Competition to retain online grocery shoppers post-pandemic

Online grocery shopping the next big battleground for supermarket giants. New data has revealed Australians spent $94.6 billion in supermarkets in the year to March 2020, with Woolworths and Coles Group capitalising on 67.5 per cent of that total.

Michele Levine, Roy Morgan CEO said the competition to retain online grocery shoppers post-pandemic opens up an interesting new front in Australia’s fiercely fought supermarket rivalry.

New data from Roy Morgan’s latest Fresh Food & Grocery Report shows that in the year to March 2020 Woolworths had the lion’s share of all online supermarket spending (57.4 per cent) and this share grew to 60.1 per cent for the first three months of 2020 (March quarter 2020).

Coles has shown even faster growth so far in 2020 with their share rising to 33.1 per cent in the March quarter 2020, up from 26.1 per cent over the full year – and increase of 7 per cent points.

The arrival of the pandemic not only saw physical supermarket shelves stripped bare, it turbocharged the move to online grocery-buying to such a degree demand could not be met and services were temporarily restricted.

With lockdown no longer in place except in specific Melbourne locations, shoppers have increasingly returned to physical locations throughout Australia, but it is likely that many of those who recently made the move to online groceries will continue to use that option, at least some of the time.

“Our data shows that almost one quarter of grocery-buyers who shopped at Coles, Woolworths or Aldi in a four-week period actually spent money at all three supermarkets. That is a high rate of customer leakage between the brands,” Michele said.

“It might even be said that rival brands attracting customers away from what they regard as their main supermarket have succeeded in larceny. However online shopping changes the dynamic significantly.”

Aldi and IGA account for 22.2 per cent or more than one-fifth of the overall grocery spend (leaving just over 10 per cent for other supermarkets such as Foodland, Foodworks, local independents and convenience stores).

“But Aldi doesn’t offer online shopping at all, and IGA has it only on a discretionary store-by-store basis,” Michele said.

Michele said there is no doubt about the growing significance of the burgeoning online grocery market.

“Overall, the general lack of competition in the online grocery shopping market leaves the two majors in a dominant position – and both have grown their shares of the market so far this year.”

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