Rapid Online Food Shopping Development: New Trend Explanation

"It is a well-known fact that bringing in technologies in the retail sector is good for customers."

N. R. Narayana Murthy, Co-Founder at Infosys

Retail has almost moved from offline to online. Is there at least one large store now without remote purchase and delivery services? Most probably not. Let's consider why retail is so eager to introduce digital technologies and how successfully this industry moves in such a direction.

The Main Reasons For Retail Digital Transformation in 2020

Previously, the mastering of digital space was an indicator of significant retailer's development. Now it has become a necessity. No major company in this area will compete with others and have an expected level of income without it. There are many reasons for changing the approach, ranging from customer convenience to simplify processes within the retail company. Here are the most relevant ones prompting to use the online mode in trading this year:

Coronavirus Pandemic. The force majeure showed offline retail's vulnerability to global world changes. The disease has significantly limited the ability of ordinary stores to make a profit. Overall, sellers needed to provide an Internet shopping ability and fast contactless home delivery or in-store pickup service. Earlier, we wrote on how the industry is dealing with new business conditions. Now, meeting grocery demand is impossible without the implementation of digital solutions.

Maintaining Competitiveness. As seen, industry's giants have explored digital achievements actively for the last few years. Now it's impracticable to ignore the transformation. So, online retail service is the way to withstand the competition.

Audience Expanding. One of the reasons for Amazon sellers' success is the significant expansion of their consumer market. The same goes for online trading in general. The ability to order products online and receive them quickly will increase the number of customers. Moreover, online food sales are a great way to attract new clients who are used to buying all the things via the Internet.

These aren't all the reasons that are driving retailers to Internet trade and active digital technologies usage. But these factors determine the urgent need for business transformation in short terms.

Why Online Food Retailers Get More?

There are very few online grocery retailers, too many offline sellers, and a fast-growing group of companies practicing both approaches. Anyway, now, many traders think about how to start an online grocery store. And not in vain.

According to the latest ResearchAndMarkets studying, as of 2018, the global online food market was $ 154.69 billion. Now, this amount promises to balloon. As of 2027, it's expected to reach up to $ 975.16 billion. Thus, during this period, the compound annual growth rate (CAGR) of this niche will be 22.7%.

So, let's try to figure out what opportunities online food trade opens up and why the retail industry should hurry up to switching.

• Increasing the level of sales and profitability. It's more convenient for people to buy online than in a regular store. Mostly because they don't have to worry about the delivery of groceries. Also, the range of customers becomes wider due to those used to buying via digital devices.

• Improving customer experience. The best places are the ones where you can order food shopping online. Or to purchase other desired products with a few clicks. According to the US Bureau of Labor Statistics survey, as of 2019, Americans spent 0.75 hour or 45 minutes per day buying groceries. But clients don’t like to walk between the rows, stand in lines at the checkout, and communicate with an unfriendly cashier. Liquidation of these factors and the high delivery service level ensure a comfort interaction between client and business.

• Reducing time to work. Online trade is a stage of global digital transformation development in retail. The last one allows to automate processes and spend much less time on their support. Thus, this type of sales makes staff work more efficiently. Employees get more done with less time.

• Increasing the number of services. Digital space makes it possible to create new business solutions and implement them before others. Hence, online grocery trade is the base for experimenting with new products and services that clients need.

So, remote shopping gives benefits for sellers and even more convenience for customers. Anyway, just online trading is not enough to stay ahead of the competition. It's time to move on to what is missing for a better result.

Is Offline Grocery Retail Still Needed?

Can it be assumed that online shopping is the future of grocery retail? Does it make sense to support offline stores? Especially now, when the WHO advises to avoid crowds and leave homes only in extreme necessity cases.

Despite the current situation, a necessity for offline retail functioning is still present.

The above companies, trading in online and offline markets, are the most successful. Why? Because they get income from both sources at once.

There are several more reasons why food retail needs offline stores:

• Customers will always have the habit of shopping outside the homes to see the goods with their own eyes. To rid clients of this opportunity is to miss a significant profit.

• Online shopping in the grocery store is not so convenient for making one-time small purchases. There should be places where clients can buy goods and get them right away.

• Online stores can give a technical failure sometimes when offline retail is more resistant to this factor.

Thus, offline stores are equally important. But for their efficient functioning, new digital solutions should be implemented. A simple example is self-checkout counters. Besides, now it's needed to provide customers with complete safety in making purchases live.

The Loudest Digital Transformations in Retail Industry

Amazon. In 2017, Amazon acquired Whole Foods. Thus, the company entered the grocery retail market. Now the main advantages of buying food from Amazon are:

• the ability to purchase groceries and other products at the same time;

• delivery within 2 hours from the moment of ordering;

• planning orders in advance.

“We’re reaching more customers with our grocery offerings. Online grocery sales tripled year-over-year," - commented on Amazon's financial results as of the second quarter its CFO and Senior VP Brian Olsavsky.

There are lots of opinions that Amazon never succeeded in becoming a food giant. But its focus on positive customer experience and implementation of new digital solutions make this company one of the best online retailers in the sector.

Walmart. Following TABS Analytics as of 2020, people preferred Walmart grocery online shopping to Amazon. According to John Furner, President, and CEO at Walmart, compared with last year, Walmart’s grocery sales (both online and offline) were up by about $3 billion in the quarter and more than $8 billion so far in 2020. To reach such results, Walmart actively uses the click-and-collect function and allows customers to order products using voice input. This company's experience is another example of how digital technologies affect the success of a grocery trade.

Tesco. The UK-based company was the first to open an online food store in South Korea. To prevent people from wasting time in supermarkets, Tesco placed banners with all its products on the subway. For order-making, it's needed to scan the QR-code on the picture. Delivery of the purchase will be carried out soon. The company is so customer-oriented. Due to this, it conquered the international consumer market.

Thus, now online mode is the critical condition for competitiveness in the grocery shopping niche. Anyway, retailers shouldn't forget about offline stores as they are also a powerful source of profit. Effective trading is all about meeting the client's needs in the most convenient way. It's hard to imagine it without the usage of modern technologies.