Fewer consumers are buying their groceries online compared to a year ago, causing retailers to take a hard look at their e-commerce business and ask: Do we try to win back online shoppers or shift our strategies to cultivate and focus on omnichannel shoppers? The answer is both.
SymphonyAI Retail CPG research of more than 607 million transactions across 58 million global households in Europe and the U.S. uncovered opportunities for retailers to regain lost revenue in e-commerce. Notably, the study highlighted the importance of omnichannel shoppers to score large incremental sales.
Furthermore, the advancement of AI and predictive analytics can better support retailers looking to target that growing omnichannel shopper base.
What the Research Says
SymphonyAI looked at Q1 2023 transaction data compared to the same quarter a year ago, and the truth is many e-commerce grocery shoppers have left the channel. More specifically:
- More than half of e-commerce customers are no longer buying groceries online compared to a year ago.
- Of the lapsed customers, only six in 10 are reverting to the physical store to buy their groceries. The other four are leaving the retailer altogether.
- Consumers who return to the store to buy their groceries are reducing their overall spend by 16%.
For retailers, these shifts in consumer behavior online are leading to less revenue being generated through e-commerce, but the impact is also being seen inside the store. The online dip hasn’t triggered a comparable boom among in-store-only shoppers, and the shoppers that do buy inside the four walls of a brick-and-mortar location spend less on goods than omnichannel shoppers. However, there are opportunities for retailers to regain revenue.
Omnichannel Shoppers Demonstrate Their Value
Looking at Q1 2023 and into mid-2022, more than 70% of current online shopping households also shopped in-store, qualifying them as omnichannel shoppers.
The research shows that since last year omnichannel shoppers have driven positive sales growth online compared to those shoppers who only buy online. Compared to shoppers who only shop in-store, omnichannel shoppers fueled bigger incremental baskets. When a shopper becomes an omnichannel shopper, they spend 15-18% more with the retailer and visit more frequently.
Retailers that can present a strong omnichannel value proposition will ultimately grow their loyal shopper base. The research revealed that the loyal customer retention rate increased a full percentage point among omnichannel customers in Q1 2023.
To further reach omnichannel customers inside stores and increase sales in that channel, retailers can leverage AI and predictive analytics, which reviews omnichannel shopping data at a store-by-store level to recommend a fully optimized, customer-centric product assortment that meets that omnichannel shopper.
A personalized approach can only improve loyalty among omnichannel shoppers and grow baskets, too.
Opportunities To Build Back E-Commerce
Furthermore, the research found ways where retailers can win back some revenue online and overall. For one, looking at the number of customers who only shop in-store, more than eight in 10 of those shoppers have not used e-commerce once over the past five years. They may seem set in their ways, but retailers have much to gain from using well-crafted targeted campaigns to convert some of these customers into omnichannel shoppers.
Using AI predictive models, retailers can quickly identify the top prospects for e-commerce who will stay engaged for the long term, thereby maximizing ROI. The data shows converting 5.5% of those prospects into an omnichannel shopper can unlock a nearly 1% growth in total retailer revenue.
The data also highlighted opportunities to grow e-commerce revenue by targeting promotion-sensitive households. In the period from Q1 2021 to Q1 2023, the percentage of households buying online through promotions has increased steadily.
Retailers can introduce more personalized offers in categories that are more frequently purchased on promotion online. Retailers can also highlight offers that are only redeemable online to promote e-commerce activity.
AI-powered insights that analyze shopper data can rapidly evaluate what promotions should work best when reaching consumers, saving time in the trial-and-error process of launching a variety of promotions. Predictive analytics assists retailers with pinpointing what promotions can be most effective when targeting shoppers.
AI Can Provide a Boost
Retailers can see the data, recognizing that online shoppers are dwindling in grocery. However, with predictive analytics and now combined predictive and generative AI, they have opportunities to become more efficient and effective. The data-driven insights support retailers in making decisions that help win back online sales, grow omnichannel shoppers and build more effective, personalized in-store shopping experiences.
AI and predictive analytics also help retailers pivot and react to consumer shifts in behavior in real time. Retailers can work faster and smarter. No matter whether their shoppers only buy online, prefer in-store or shop in both channels, the data helps retailers to deliver customized assortments, and effective pricing and promotions to increase conversions and grow revenue.
Laetitia Berthier, head of customer success, SymphonyAI Retail CPG
Laetitia is a consulting professional with more than 20 years of experience in customer-centric strategies in Europe and North America. She’s currently Head of Customer Success at SymphonyAI Retail CPG.
