing the reach, quality and convenience
of its offering.
Key Takeaways
Through these channels, shoppers receive useful tools to make
their shopping experience easier and more relevant, allowing them
to place online orders for food items, receive tailored email offers
and digital coupons based on purchasing history, and then
redeem those coupons online.
Grocers can learn from Price Chopper’s team effort to take its
digital capabilities to new levels. Beyond challenges like the
centralization of data and adjusting expectations about digital
versus brick-and-mortar, there are many opportunities that
supermarkets can take to build profitability and loyalty by
enhancing their digital offerings.

In the digital age, shoppers will use whatever channel best suits their needs for convenience,
choice and value, which means it’s critical that retailers leverage both physical and digital assets
to optimize online and in-store customer experiences. But bridging the gap between the online
and brick-and-mortar worlds is no easy feat. Here are some ideas to help link the two, designed
to put retailers in a stronger position to succeed in today’s digital environment:
• Value across channels: Regardless of channel, key drivers behind consumer purchases
remain the same: price, quality, convenience and product selection. Retailers must
demonstrate their ability to deliver these values in every interaction—whether it takes
place online or in-store.
• Consider channels holistically: Online and in-store are inherently different formats,
with unique uses, expectations, challenges and economics. When developing a strategy,
retailers must consider the entire retail landscape and appreciate the differences between
channels. Online and offline tactics should complement one another to drive increased
engagement and sales across all channels.
Understanding consumers’ wants and needs is crucial when developing an omni-channel
strategy and experience. However, while today’s consumers demand a more personalized
shopping experience, retailers need to prioritize which initiatives they wish to execute and
determine how much of an investment they’re willing to make. This requires a deep
understanding of the decisions that shoppers make along the path to purchase, the types of
information they seek to inform those decisions, and where and how they choose to make their
purchases. Once grocers are armed with this knowledge, they can use it to personalize and align
content to meet shoppers’ unique needs.
23
Linking Bricks to Clicks
T R A N S I T I O N I N G T O D I G I T A L

EVALUATE THE LANDSCAPE
Consider your regional retail landscape, taking potential trends,
challenges and opportunities into consideration. Then, identify what
stage of maturation you’re at with your current digital initiatives.
ASSESS YOUR OPTIONS
Consider the complexity of the project and identify potential tools and
solutions that will meet your needs and can help bring your digital
strategy to life.
IMPLEMENT YOUR STRATEGY
Identify your goals, create a roadmap, and take decisive action.
Leverage any existing data you may have.
MEASURE AND ADJUST
Take a data-driven approach to your digital eﬀorts and analyze exactly
what’s working, what isn’t, and adjust your initiatives accoedingly.
Ready to embrace e-commerce or enhance your existing oﬀering?
See where you’re at and what needs to be done by completing the
checklist below:
Checklist

While brick-and-mortar stores dominate the grocery shopping experience, e-commerce is a
growing business that is still in its emergent stage in many parts of the world. Success in e-
commerce might not come easy to some retailers, but early movers often gain considerable
competitive advantage and establish themselves as forerunners in the industry.
The findings in this study clearly indicate that:
• Single-person households account for one fifth of all households surveyed in this research
study, representing a new demographic grocers should be engaging with
• Today’s shoppers see value in loyalty programs, with as much as 72% of consumers
currently participating in such programs
• Appetite and adoption for grocery e-commerce is at an all-time high
• There is significant demand for home delivery as consumers demand greater
conveniences from their providers
• Consumers are willing to switch from their primary grocer for the convenience of online
grocery services
Each of these conclusions clearly indicates that consumers are primed and ready to embrace
the world of online grocery retail. Which begs the question: how can retailers capitalize on this
opportunity?
• Demonstrate credibility
Consumers are often reluctant to try online shopping, so it’s crucial that retailers establish
trust, credibility and exceed customers’ expectation during every interaction. To allay
concerns about product quality and service levels, retailers should consider offering
quality assurance programs that provide recourse for items that are damaged or don’t
A New Norm
C O N C L U S I O N 24

meet the customers’ expectations. To gain consumers’ trust, the necessary infrastructure
must be in place to facilitate orders being ready for delivery or pick-up within the specified
time period, and if an order cannot be fulfilled as expected, the customer must be notified
immediately.
• Ease of use
Functionality and ease of use should be a top concern in website and mobile app design.
Assistance should be readily available, and the checkout process should be straightforward
and secure. If the website or app is slow to load or difficult to use, retailers risk customers
abandoning their digital carts before purchase.
• Market awareness
From demographics to operating costs and even consumer preferences, there are several
factors that can vary significantly from market to market. There is no “one-size-fits-all”
approach—retailers must know their market and specifically tailor their digital strategies
to suit it.
6000 Fairview Rd., Suite 1200
Charlotte, NC 28210
545 King St. West, Suite 500
Toronto, ON M5V 1M1
Sales Inquiries:
sales@mercatus.com
Thank You!

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