By Anne-Marie Roerink, Principal, 210 Analytics
While less than 1 percent of shoppers consider online their primary channel for food and other grocery-type items, strong online players can quickly disrupt the marketplace. As is, the online marketplace is approaching a tipping point toward rapid growth acceleration. Market research company IRI expects omnichannel sales to grow to 10 percent of sales by 2022, with a dominance of click and collect. But how about produce?
For years, food retail executives were firmly convinced that shoppers would never buy fresh items online. After all, with opinions on what constitutes a perfect buying banana varying from glow-in-the-dark green to a brown-speckled counterpart, it would be hard to believe shoppers would hand over the controls to buy said banana to someone else. However, both survey and market sales data show that online produce sales are hardly off-limits for today’s consumer, and particularly, tomorrow’s consumer. The Power of Produce 2016 took an in-depth look at the online opportunity.
While most online shoppers employ a dual-store system with some offline and some online purchases, IRI found that perimeter departments have a strong presence in click and collect and home-delivery baskets, with 80 percent of them containing produce — far ahead of bakery, meat, seafood and deli. In-store baskets contain produce 42 percent of trips. The basket size for omnichannel is also much bigger than the traditional basket, at $160 for click and collect, and $180 for delivery.
All that said, thinking through online produce shopping does prompt some concerns, led by shoppers questioning freshness and quality, and simply wanting the control of selecting fresh produce versus having someone else pick items for them. However, among shoppers who routinely buy food online, these concerns are strongly diminished. In other words, familiarity and experience help overcome preconceived notions and concerns — so long as experiences are positive, of course. Additionally, Millennials are not only much more likely to have bought food online, but fewer than half worry about someone else picking their produce versus two-thirds of Baby Boomers. As experimentation continues and Millennials increase their spending, online purchasing looks increasingly promising.
Next, shoppers were presented with a scenario in which their current produce department would fulfill the online order. Interest in potentially buying produce online more than doubled from 18 percent to 52 percent of shoppers — signifying that the trusted relationship between the primary produce store and the shopper helps overcome at least some of the major online shopping concerns. This is an important finding for both producers and grocers in growing online produce sales.
When looking at the online sales performance of brick-and-mortar retailers with an online presence, shoppers’ willingness to purchase fresh is right in line with the rest of the grocery list with aggressive growth rates, according to MyWebGrocer (MWG) statistics. Overall MWG e-commerce growth is +15 percent versus +18 percent for total fresh produce, +18 percent for fruit and +24 percent for vegetables. Hot items include citrus fruits, peppers/chilies, lettuce, broccoli, cauliflower, beans, melons, squash, and zucchini.
For these retailers, produce represents 9.4 percent of their total e-commerce sales and 85 percent of each basket contains fresh produce — much in line with the share found by IRI. The data is clear, online is ripe for produce.
Source: The Power of Produce 2016 — Shopper research by the Food Marketing Institute. Commissioned by the FMI Fresh Foods Leadership Council and made possible by Yerecic Label and Hill Phoenix. Research conducted by 210 Analytics.