Online grocery shopping in Germany: From zero to hero?
Philipp Piroth,
Ph.D. Candidate,
Faculty II Marketing and HR,
Ludwigshafen University of Business and Society,
Ludwigshafen on the Rhine, Germany
Edith Rüger-Muck,
Professor of Marketing and Vice President for International Affairs and Diversity,
Faculty II Marketing and HR,
Ludwigshafen University of Business and Society,
Ludwigshafen on the Rhine, Germany
Digitalisation is a continuous process that has had a tremendous economic impact and has disrupted many industries into rethinking their business approaches, or else risk perishing in the digital age. As food consumption is vital to the functionality of the human body, the importance of universal food distribution and availability remains indisputable. Yet, online grocery shopping remains a segment that was left comparatively untouched in terms of digitalisation since its first wave at the turn of the millennium. Worldwide acceptance of online grocery shopping developed differently.
Online grocery shopping has faced many set-backs in its early stages mainly due to fragmented market structures, cost intensity and the perishability of the products as a critical factor in the requirements on the cooling chain. In Asia, countries such as China, Japan and South Korea were early adopters concerning digital grocery shopping. In Europe, online grocery shopping became popularised in France and in the UK. German consumers however rejected this form of shopping for a long time due to various reasons. In 2019, the share remained just 2 % of total sales volume. Reasons for the reluctance of German consumers to shop groceries online can be seen in their concerns about data security and in their resistance towards mobile and digital payment methods. However, especially due to the Corona crisis, a change in shopping behaviour could be observed in 2020, showing that online grocery shopping has become more popular among Germans. There still remains a gap between consumers’ intentions to buy groceries online compared to consumers’ actual purchasing behaviour. These differences in adoption patterns may be related to the national infrastructure such as the highest supermarket density in Europe and liberal opening hours. However, both the retailing industries efforts and the consumers’ willingness strongly influence actual adoption behaviour.
Grocery retailing is regarded as a hypercompetitive market with low overall margins and heavy infrastructural investment. Digital transformation in retailing is likely to diminish the distinction between brick-and-mortar stores and online retailing formats and, in fact, many retailers have restructured their logistics to multi-channel approaches. Again different preferences are visible throughout Europe. While France has installed pick-up systems, many other countries (such as) prefer a home delivery option. In Germany however, efforts to digitise both the stationary and online offering remain on a moderate level, despite general increased reception of digital technologies in grocery retailing amongst consumers in Germany.
With the pandemic spread of the novel COVID-19 virus, online grocery shopping became a reliable option for risk groups (such as elderly, chronically ill, or those with pre-conditions). While online shopping in Germany generally decreased during the stay-at-home policies, online sales of food and medicine saw a sharp increase in revenue. Three in ten consumers bought food online during the pandemic. Still, acceptance may have risen further due to the COVID-19 policies. As such, the retailing industry now has an opportunity to adapt to the new customer segments entering online grocery shopping with the SARS-CoV-2 pandemic by integrating adequate and consequent digitalisation efforts within their service offerings. Smart shopping carts and applications as well as radio-frequency identification (RFID) show large acceptance rates in Germany and should therefore be implemented on a larger scale. Consequently, digitalising the in-store and online shopping experience will help in many ways as it increases both the ability to effectively market products, but also enables substantial consumer education both in health and sustainability related product characteristics. Digitisation will also help to individualise the user experience and may help counter the low overall social interaction in online shops by integrating smart shopping assistants. Implementation of real-time delivery tracking (as already in place with many food delivery services) would help consumers to plan accordingly and may help integrate grocery shopping into the new home-office reality. It appears as if the COVID-19 pandemic did not alter actual useage in Germany substantially, however German consumers’ intention to use these services are picking up. Famous examples, such as the Dutch company ‘Picnic’, illustrate the success of local food distribution via online ordering. With an increased interest in this topic from the German population, the retail industry should focus on strengthening their online service offerings and invest in larger capabilities to ensure adequate home delivery during stay-at-home policies. As the COVID-19 cases rise again, so may the number of orders placed with online grocers, perhaps triggering the lasting establishment of online grocery shopping in Germany.
Email: philipp.piroth@hwg-lu.de
Expert article 2836
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