The Evolution of the Omnichannel Grocery Shopper
Positioning your grocery business to win today's omnichannel shopper
What Research Tells Us About Grocery Customers’ Shopping Patterns
The data gathered from the three surveys clearly indicate some solid patterns in how modern grocery customers are choosing to shop and where their priorities lie.
Let’s rewind and revisit the key grocery shopping trends we uncovered in the three volumes of the Omnichannel Shopper Behavior Report 2022 and break down the patterns to understand how retailers can leverage those insights to meet consumer demand and boost profitability.
1.1 Where Do Grocery Customers Prefer to Shop From?
Our Key Takeaway #1: US households primarily depend on regional supermarkets for their groceries
This is clear from the volume 1 research, chart 1, which highlights that more than 40% of US households rely on regional supermarkets as their primary grocery store, way more than big-box discounters (31%), hard discounters (10%), and natural or organic stores (9%).
Additionally, see chart 2: The role of regional supermarkets as the primary grocery store increased directly depending upon the household income, but only until $200,000. Households earning more than $200,000 prefer to shop from natural/organic supermarkets instead.
Our Key Takeaway #2: Cost is the top priority in customers’ choice of where to shop
Because of the current impact of inflation, cost has become the deciding factor in grocery customers’ decision on where to shop from. Retailers, now more than ever, need to focus on meeting the demand of cost-conscious consumers as inflation and recession has deeply affected the average US household’s grocery budget.
See chart 3: Cost is the most important criteria in grocery customers’ decision of where to shop, followed by convenience.
1.2 Shoppers’ Fulfillment Preferences
Our Key Takeaway #3: In-store shopping continues to be the biggest driver of grocery sales
Whether we talk about regional supermarkets, hard discounters, big-box discounters, or natural/ organic grocery stores, in-store shopping continues to be the leading driver of sales, indicating that grocery shoppers’ preferences to the pre-pandemic times have been reset to some extent. That said, most grocery customers today are omnichannel as they’d rather not restrict themselves to one particular channel when they can get a better experience otherwise.
See chart 4: 90% of regional supermarket shoppers shopped in-store, 16% chose pickup, 14% chose delivery, and 4% got their items shipped. 83% of big-box discount shoppers shopped in-store, 30% chose pickup, 20% chose delivery, and 12% got their items shipped. 87% of hard discounter shoppers shopped in-store, 17% chose pickup, 17% chose delivery, and 4% got their items shipped. 79% of natural supermarket shoppers shopped in-store, 26% chose pickup, 31% chose delivery, and 10% got their items shipped.
Also, refer to chart 5: It indicates that almost one-fifth of regional supermarket shoppers and more than one-third of big-box discounter shoppers are omnichannel.
1.3 Customers’ Hesitation Toward Grocery Delivery
Our Key Takeaway #4: Grocery delivery cost is a major deterrent for customers
Compared to the past couple of years, there is a clear shift in grocery delivery preferences. Customers are no longer dependent on doorstep delivery of their items like they were during the pandemic, now that restrictions have been completely lifted and there are no safety concerns associated with in-store shopping.
Our research has outlined several reasons for this shift, the most obvious ones being customers’ desire to select their own produce and avoid the explicit fees that are associated with pickup or delivery services.
See chart 6 that outlines that 62% of the US grocery shoppers surveyed don’t use delivery so they can select their own produce or want to avoid extra charges, fees, and tips.
Additionally, refer to chart 7: While the desire to select their own produce grows with household income, shoppers' desire to avoid extra costs related to delivery is relatively stable across income groups.
Moreover, see chart 8: All age groups unite on wanting to avoid explicit and additional costs that come with grocery delivery.
Our Key Takeaway #5: Grocery customers are more sensitive to additional/service costs than inflated cost of products
Grocery customers want to avoid paying any more than they should, but the research tells us that the grocery customer is far more price sensitive when it comes to explicit fees that get added during the checkout process, as opposed to the pricing of the products themselves.
Moreover, rise in inflation is causing heightened customer awareness of overall costs of their grocery carts. Retailers now have an opportunity to optimize their pricing in a way where they can offset high operational fulfillment costs against produce prices.
Chart 9 clearly highlights the bottom-most reasons why households did not use a grocery delivery service. Only 14% of the customers admitted that inflated product pricing is their primary reason for the same.
Our Key Takeaway #6: Time-starved Gen Z and millennials are more inclined towards grocery delivery than older age groups
Whether it’s because Gen Z and millennials value convenience over cost or are too busy to make a trip to the grocery store given their hectic lifestyles, our research has confirmed that these age groups are far more likely to opt for grocery delivery over older ones. This is something retailers must be mindful of while building and executing their marketing and targeting strategies for this growing segment of grocery shoppers.
See chart 10: While convenience is the foremost reason for choosing a delivery service among all age groups, it is most important to younger age groups.
1.4 Grocery Shoppers’ Sensitivity Towards Cost
Our Key Takeaway #7: The cost vs convenience dilemma is ongoing and unresolved with different audience segments choosing one over the other in various scenarios
If there’s one clear takeaway from the research, it’s the fact that modern grocery customers are always looking to maximize convenience and lower costs. However, since a majority of online grocery orders are planned, customers are willing to delay receiving their orders to pay a reduced fee.
From respondents’ shopping and fulfillment preferences, it is apparent that they value the convenience that comes with choosing a pickup or delivery option, but are also constantly on the lookout for ways to save on explicit costs that pickup or delivery inevitably come with. Therefore, convenience for grocery shoppers doesn’t always equate to receiving their orders faster, since cost is also a key factor.
See chart 11: When the delivery fee was fixed at $9.95 for all large orders, more than 42% of customers chose to receive their order within 1 to 3 hours the same day.
Chart 11: Grocery customers’ time slot selection for fixed delivery fee
Also, see chart 12: When the delivery fee was variable based on when the order was received, more than 40% of customers chose to receive their order the next day or later for a reduced fee
Chart 12: Grocery customers’ time slot selection for variable delivery fee
Take a look at chart 13: Most customers are willing to receive their orders later for a reduced delivery fee.
Chart 13: Grocery customers’ delivery time slot selection
1.5 Grocery Shoppers’ Subscription and Membership Preferences
Our Key Takeaway #8: High-income households and 30-44 years old shoppers are most inclined to opt for grocery subscriptions/memberships
Participation in grocery subscription or membership plans is the highest among households with an annual income of more than $200,000 and shoppers aged 30-44. This is because these demographic groups are the most likely to be starved on time and comfortable with the idea of pre-paying for added convenience and benefits. Another insight that can help grocery marketers tailor their strategies to optimize for improved targeting and higher conversions.
Firstly, see chart 14: 50% of US households use Amazon Prime for grocery and 20% use Walmart+.
Chart 14: US households that have opted for grocery membership/subscription
Now, see chart 15: The oldest age group (> 60) is the least inclined to opt for a grocery subscription or membership.
See chart 16: Household income is proportional to the likelihood of opting for a grocery membership or subscription, with the $200,00+ group being the most likely to opt for 3 or more subscriptions.
Finally, see chart 17a and 17b: Participation in membership/subscription programs is highest among 30-44 year-olds and $200K+ households.
1.6 Grocery Shoppers’ Pickup Preferences
Our Key Takeaway #9: Pickup wait times strongly correlate with customer satisfaction ratings
The pickup experience revolves almost entirely around how long customers have to wait in their cars for their orders to be handed over to them. A precisely-estimated pickup slot with a negligible wait time is likely to garner a higher customer satisfaction rating compared to an experience where the customer is made to endlessly wait at curbside. The best advice for grocery retailers is to offer a pickup experience supported by a well-orchestrated order assembly and fulfillment process.
See chart 18: It is clear that pickup wait times are indirectly proportional to net promoter scores shared by customers.
Our Key Takeaway #10: Customers embrace technology to improve their fulfillment experience
It’s interesting to note that grocery customers who opt for pickup are comfortable using the retailers’ mobile app to check in and alert the store of their arrival and also share their live location to improve hand-off precision. Customers have clearly come to embrace technology in order to enhance their grocery pickup experience, reduce wait times, and streamline logistical challenges that may arise during hand-off. However, the affinity towards using technology seems to be the highest in the 30-60 age group.
The ball is now in retailers’ court to leverage modern technologies to build integrated platforms that overcome all operational issues and deliver delightful grocery shopping and pick-up experiences.
See chart 19a and 19b: To notify the store of their arrival, more than 48% of the customers used the retailer’s mobile app.
Also, see chart 20a and 20b: Customer satisfaction ratings and net promoter scores were much higher in case of customers who used retailers’ apps to check-in.
See chart 21: More than 50% of the customers granted the mobile app access to use their location information
Finally, see chart 22: Customers between 30 to 60 years of age were most willing to share their location with the mobile app.
1.7 Customers’ Affinity Towards Pickup
Our Key Takeaway #11: Grocery shoppers prefer pickup since it's the ideal balance between saving on cost and opting for enhanced convenience
For the modern grocery shopper, grocery pickup seems to offer the best of convenience and value for money. It doesn’t require them to spend their valuable time shopping in stores and waiting in checkout queues, but also save substantially on higher fees associated with delivery. Pickup enables shoppers the convenience of choosing a fulfillment slot that works for them and getting their orders handed over to them without leaving their vehicles.
See chart 23: The primary reasons why grocery shoppers opted for pickup was lower cost or no service fee and shorter wait times.
Also, see chart 24: The appeal of not paying more than necessary was fairly consistent across the age groups while the ability to wait around less most resonated with the 30-44 customer.
Refer to chart 25: Half of the customers would delay when they picked up an order if it meant paying a lower fee to use a service.
Chart 25: Customers’ pickup slot preferences for variable fee structure
Finally, see chart 26: Even though past-month customers were more willing to pay a premium for expedited service, nearly half were still inclined to choose a next-day or longer option.
1.8 Grocery Shoppers’ Expectations From Customer Experience
Our Key Takeaway #12: Customers’ grocery experiences (good or bad) impact brand loyalty and drive word of mouth
Survey respondents have made it clear that whether good or bad, grocery shopping experiences are worth sharing with their loved ones. Therefore, not only do the quality of shopping and fulfillment experiences retailers offer directly impact the future buying behavior of customers, but also how likely they are to recommend a brand or service to someone they know.
See chart 27a and 27b, as well as chart 28a and 28b: Among households that used grocery pickup or delivery in the last 12 months, about 87% of them had a positive experience and 43% of them had at least one negative experience.
Also, see chart 29a and 29b, as well as chart 30a and 30b: Nearly three out of four customers shared their positive experience with friends or family and about eight in ten customers shared their negative experiences.
Our Key Takeaway #13: Positive grocery shopping experiences are attributed primarily to product availability and condition
Pickup and delivery grocery customers are most likely to have a positive experience when they receive their ordered products in good condition and most of the items they ordered are available. This is understandable as substitutions can be hugely frustrating for grocery shoppers, especially when their primary motive is to save time by ordering online.
Moreover, we saw that the key reason for grocery shoppers to not use pickup or delivery was so they could select their own produce. Hence, it makes complete sense that online shoppers expect to receive products in good condition in order to declare their shopping experience as a positive one.
See chart 31: It clearly highlights that among factors that contributed towards a positive customer experience, “getting products in a good condition” was on the top, followed by “all products were available”, and “it was a convenient way to shop”.
Our Key Takeaway #14: Both positive and negative experiences deeply affect shoppers’ buying behavior
Positive experiences are likely to encourage shoppers to make repeat purchases from the said retailer while negative ones will dissuade them to return. Given the abundance of choice that grocery shoppers have at their disposal, the slightest inconvenience can make or break their entire opinion of the retailer and their future buying behavior.
See chart 32: Having a positive experience with a Pickup/Delivery service motivated 34% of customers to use the same service more often.
See chart 33: It states that 33% of the customers who had a negative experience with a pickup and/or delivery service either used the same service less, switched to another service provider, or stopped using it completely.
Finally, see chart 34: Among what would cause households to consider trying a new or different pickup or delivery service, the topmost reason is health issues that prevent them from shopping in-store, followed by financial incentives and hearing a positive experience from friends or family.
1.9 Households’ Intended Usage of eGrocery Pickup and Delivery Services
Our Key Takeaway #15: Retailers will need to work harder to attract and retain eGrocery customers in the coming year
It’s going to get more challenging to attract and retain grocery customers for regional retailers over the long term as shoppers’ expectations are constantly on the rise and they are being met with brands that promise to deliver on them. With multiple online grocery shopping options for customers to choose from, it's crucial for retailers to streamline operations and offer frictionless exceptional experiences.
See chart 35: it clearly states that in terms of expected usage, US households are less likely to use eGrocery pickup/delivery services in the next 12 months compared to current usage levels.
Our Key Takeaway #16: Younger shoppers are more likely to use eGrocery in the coming year
The silver lining is that younger shoppers are more inclined towards eGrocery as they highly value the convenience that it brings and are more likely to have busy schedules that encourage them to shop online. For retailers, this poses an incredible opportunity to focus on marketing to this segment that promises increasing potential. Moreover, once the younger demographic has adopted online grocery shopping, retailers can drive them to brand loyalty and capture more lifetime value.
Finally, see chart 36: While still lower than current benchmarks, younger grocery shoppers (18-44) are more likely to continue using eGrocery pickup and/or delivery services in the coming year than older ones (45+).
Now that we’ve broken down the key trends and corresponding takeaways from our research, let’s look at how retailers can leverage those insights to draft an omnichannel grocery strategy that helps grow their business operations and boost profitability.
Mark develops the overall marketing strategy for Mercatus and leads the team responsible for market insights, branding, product marketing and demand generation.