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The holiday season is upon us, and we can’t help but think of shopping — and shopping for food. The shopping stories are a combination of Black Friday craziness and the shift to buying from online retailers like Amazon. Here at Simon-Kucher, we were wondering about the intersection: Do holiday meals and online buying intersect? The question occurred to us after multiple clients asked us about product and pricing strategy for Amazon. We know that a growing number of traditional grocery dollars are shifting to online retailers, but how much of this happens during holiday season, when grocers have their biggest weeks of the year?
In my family, Thanksgiving meals usually feature the obligatory turkey, Grandma Sherry’s sweet and sour meatballs, Ritz cracker stuffing, and an array of other sides, desserts, and drinks. Thinking about meals like this, with the preponderance of perishable ingredients, we intuitively thought there would be little room for an online retailer. And we were mostly right.
With research firm Instantly, we conducted a survey where we asked a panel of 1,052 shoppers how they planned to shop for Thanksgiving and winter holiday meals. Among other things, we asked about usage of Amazon in general, plus Amazon’s Prime and Prime Pantry programs.
You might have guessed it: Hardly anyone is planning on shopping for their holiday meals on Amazon. Shoppers plan to buy about four percent of their holiday meal items there, consistent for both Thanksgiving and a winter holiday meal. Comparatively, shoppers will buy 39 percent of their meal items at a traditional grocery store, 29 percent at Walmart, seven percent at a specialty food store, and 22 percent somewhere else, which includes warehouse club stores.
Narrowing down the group to those who say they will use Amazon, they will buy only 22 percent of their items there, leaving 78 percent for shopping in stores. For Thanksgiving, these Amazon shoppers are 87 percent more likely to shop at Target than the average shopper, 38 percent more likely to shop at a specialty store, 19 percent less likely to shop at Walmart, and a whopping 54 percent less likely to shop at a traditional grocery store.
So — they are more likely to shop where specialty items are available (Amazon, Target, Whole Foods) and less likely to shop in a conventional retailer.
They are also more likely to shop for electronics, shop via mobile phone, expect discounts, and be influenced by promotions. This suggests that Amazon will be used for items that can be easily compared across retailers, such as common dry goods, and perhaps expensive ones that are sold on a discount.
There’s not many of these Amazon shoppers looking for groceries, right? Yes, but…
Our study also covered the non-food side of holiday shopping — the gift-giving time of the year. This world is less interesting for this publication’s readers but we found important lessons that can apply to the future of grocery shopping, online and offline.
1. More holiday shopping time is spent online, both on the web and on mobile. Some of this is actual shopping while some is pre-shopping. No doubt, this will grow, as more prices and product information becomes available online. It is important to have information on your products easily available online.
2. In some categories, where shoppers may be looking for very specific items, like electronics and toys, more time is spent shopping on the web and mobile. Part of this is because consumers expect more discounts online than in-store, and retailers have trained consumers to expect this. Be careful not to train your consumers to expect discounts.
3. Shoppers still prefer to shop for apparel, footwear, and healthy/beauty items in stores. In those categories, consumers want “receive product right away” and “feel and try the product before purchasing.” This lines up well with the grocery experience. Part of the experience is that of choosing fruits and vegetables up close, finding the right cut of meat, or grabbing a treat to eat on the way home. It’s hard to replace the experience of seeing, smelling, touching, and tasting in a store.
One area that will be hard for Amazon and other online retailers to match is shopping for perishables. Some shoppers are always going to want to select those items in person. But Amazon is piloting its Fresh program, where they deliver a full range of grocery items via refrigerated trucks, along the lines of Peapod and Fresh Direct — and with a hefty $299 per year fee. It’s a different direction from Amazon’s Prime and Prime Pantry programs and will give the industry more to think about.
Scott Sanders is a Senior Consultant at Simon-Kucher & Partners and a consulting brand manager for Bosco Products, maker of the classic Bosco Chocolate Syrup. Scott has had past roles as Director of CPG Analytics at Pivotstream, as a Consultant at Market Performance Group, and held various analytics-based roles at Acosta Sales & Marketing, a sales agency that represents 25 percent of the U.S. grocery industry.