Growth opportunities if grocery firms embrace digital

While traditional grocery still tops online, all players will be looking to digital trends says Bank of Ireland’s head of Retail Sector Owen Clifford.

While overall grocery market growth is slowing, new data from Kantar shows that online shopping continues to accelerate.

Kantar’s data showed that grocery sales were down 5.5pc year-on-year in the most recent four weeks, compared to the record-breaking spending high of March 2020, a fall of €59.3m.

“An interesting dynamic has emerged in recent months with the larger operators seeking to retain market share and the convenience operators seeking to win it back”

Despite this grocery spending remains 20pc higher than pre-pandemic levels.

St Patrick’s Day saw alcohol sales grow by 25.8pc over the 12-weeks while Mother’s Day and the build up to Easter saw an extra €2.9m worth of chocolate purchases.

Online shopping continues to accelerate with Irish consumers spending €25.5m more online than they did in the same four weeks of last year.

Big weekly shop trend continues

Dark haired man in suit with blue tie.

Owen Clifford, head of Retail Convenience sector, Bank of Ireland

“Whilst the sales performance in the last four weeks shows a reduction of 5.5pc, this is linked to the ‘hamsterkauf’/bulk-buying behaviour that occurred in March 2020,” said Clifford. “Grocery retailers are continuing to deliver a strong trading performance with annual sales increases of more than 20pc being reported in comparison to 2019 performance nationwide.

“The less frequent/big weekly shop trend still continues with consumers, driven by health and safety concerns, visiting stores less often but spending more when in-store. This type of shopping behaviour favours the larger grocery operators.

“An interesting dynamic has emerged in recent months with the larger operators seeking to retain market share and the convenience operators seeking to win it back. Convenience operators have pivoted back towards grocery from being purely food-to-go/coffee-to-go focused and are now presenting themselves as a more accessible, top-up option. They have focused particularly on the large proportion of consumers now working regularly from home.”

Digital to transcend all segments of grocery

Clifford said the future of online grocery will continue to be under the spotlight in the coming months.  The existing platforms were stretched when dealing with the unprecedented volumes over the past year leading to some consumer disengagement with the channel. 

“However, the current low levels (under 5pc of total grocery sales) conducted via online demonstrate that a real growth opportunity is available if a frictionless, efficient, reliable service can be delivered.  An increase in online sales of €25m when compared with March 2020 demonstrates that this channel has now become embedded within the grocery shopping patterns of a larger proportion of Irish shoppers.

“It will be interesting to see if further partnership models develop via Ocado, Buymie, Deliveroo, Just-Eat or internal ‘dark stores’. The cost of picking and delivery linked to the online channel remains a deterrent to grocery retailers.

“I would expect a greater emphasis to be placed on user-friendly click and collect offerings from all the leading brands in 2021,” Clifford concluded. “The development of more intuitive/extensive, mobile device friendly, brand apps linking personalised offers, loyalty rewards, click and collect, community initiatives and nutritional advice etc will be a priority for all brands to build/expand upon their online offering in the months ahead.

By John Kennedy (john.kennedy3@boi.com)

Published: 8 April 2021