Future Talk by Retail Analysis: why is online grocery so important to Australia?

Date : 04 March 2021

Nick Miles

Head of Insight - Asia Pacific

Before the COVID-19 pandemic online grocery was accelerating in Australia, however since the pandemic hit, growth has become supercharged. For retailers and suppliers online grocery is going to be a vital growth channel over the next few years down under.

In our next Future Talk by Retail Analysis webinar, we will consider how global retail trends are impacting on Australia and how the online grocery landscape will evolve, both to meet demand and also aid profitability. We will consider what should be front of mind for suppliers as a we enter a new era for the online grocery channel.

1. The pandemic has accelerated grocery retail trends both globally and in Australia, with growth over the next two years to be dictated by online grocery

The global pandemic has been a catalyst for change, digital technology has been rapidly adopted across society and business, while online grocery retail penetration has reached new record highs. Healthy living, meal solutions and responsible retailing have been thrown further into the limelight as well. Much of the thinking behind these trends was in the pipleine before the pandemic, but what we have seen is these trends being accelerated by it, with retailers drawing forward innovation pipelines.

Coles and Woolworths, despite some initial issues, have driven some phenominal growth through the online channel in the past year, with online food growth in H1 FY21 of 48% and 92%, respectively. With more capacity and more people shopping online for groceries than ever before, we expect penetration of the channel in Australia to remain elevated post-pandemic, plus as the market recalibrates and spend shifts back to out of home channels, online will be the main source of revenue growth for the sector over the next two years.

2. Online profitability remains a barrier for many to invest, but if you don't invest you risk losing market share - what do you do?

I have lost count of the number of times I have heard people mention this in meetings and of course protecting profitability is vital for any business. However, those who didn't take the plunge before the pandemic have lost significant market share as record numbers of shoppers turned to the channel. While many retailers who have managed to ramp up capacity over the past 12 months have delighted shoppers and will likely reap the benefits of their loyalty for many years to come. Some have held firm and still not invested, while others, like Metcash, have rapidly launched new services and brought them to market. In fact, Metcash was lucky as its stores also benefitted from the huge shift of people shopping closer to home.

What we see is, retailers are getting smarter at leveraging the models they have at their disposal to make online grocery more profitable. Although there is some way to go, tactics we see include, rolling out the right fulfiullment models to the right locations, creating great omnichannel experiences through making stores work seamlessly with online, new partnerships to fast track innovation, greater levels of automation to cut labour costs, enhanced delivery planning, sourcing delivery to third party operators and commercialising data and the path to purchase. We expect innovation in this area to be even faster over the next few years as retailers look to grow market share, but also balance the bottom line. Those that sit and wait we believe will be left behind, so don't stand still and get involved in understanding what this means for your business.

Want to know more?

We will explore this further in our upcoming webinar where you can hear from our experts and put your questions to them...

Australia and the future of online grocery


11 March 2021 | 8:00AM - 9:00 AM (AEDT)
10 March 2021 | 9:00PM - 10:00PM (GMT)

Join us to learn more about how global trends are impacting Australia, plus how online grocery will continue to drive significant growth and evolve over the coming years. For subscribers only.

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