Digital Days: How Online Shoppers Are Shaping Europe’s Grocery Market
In an increasingly connected world, there’s no denying the growing influence of e-commerce. While e-commerce is at different stages of maturity around the world, it’s beginning to gain momentum in Western Europe. Here, consumers are rapidly adapting their lives to keep pace with digital advances, which will likely lead to a wave of consolidation, polarization and even some saturation in the consumer packaged goods (CPG) space. That said, however, trends are accelerating and consumers are in control.
The speed of adoption and acceptance will vary across countries, but each is headed in the same direction. And as European consumers move forward on their e-commerce journeys, we see three distinct factors of adoption that each country will experience along the way.
- Information will grow increasingly integrated. Technology has been a big enabler over the past five years, and it will become an ever stronger factor going forward. This will be particularly relevant in areas where e-commerce is still growing into its own, such as in online grocery retailing.
- Generational divides are developing. In many countries, consumer motivations and intent to shop online have reached a tipping point, much of which reflects generational changes in how we shop. For example, older consumers are living longer but thinking younger, while younger generations are prepared to more adaptive.
- E-commerce spending trends are shifting. Industry business models will ultimately determine the amount of e-commerce spending across the major European economies. CPG companies will soon seek a compelling return on investment (ROI) from their online sales as they attract new shoppers, and this will influence how distributors fulfill orders.
It’s clear that improving technology is a key e-commerce growth driver, so as digital moves to the forefront, how is online changing Western Europe’s grocery landscape, and is digital the only factor affecting the landscape?
First and foremost, digital presents a new and significant opportunity for retailers in the most developed e-commerce countries. In fact, Nielsen expects marketers to allocate 30% of their advertising spend to digital channels over the next five years.
Technology isn’t the only growth impetus, however. Consumer behavior will play a role as well, particularly as the paths of an aging population, multiculturalism and digital native grocery shopping converge.
But after five years of weak consumer demand, which held back CPG demand, digital will be a springboard for future growth. Online technology, combined with the ease of mobile connectivity, allows consumers access to instant information, choice and speed. These are prime motivators for consumers, and the digital realm lets them make informed purchase decisions in real time. They now have the power to understand product offers, proactively plan and control their spending and saving money when they can.
In light of digital shifts, ease of access to information and consumers’ demand for real-time gratification, Nielsen expects two dominant behaviors to shape online grocery spending:
- Consumers will demand an integrated off line-online-mobile shopping experience that enables them to shop—and have their requirements fulfilled—in a way that’s convenient for them and fits in with their busy lives. This is already happening in the early adopting countries of the U.K. and France, where the online share of all grocery spend is the highest in Europe, at 4.4% and 3.9%, respectively.
- Shoppers will become even more price sensitive, and that will affect the sentiment of shopping via their peer and social network connections. Shoppers will also use group purchasing to drive down prices. This behavior will also shift shopping dynamics: consumers will ultimately offer to buy products rather visiting retailers offering to sell.
For additional insight into digital trends across Western Europe, download The Digital Consumer’s Journey in the Western European Grocery Market.