Supermarket chain Coles has extended its online grocery shopping service to a sixth Australian city, Adelaide. Although Australian consumers have not been receptive to online grocery retailing, if Coles can promote the channel's time and money saving capabilities, while emphasizing that quality is not compromised, the venture may prove successful.
While online grocery services have operated in Australia for over a decade, the service still only represents a small proportion of total grocery retailing in the country, particularly when compared to countries such as the US and UK. In fact, when Datamonitor asked Australians in August 2008 how often they bought groceries online, an overwhelming majority (87%) reported 'never'. Exactly the same proportion said 'never' in April 2009, indicating continued resistance to the service. Perhaps in response to low uptake, Woolworths has not matched Coles in terms of coverage (Woolworths currently offers its online service in Sydney, Melbourne and Canberra only).
One of the most compelling reasons against the adoption of online grocery shopping is the inability to select fresh produce in person, relying instead on the discretion of supermarket employees. Indeed, Datamonitor's Consumer Survey conducted in April 2009 found that seven in 10 Australians considered the 'freshness and quality of produce' to have a high amount of influence in deciding where they do most of their grocery shopping, while one quarter perceived it to have a 'very high amount of influence'.
However, the current economic downturn may reignite opportunities for online grocery services. The ability for consumers to purchase groceries from home affords them more 'quality time', an increasingly precious commodity in times of financial adversity. Accordingly, the aforementioned survey revealed that, compared to two years ago, 'using time saving products or services' has become more important for over half of Australians. Furthermore, 'proximity to home' has a high amount of influence for nearly two thirds (64%) of Australians in their choice of supermarket, illustrating the growing value they place on convenience.
If retailers are able to overcome the perception that online grocery services result in a quality compromise, they will be in a prime position to capitalize on homebound consumers looking to save time and money (by making fewer car trips). Retailers can achieve this by establishing a more integrated online and offline shopping experience, and building a strong online community, so that consumers can trust the quality of products that they are unable to select in person.