Succeeding in Grocery e-commerce - GMA Leadership Forum August 23, 2014
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GMA Leadership Forum Succeeding in Grocery e-commerce August 23, 2014
Grocery delivery has been around for a while…
McCall’s Magazine – New York City 1913
A.T. Kearney 7/08.2014/GMA/52465 2
..but we are still in the early days
Maturity of Online Grocery by Market
Introduction stage Growth stage Maturity stage Saturation stage
Market
share
UK
NL
Belgium
France
Germany
USA
Time
A.T. Kearney 7/08.2014/GMA/52465 3
The US is approaching an inflection point…
US Online Grocery Market Drivers
Improving
Freshness
& Quality
Explosive Improving
Connected Growth in Availability
Consumers Online and
Grocery Convenience
Increased
Urbanization
A.T. Kearney 7/08.2014/GMA/52465 4
…and winners will reap substantial rewards
U.S. Online Grocery Share
2013-2023 Opportunities
7.5% • Source new growth
• Capture profitable customer
+16-24% 3.5% segments
• Drive brand and product
discovery
2.6%
0.7% 4.0% • Improve loyalty
0.9%
1.9%
• Enhance consumer insights
2013 2018F 2023F
High growth Scenario
Base Scenario
Source: Progressive Grocer’s Annual Consumer Expenditures Study (CES), A.T. Kearney A.T. Kearney 7/08.2014/GMA/52465 5
A.T. Kearney’s 2014 U.S. Online Grocery Survey
Survey Methodology
Online survey of 2,003 grocery shoppers in June 2014
• All respondents are the primary HH grocery
shopper
• 85% female
• 53% married / 30% single
• 27% urban area / 53% suburban / 27% rural
• Representative of the US population as a whole
(e.g., income, geography, HH make-up)
A.T. Kearney 7/08.2014/GMA/52465 6
70% of US shoppers will consider buying more
groceries online
70% of shoppers consider buying Millennials and higher income
groceries online 1 consumers are leading the way 2
Shopper Concerns Online Grocery Shoppers
Price 52% High
10-20% 5-18%
Availability 46%
Income
Freshness & Quality 45% 4-10% 1-5%
Low
Delivery Fees 21%
18 Age 65+
Growth will occur across A third of consumers are willing to
3 4
categories pay for same day delivery
Plans to Increase Purchases
Willingness to Pay
Other 8.1%
100% 100%
Fresh Produce 12.3% Not interested in
54% 51% this service
Fresh Meat/Seafood 18.4%
13% 35% Interested if Free
Beauty / Personal Care 23.0% 34% 14% Willing to Pay
Household items 24.6%
Home delivery Pick up in
Packaged food 28.8% within same day store same day
A.T. Kearney 7/08.2014/GMA/52465 7
Traditional retailers are focused on three
areas… Convenience Speed Experience
• In-store payment option • Same-day or next day • In-store maps on
• Delivery (30+ locations); delivery options mobile apps
In-store pickup (11 loc.) • Crowd-sourcing • Social media cues
• Drive-thru (Bentonville) delivery pilot inform assortment
• 1-hr delivery windows • Same-day or next day • “Personal Shopper"
• Order from history – delivery feature can take
linked to loyalty card special requests
• 195+ pick up points • Next day delivery • Personalized offers
• Varied assortment through Peapod • Shopping lists and
online suggestions through
app
• Click & collect service • Next day delivery • In-store interactive
• 7 days a week delivery touchscreens for
transactions and
browsing
• Click & collect service • Next day delivery • Online store has
• 7 days a week delivery strong search tool,
multimedia and
• No minimum spend
favorites list
• 1 hr. delivery time slots
A.T. Kearney 7/08.2014/GMA/52465 8
…and many players have emerged
A.T. Kearney 7/08.2014/GMA/52465 9
CPGs – Key Success Factors in Online Grocery
What Changes Online? How CPGs can win
• Enable variety
Assortment • Rise of the ‘Endless Aisle’
• Drive innovation online
• No special display locations or • Optimize digital presence
Merchandising shopper marketing • Develop online pricing and
• Digital vs. physical engagement promotion strategies
• Innovate online specific
• Ubiquitous price comparisons offering
Pricing
• Get cost-to-serve right
• Create online impulse drivers
• Fewer impulse opportunities
Shopper • Engage across digital
• Fleeting customer loyalty
Behavior touch=points
A.T. Kearney 7/08.2014/GMA/52465 10Local Online Grocery Evolution
■ Triangle of skills required – Grocery, Logistics, Internet
■ Life of a basket – many touches, many influences
■ Format evolution – local, shared assets
A.T. Kearney 7/08.2014/GMA/52465 11What to do as a CPG manufacturer?
Where does my product or category fit?
Digital point of purchase happens at many different times – when, who
and how to target
Successful companies go beyond business as usual to lock in these best
customers
‒ Bringing new thinking to co-marketing (co-op retargeting, shared database )
‒ Leverage digital assets in new ways
‒ Shopper marketing test/learn
A.T. Kearney 7/08.2014/GMA/52465 12Infrastructure Free Grocery Ecommerce
Grocery
Consumers
Stores
Retailer Marketplace
Order Anywhere 1 Hour/Same-day
Multiple Local Stores 12 Major US Metros
dedicated site Delivery & Pick up
A.T. Kearney 7/08.2014/GMA/52465 13Ecomm Pain Points & CPG Success Strategies
“I don’t trust produce picked in a
warehouse. I’ll end up with Content: Images &
Quality nearly expired or leftover items.” Editorial Copy
“My kids will be home any
minute and there’s nothing in the Convenience: Recipes
Speed fridge for dinner - looks like it’s & Lists
take out again”
“I love walking my grocery
stores aisles and discovering Efficiency: Sampling &
Choice new products but just don’t have Direct Couponing
the time
“Its so hard to find what I am
looking for. Most things don’t even Impulse:
Ease have pictures making it a guessing Recommendations
game as to what I am buying”
A.T. Kearney 7/08.2014/GMA/52465 14Kraft Foods Group e-Commerce Overview
• Food & Beverage e-Commerce is large, growing and highly incremental
to Kraft
• For first time ever, Kraft is building an e-Commerce platform with huge
upside and strong customer support
1. Establishing a strong base foundation
2. Driving the base with A+ marketing; harness big data to maximize ROI
3. Accelerating growth through channel innovation, test-and-learn
4. Execute with operational excellence to deliver gold standard partnership
• Understanding consumer’s digital path to purchase will position Kraft to
capture this highly incremental purchase
• Unlocking key insights to develop personalized/inspiring content will
enable Kraft to overcome key barriers
A.T. Kearney 7/08.2014/GMA/52465 15Thank you
A.T. Kearney 7/08.2014/GMA/52465 16You can also read
