No checkouts, no chocolate: Online shopping hits impulse buys

Nov 27 2013, 19:03 IST
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Online shoppers stick to shopping lists, browse less (Reuters) Online shoppers stick to shopping lists, browse less (Reuters)
SummaryExposed firms include Nestle, Mondelez, Coke, Pepsi, Time Warner

For consumers, one of the great things about shopping online is bypassing the queue to check out. For producers of the candy, magazines and drinks often sold there, it's a problem.

In Britain, the country where e-commerce is most popular, about 13 percent of people do all or most of their grocery shopping online. Yet this only accounts for 5 percent of overall spending, suggesting consumers spend more when they visit a store.

That is because online shoppers search for what they need, usually sticking close to their shopping lists. They don't spontaneously buy magazines they opened while waiting to pay, or chocolate to eat on the go.

Elizabeth Clark, a 40-year-old teacher in Liverpool, England now does most of her shops on the internet, and says she ends up buying fewer sweets, newspapers, toys and wine.

"In the supermarket, obviously you walk past it and you see a special offer and you think 'Oh, I'll have that'," she said.

Even though retailers try to do the same thing by flagging special offers at online check-out, it doesn't usually work.

"I always just press 'next, next, next, next' without even reading them, deliberately, because I don't want to be tempted."

Companies most at risk are Mondelez International, Mars Inc and Nestle, the top three candy makers, soda makers like Coca-Cola and PepsiCo, and magazine publishers like Time Warner and Hearst Corp.

The latest survey of European shoppers by IRI found that 73 percent spent more time planning shopping in order to avoid non-essential purchases amid the economic slowdown.

"Shoppers are reducing their impulse purchasing," said Cristina Lazzaroni, who monitors the confectionary market for IRI in Italy, where online shopping is less of a habit.

And when they do buy chocolate at stores, more Italian shoppers are buying larger take-home tablets instead of single-serve snacks, Lazzaroni said, noting that the shift can hurt the bottom line as smaller packages often carry higher margins. IRI said sales of confectionary fell 2.4 percent in Italy in the last year.

Worldwide, the retail confectionery market is worth $196.5 billion, according to Euromonitor International, up 5.6 percent from a year ago. Nearly all sales are from stores, though online made up 0.9 percent this year, up from 0.6 percent in 2008. That is the same amount as purchased through vending machines.

CANDY LAG

Grocery is one of the last areas of retail to go online, due to challenges around delivery and perishability, but a shift is underway.

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