Online Grocery versus Supermarket apps analysed

Are traditional supermarkets ahead in the online marketplace versus new challengers?


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Why online challengers are giving traditional supermarkets a big headache

A number of traditional retailers have already been acting in online food retail for years now. However, most traditional retailers are not making profit in this area and some food retailers missed the boat due to the high investments needed.

Only a few years ago, a high online market share, for example in the Netherlands of higher than 10%, would be unexpected. Nowadays the COVID-19 pandemic has accelerated growth and shifted consumer behaviour in this area, in such a way that current growth rates show no signs of slowing down.

For traditional supermarket directors, this is causing sleepless nights. While they face their own challenges to scale online services. The current online marketplace is also extremely competitive.

New online retailers with only an online proposition, such as Picnic are gaining more and more traction, city by city. At the same time, instant delivery companies with a promise to deliver groceries to your doorstep within 10 minutes are getting massive funding in 2021, from Gorillas to Flink. These new challengers are rolling out in big European cities at lightning speed, where their ‘dark stores’ - facilities to support last mile delivery services - are popping-up on an almost monthly basis.

And next to these new online retailers, we are also seeing local initiatives such as those trying to be the bridge between the local butcher and fish markets, in a bid to bid to prevent the SME market players from going out of business. They are also looking for the same consumer to buy their grocery items online. In the Netherlands, a start-up called Local Heroes secured investment from The Dragon’s Den, and other platforms such as Flexy are also receiving high profile investments from famous musicians.

More complexity is added to the situation due to shifting consumer preferences today. Most notably, customer demands for more transparent and healthy products while at the same time focusing on value.

Traditional supermarkets need to understand how to cope with these challenges. How can they stay ahead of the competition? Or if they are already losing, can they find out why? Are the challengers performing better? Do consumers experience more or less friction in the online grocery shopping journey with traditional retailers?

Detecting and analysing on-line customer journey frictions

To solve these frictions, we’ve developed a methodology to look at the frictions that app users experience when using the online food marketplace. We created an approach where we base our insights on actual behaviour and/ comments when customers place app reviews in the Google Play Store and the Apple App Store.

This is achieved through a Machine Learning algorithm, which we created to automatically categorise what app users are saying about different retailer apps. Then we clustered these into each phase of the online grocery shopping customer journey, like onboarding, ordering, payment and delivery, etc.

In this benchmark we have explored 3 main markets: United Kingdom, the Netherlands and Belgium, and compared traditional supermarkets that offer online grocery shopping via their app versus new challengers, [both app- only and instant delivery platforms], analysing over 24 different apps with more than 1 million user ratings.

Main conclusion

Our main conclusion is: If traditional supermarket retailers want to stay or get ahead in [online] market share they need to step up their game now and reduce friction in their online journey, otherwise they will lose to the new challengers in this exploding marketplace.

Challengers outperform traditional supermarkets in consumer satisfaction and experience less bugs

Our Retail Friction analysis shows that the overall app rating you see in the app stores does not tell the whole story.

While app ratings between traditional supermarkets and the challengers in the UK, the Netherlands and Belgium are comparable, we see that, when you really analyse under the surface, consumers using challenger apps experience significantly less friction along the in-app customer journey.

Not only do they give a higher rating to the features being supplied, but we also see that the core satisfaction of consumers using challenger apps is 16% higher than traditional supermarket apps. Interestingly, consumers using traditional supermarket apps experience twice as many bugs as challengers.

The UK is leading the way as the market with the highest satisfaction. Even some traditional supermarkets in the UK score better than challengers in the Netherlands and Belgium. This is likely due to the maturity of the market, nonetheless the difference is substantial in comparison to the Netherlands and Belgium.

In addition, Snappy Shopper is the highest rated app based on satisfaction. This highlights the importance of bringing benefits from of both the traditional and the challenger world with a renewed focus on local, as per the SnappyShopper model.

Challengers beat traditional supermarkets in the core part of retailing

Consumers using challenger apps experience way less friction in the core part of retailing: ordering products, price, paying for the trip and getting it delivered to their doorstep.

Again, retailers from the UK perform best in this area, followed by Dutch retailers, while most Belgian retailers are lagging behind these two markets.

In the UK, app ratings for each step of the customer journey are the same across both traditional supermarkets and challengers. For example customer support is the best rated step for both retailers, while for both too, highlighting frictions in the onboarding process for traditional and challenger retailers.

In the Netherlands, a different pattern. Dutch consumers rate delivery and price as more important, where challenger apps perform especially well on delivery.

Ratings in Belgium are not only lower but show a different pattern compared to the UK and The Netherlands. For example, design and & UX are rated high in the Belgian market.

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