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Head Office Singapore: 31 Rochester Drive,Level 24,Singapore,138637
India Office: 880,
Adarsh Nagar,
Jogesheri West,
Mumbai,
400053
4 Trends to Ride the Imminent Grocery Disruption

4 Trends to Ride the Imminent Grocery Disruption

4 Trends to Ride the Imminent Grocery Disruption

Until relatively recently, the grocery sector has remained sheltered from the forces of e-commerce for a couple of reasons: Most shoppers still prefer to choose their own food, and few grocers have had the financial capacity to invest in the highly efficient, large-scale cold chains required to make home deliveries at a profit.

That is changing.

In the past two decades, e-commerce has altered customer shopping behaviours and transformed the retail landscape from brick and mortar to digital. Grocers have remained largely immune to digital disruption—until recently. MSN reports predictions that Southeast Asia’s grocery market will be worth US $309 billion by 2021. In fact, according to a report from Food Industry Asia, the online grocery business in Singapore alone is set to triple its growth between 2017 and 2020.

Grocers large and small should step back now and re-evaluate their near- and long-term strategies. There is no time to waste.

Trend 1: Look Beyond for Inspiration:

APAC grocers can and should actively look to other parts of the world to strategize how to be effective online; specially to define approaches to last-mile delivery. In the Netherlands, for example, Picnic provides customers with fixed delivery slots, backed by their milkman model and demonstrated to be able to reach up to 14 deliveries per hour. In China, Hema offers guaranteed delivery of both groceries and prepared meals in fewer than 30 minutes. HappyFresh commits to deliver handpicked groceries to your doorstep.

We are also starting to see significant innovations in the omnichannel grocery-customer experience in several Asian markets. Order tracking and delivery-slot notification is becoming commonplace

Trend 2: Price matching the key lever

Many grocers have been able to charge a premium price for online-basket items, but to get majority we may see a push toward a more transparent pricing model as opposed to merely online price-matching policies.

Trend 3: Early Movers will get the prize

The grocery market is supply driven, and consumers don’t yet know what they want. Like grocers, shoppers can’t predict exactly what the future will bring. Not surprisingly, most first-time online customers expect to get their groceries more seamlessly than when going to the store themselves. But many can’t imagine all the options digital grocers might offer. Indeed, the offerings themselves are now shaping customer expectations about each element of the experience, including the type and speed of service—which will evolve as quickly as the offers do. Recall, for example, Amazon Prime’s introduction of free two-day shipping. Customers may not have been clamouring for it, but it has transformed their expectations across a broad range of industries. Other changes also seem to be taking hold for example: hile convenience attracts most first-time customers to online ordering, it may not keep them coming back. Some regular online grocery shoppers are citing a pain point of falling into because of automated ordering of the same basket again and again. This, too may translate into changes.

Today with customer demand being fragmented between delivery and pickup, and various delivery speeds each require a different last-mile model. Where demand density is low and demand is fragmented, investments in large fulfilment centres, delivery fleets, and drivers are hard to justify. Recognizing the challenges, some major grocers are using their stores as fulfilment centres, getting more value from existing assets rather than making new investments.

Source - McKinsey

Source - McKinsey

Some large grocers in the US, are using their geographic proximity to customers, have tried to tap into the new gig-delivery world by using Postmates or the now-defunct UberRUSH.

Trend 4: Talent and Tech will be key enablers: Automation and robotics are also likely to play a key role. With this digital talent may be the single most important determinant of a company’s likelihood to succeed in the grocery market in the next few years. Form positions for data scientists, tech engineers, and other experts. These are critical roles that will create value.

In Sum: While online sales accounted for anywhere from 3 to 4 percent of the grocery market in 2019,1 the share could be greater than 10 percent by 2025, as major retailers—including well-funded entrants from outside the sector—invest in automation and innovative operating models to solve challenges in fulfilment and last-mile delivery. With action hotting up only those who design for this increased competition will succeed in the future