Discounters can capitalise through online grocery shopping, Canadean

Posted by AFN Staff Writers on 20th April 2015
Discounters can capitalise through online grocery shopping, Canadean
Discounters can capitalise through online grocery shopping, Canadean

Online shopping is now at the point where it is a cost-effective way for discounters to target convenience-driven shoppers, according to market research organisation Canadean.

However, Canadean said low-cost online shopping will also be the greatest threat to discount food and grocery retailers, as Amazon will make its presence felt in the groceries market over the next five years.

Shoppers at discount food retailers

In the UK, Canadean found that 65 per cent of UK consumers shopped at discounters for groceries either regularly or occasionally. According to Canadean’s research, shopping at such outlets was not restricted to consumers in lower-income brackets but is common across all social class groups.

Canadean said this was a reflection of how consumers no longer associated shopping at discounters with a decline in financial wellbeing, but considered it a savvy way to make their money go further. At the height of the global financial recession in 2008 and 2009, Canadean said many UK shoppers trading down to discounters thought that this would be a temporary arrangement. However, Canadean research has shown that 84 per cent of consumers who visited a discounter over 2008-2013 came back after their first visit.

“Pleasantly surprised by the quality on offer, shoppers felt less embarrassed about going to discounters, and were instead proud of knowing where to pick up a bargain,” said Ronan Stafford, senior analyst at Canadean.

Online groceries in Australia

In Australia, online groceries sales are predicted to grow, reaching $2,194 million in 2015, up 14.6 per cent from $1,914.2 million in 2014.

In February 2015, Australian Food News reported that online discount retailer Kogan had moved into the grocery sector, launching Kogan Pantry. At the same time, recent research has shown that Australian consumers are exploring new frontiers in grocery shopping, with one in eight Australians purchasing vegetables online.

Convenience through technology will drive future growth

According to Canadean, online shopping, either as a home delivery service, or as click and collect, has now evolved to the point where it is a viable opportunity for discounters while still minimising costs. The shopper experience of online shopping has improved rapidly over the past ten years, and these services are no longer a drag on profits for the traditional supermarkets that pioneered its use.

A survey conducted by Canadean in January 2015 found that 40 per cent of consumers said they shopped online for groceries, with another 14 per cent stating that they would be willing to do so.

Discounters miss this large audience currently, according to Canadean, and as consumers feel increasingly busy and time-pressed, they will respond strongly to a retailer that is able to provide the best value in their hectic schedules.

“Shoppers have responded strongly to the value positioning of discounters, but if they want to continue to grow their market share, discounters will also need to offer convenience,” Mr Stafford said. “Online technology will be the way to provide convenience while remaining cost-effective,” he said.

Amazon will emerge as biggest threat to discounters

Amazon has launched subscription-based services in the UK such as Amazon Family and Amazon Subscribe & Save, and their activities in the US show a strong desire to rapidly gain share in the groceries market. Consumers will increasingly look to online technology to help them save on both time and money – and Amazon will want to become the leader in developing profitable online grocery shopping, according to Canadean.

“Value will remain the most important factor for shoppers, but discounters can’t afford to be left behind in a time when consumers increasingly turn to online shopping,” Mr Stafford said.