Hitching business to the online wagon
E-retail is giving tough competition to physical stores, gaining ground in revenue and visibility as consumers distance themselves from the traditional supermarket model. .
E-retail is giving tough competition to physical stores, gaining ground in revenue and visibility as consumers distance themselves from the traditional supermarket model.
The competition in the food retail market has increased in recent years. Traditional food retailers are facing fierce pressure from alternative channels, including warehouse clubs, supercenters, drug stores, mass retailers and convenience stores, as well as online retailers and grocery delivery services. Let’s take a look into how e-retail, in terms of food and grocery, is winning brownie points.
Success story of e-retail so far
Virtual baskets don’t necessarily mirror physical ones, with the relationship being inversely proportional in nature. As consumers warm up to the idea of e-grocery, retailers are realizing that some categories of products are simply better suited for e-commerce than others. This leads to discrepancies in adaptation rates varying from market to market. While immediate use items like fresh and frozen foods, condiments and beverages are slower in adoption for the western market, the abundance of fresh produce farming leads to a spike in purchase of these products for East. There is also a tremendous opportunity among niche consumer segments — especially in the healthy eating space and other categories that may be more difficult to find on instore shelves. E-commerce is well suited to specialty retailing because it allows companies to offer greater product selection in a category than would typically be available in brick-and-mortar stores – a factor that forms an integral benchmark of globalization in markets of India and her neighbours.
Trends that contribute to the success of food e-commerce
Mobility: Mobility has risen to be the primary factor, with consumers choosing the comforts of home for even the most minor grocery shopping. For countries like India, there is a great potential for
online retailers that offer consumers a wide variety of high on health-and-life foods and provide guidance for consumers aspiring to healthier lives. A number of specialty retailers have emerged in the technology space, from national online grocery delivery services with extensive fresh sections to local produce delivery services. Also, specialized meal delivery services have emerged to provide consumers the ingredients, delivered to the comforts of their homes. Dining in and food delivery is gaining market share and they account for 15-20 per cent of the market now.
Technology - a game changer: The rapid widening of food technology bracket is a very positive development as far as groceries are concerned because one can reach a number of retailers for delivery, and it has also made the market intrinsically competitive and transparent. A whole range of food tech concepts have come in – be it for food exploration, discovery, reservations, delivery, feedback, Internet restaurants among others. There is increased competition as well as higher performance benchmarks for the restaurant and grocery sectors. Internet only, and differentiated retailers are gaining traction as they are eliminating acute challenges, like high rentals and manpower attrition, and connecting directly with the consumers.
Rise of organic food: The demand for natural and organic products has led to increased competition within the retail space, and it has come as an opportunity for e-grocers. Natural organic food has become a staple in local health food stores and in most e-grocery stores. Almost all food stores now carry a special section of natural and organic food. Consumers are demanding more and more certified organic foods and this has spurred the demand for organic to an all-time high. With the increase of venerable diseases such as E coli, salmonella, and Listeria, people are becoming more aware of the food they put into their bodies. Consumers want to be healthy at all costs and such food offers the assurance of no pesticides or toxins. This has given impetus to retailers to go the online way, making organic the winning formula of success.
Personalization: Algorithms and predictive analytics get a greater chunk of attention these days, owing to them being valuable tools for personalizing offers and recommendations. Yet the “secret sauce” that makes them pertinent to e-retail sector is data about individual customers. With the current rise of innovative measures to mine the viral wagon, grocery retailers have a great strength in that they know how to be effective “fast followers.” Yet the key to exploiting that strength is in knowing who to follow – and personalizing accordingly. This is an important tool that shouldn’t be ignored. Past purchases, frequent visits to a particular section and data on consumption patterns are helping the online players in getting the valuable information that they require. In today’s world, the competitor to follow is the one that’s furthest ahead on the learning curve of understanding and serving their customers – this makes online retailers the ones to watch out for. Bridging digital with in-store: Although major force now, e-commerce is only a section of the digital picture. A complete digital strategy includes interaction at every point along the path to purchase, including finding stores, making lists, checking prices, researching products, sharing content and purchasing. These touch points occur both in and out of stores, and consumers are increasingly using technology to simplify and improve the process. Instore digital options can bring the ease, convenience and personalization of online into brick-and-mortar stores. Inculcating digital strategies into the physical experience is a valuable addition as these options can increase dwell time, engagement levels, basket size and shopper satisfaction.
The industry is incredibly dynamic and there is constant pressure to adapt formats to address evolving customer preferences. Larger players have been much more receptive to operating a broad portfolio of store formats, including online factions to tap into the digital market. Yet new entrants are experimenting through integrated platforms to gain ground. In doing so, these players have been able to leverage their infrastructures to drive higher sales, margins and investment returns.
With the current rise of innovative measures to mine the viral wagon, grocery retailers have a great strength in that they know how to be effective “fast followers.” Yet the key to exploiting that strength is in knowing who to follow – and personalizing accordingly.
The writer is Founder and CEO, Storehippo, a Saas based E-commerce platform that enables businesses to go online.