With Aldi set to kick off online deliveries in Atlanta, Dallas and Los Angeles later this month, following its partnership with Instacart, market-research provider Euromonitor International has warned that the retailer may face an 'uphill battle' when it comes to convincing grocery shoppers to move online.
“Online grocery, especially the purchase of food and beverage products, faces an uphill battle in the US," said Michelle Grant, head of retailing at Euromonitor International.
"Consumers tend to prefer the store experience, especially to inspect the fresh products. They also hesitate to pay for delivery and do not like waiting at home for the delivery. Another issue is out-of-stocks that make for a less than compelling customer experience. As a result, grocery products have been the last categories to move online, but the race is on to crack this market."
Changing Demographics
However, Aldi, like other grocers, may, in time, benefit from the fact that young consumers are shopping online more prevalently.
"According to Euromonitor International’s Global Consumer Trends Survey, 25% of Americans shopped for groceries online at least once in 2013. The percentage increased to 38% in 2016," said Grant.
"The frequency of online grocery shopping increased in that time frame. Interestingly, the percentage of Americans between the ages of 20 and 29 who shopped online for groceries daily or weekly doubled in the past three years. With younger generations shopping more frequently online for groceries, it is likely that this channel will grow.”
Growth Potential
Aldi is currently the eleventh-largest grocery retailer in the US, recording a CAGR of 10.4% between 2011 and 2016. In addition, the discount channel accounts for just 2% of the market currently.
“Aldi continues to focus on the US, its second-largest international market, with strong expansion plans in the works," said Grant. "The discounters' channel in the US is far from being mature, at only 2% of modern grocery sales in 2016, but it offers strong potential, as consumers become more aware of the model.
"In light of this and the disruptive effects [that] discounters are having on similar international markets, competitors have even adopted strategies that Aldi has long been known for," she said.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
