FDBusiness.com

Online shopping is now at the point where it is a cost-effective way for discounters to target convenience-driven shoppers. However, low-cost online shopping will also be their greatest threat, as Amazon will make its presence felt in the groceries market over the next five years, finds Canadean.

A new Canadean survey shows that 65% of UK consumers shop at discounters for groceries either regularly or occasionally. Moreover, shopping at such outlets is not restricted to consumers in lower-income brackets but is common across all social class groups. This is a reflection of how consumers no longer associate shopping at discounters with a decline in financial wellbeing but a savvy way to make their money go further. At the height of the recession in 2008 and 2009, many shoppers trading down to discounters thought that this would be a temporary arrangement – yet Canadean research shows that 84% of consumers who visited a discounter over 2008-2013 came back after their first visit. Ronan Stafford, senior analyst at Canadean, says: “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.”

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% of consumers say they shop online for groceries, with another 14% stating that they would be willing to do so. Discounters miss this large audience currently, 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. Ronan Stafford says, “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. Online technology will be the way to provide convenience while remaining cost-effective.”

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. “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,” adds Ronan Stafford.