Grocers Navigate the Shift from E-commerce to In-Store

More than half of e-commerce grocery customers have left the channel since last year. Where have they gone, and what can grocers do to bring them back? That’s the question many supermarket chains and retail marketers are trying to answer.

According to new data from SymphonyAI Retail CPG, 52% of e-commerce grocery customers have left the channel since 2022. This decrease presents a mounting challenge for retailers grappling with how they can retain customers, even as interest in online grocery shopping recedes.

It wasn’t very long ago that consumers were champing at the bit to purchase fresh produce and other supermarket staples online. During the pandemic, the grocery e-commerce sector experienced the equivalent of more than five years of growth in just five months. Experts predicted that penetration could triple, reaching as high as 35% or $600 billion, by 2022.

Today, those figures are being called into question, and experts like Laetitia Berthier are looking for answers. As the head of client management for SymphonyAI Retail CPG, a provider of end-to-end, integrated merchandising, marketing, and supply chain solutions for companies, Berthier has a first-hand look at the challenge online grocers are facing in 2023.

The needs for e-commerce grocery have clearly shifted, and now Berthier says more grocers are looking at the omnichannel experience as a way to bring back customers looking for convenient, personalized experiences. They’re also focusing on how they can use AI as a tool for generating insights to promote specific products and meet the needs of individual customers. Those insights have the potential to drive significant value for retailers, including growth in incremental sales.

Berthier believes it’s a misconception that the decrease in e-commerce grocery shopping is due solely to waning pandemic precautions. According to the data, the losses grocers are seeing today aren’t coming primarily from shoppers who were forced online during the height of the pandemic, but rather, from consumers who had adopted the channel more recently.

“Customers are now seeking convenience when it comes to the online grocery format. This year, we’ve seen more frequent small baskets versus large baskets, which is a shift from even before the COVID-19 lockdown era, when shoppers tended to use the online channel for a large, planned basket,” Berthier says.

SymphonyAI Retail CPG’s data shows that 26% of e-commerce grocery purchases encompass small-size baskets, while the popularity of large baskets has declined to 24%. 

Another alarming statistic for retailers — data shows that of those shoppers who left a retailer’s online channel, 40% have also ceased shopping in the retailer’s physical store. That means they abandoned the retailer altogether. Berthier says this is a trend that indicates the crucial need for retailers to understand evolving shopper dynamics, if they hope to successfully retain consumers in the online channel and in-store.

“Retailers can better serve omnichannel customers with technology and data-driven insights,” Berthier says. “AI plays a significant role in understanding and meeting the evolving needs of these high-value shoppers. For example, AI enables retailers to craft promotions tailored to attract shoppers to the online channel who previously have not tried it.” 

AI offers insights into emerging trends in shopper behaviors and supports data-driven strategies, including customer-centric assortment recommendations, promotions and personalized shopping experiences. Industry leaders like Berthier believe that AI will be critical for retail in the coming years — facilitating early trend detection and enabling retailers to target specific shopper segments through personalized offers. 

“By harnessing AI to do deep-dive analysis of shopper data and construct accurate predictions, retailers can gain valuable insights into changing customer behaviors, enabling retailers to craft assortments, promotions and merchandising to most effectively engage new and existing high-value customers,” Berthier says. “SymphonyAI Retail CPG’s research finds that converting just 5.5% of in-store shoppers identified as top prospects into omnichannel users could lead to an additional 1% growth in retailer revenue. Retailers have a massive opportunity to increase digital engagement as a way to drive sales and build customer loyalty.”