What’s in store for online food shopping?

That shaky, squeaky wheel on the supermarket cart is becoming less of an annoyance as more consumers are moving to the online grocery store. Internet food shopping is set to experience rapid growth in the next few years. As online food retailing grows, so will the complexities and changes for food processing companies, says Rabobank in a flagship report, Food Processors Challenged by Online Growth Dynamics.

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New reality for food processing companies

With consumers looking at potential purchases online, rather than in-store, product visibility will become ever-more important. “Food processing companies should embrace the online trend, adapt their strategies to the new reality and look for ways to address the changing needs of both food retailers and consumers head-on,” said report author John David Roeg.

“New strategies may include assortment changes, such as adding more product variety such as healthier options for example, or improving packaging, pricing or production flexibility. Spending on advertising will probably need to change as well. This could include spending money to prevent product substitution or block competing products on retailers’ websites,” said Roeg.

Losing visibility online

Visibility and pricing will become determining factors in online food purchasing. Therefore, food processing companies will need to look at increasing flexibility by refining packaging options or improving pricing to catch the consumer's eye.

In theory, everyone will be able to sell everything online. But, there is a fair chance that the products will not be discovered. “Companies that rely heavily on impulse-buying in the store could face volume declines in an online environment. Food producers could also target new groups by introducing smaller and bigger packaging at various price points,” said the analyst.

Adjusting marketing strategies

Food processing companies will have to accept and adjust to new demands from food retailers, and one of those changes is marketing online.

“Food producers must actively manage where, when and how they appear in retailer’s online overviews, banners and search results. This means marketing budgets may need to be reallocated to pay for banners, blocking ads, digital coupons, avoiding substitution, appearing in retailer suggestions, and so on,” said Roeg.

Global impact of online food shopping

Online food shopping in the global food industry will affect food processing companies of almost every size, whether they are producing brands or private labels for supermarkets. Rabobank believes the impact from online food buying will be of a similar magnitude to that felt when self-service supermarkets, hard discount and private label were introduced in the 20th century.

“All food producers will need to develop strategies to better align their assortments, marketing tactics and supply chains with the growing online food retail channel," said Roeg.