5. online shopping

Grocers must consider how to retain new online customers post-lockdown and convert them into omnichannel customers

The global coronavirus pandemic has created an environment where it’s out with the old and in with the new. Who’d have thought Aldi would ever partner with Deliveroo, for example?

But it has only accelerated the trends established in recent years. Pre-Covid consensus put e-commerce gaining 50% share of global retail sales by 2030. But we’ve now seen five years of that growth in the past five weeks.

It’s no coincidence every business winning with digital is now also best placed to win the recovery. Take TV, for example: Netflix doubled its new subscriber numbers to 15.8 million during the past quarter, even as new entrant Disney+ gained 26.8 million subscribers at record speed.

Meanwhile, in spite of launching their own rival subscription service with BritBox, ITV and the BBC are talking about the cutbacks in programming as their traditional, above-the-line ad revenues have dried up and licence funding is reduced. So, it’s not hard to guess who will win that battle.

Amazon’s sales are through the roof. At its last earnings call, CEO Jeff Bezos told shareholders to “take a seat”. Part of his training them to be “infinitely patient”, what he means is that he’s found a new excuse to reinvest current gains towards future growth.

I’ve said it time and again that the world is going digital, and its disruptive force is being felt more keenly than ever from industry to industry. So, what of grocers? They have done an amazing job to pivot with demand to e-commerce. But what of the future?

Uniquely, grocers are currently so busy coping with the pandemic – increasing distribution and delivery capacity, implementing safe shopping measures and hiring new staff – have they actually been able to think about how this crisis is going to affect their business models in the same way others have been forced to while closed? How will they retain those new online customers post-lockdown, and convert them into omnichannel customers?

The next five years’ growth will come from three places: digital, discount and a bit of convenience. To maintain growth and relevance for the long-term the grocers must win the digital battle.

So, to grocers I say there is no turning back. Digital is growth. Discounters don’t have it and their model doesn’t suit it; push the UK online grocery bar even higher or Amazon will make its move just as Aldi and Lidl have done, and the grocers will get another opportunity to repent at leisure.

Those who get to know their customers through data will be best positioned to win. But what will they do with that extra capability? Other categories and services possibly – ‘Tesco.com Extra’ springs to mind. Or, indeed as Ocado is showing, online retail is a global format because it’s tech and data analytics-based. Develop potential midterm growth scenarios that are much more credible than a bookstore ruling the retail world.

This is why it’s time to change the dialogue. At last, the naysayers – “oh, woe is me, online isn’t as profitable as the store” – are changing their tune. Grocers must change their dialogue with shareholders and get them ready for a fight for growth for the next generation – or stay put and be an ageing dividend cash cow.