JEDDAH — Roughly two-thirds of consumers in Saudi Arabia are willing to buy groceries online, but at the same time, majority of respondents (65%) in the kingdom also prefer the enjoyable and engaging experience of going to the grocery store, Nielsen Global E-commerce and the New Retail Survey revealed Tuesday. The survey polled 30,000 online respondents in 60 countries to understand how digital technology will shape the retail landscape of the future. The report looks at how consumers are using technology and offers insights into how retailers and manufacturers can use flexible retailing options to improve the shopping experience and drive increased visitation and sales across channels. The good news for brick and mortar retailers is that clicks won't be replacing bricks any time soon. Online shopping has a number of benefits, but physical stores also have strong key advantages over e-commerce —especially for fast-moving consumer goods. Sixty three percent think grocery shopping in a retail store is a fun day out for the family. However, Nielsen research shows that clicks do lead to bricks and this is an important take-away for retailers and manufacturers who must engage the consumer early on the path to purchase. There are many touch-points along this path, which include finding the store, making shopping lists, checking prices, researching products, sharing reviews and manufacturer and retailer content on social media and finally purchasing. “E-commerce is definitely on the rise in our region,” said Arslan Ashraf, Managing Director, Nielsen Arabian Peninsula. “However, the physical shopping is still an important part of our culture in the Middle East. This is an experience which online shopping can't provide. Therefore, retailers and manufacturers need to take a blended approach of online and offline to be successful and attract consumers who will use whatever channel best suits their needs – either for research, entertainment or shopping.” Retailers have a lot of room to grow when it comes to in-store digital enablement options, such as mobile coupons, lists and shopping apps, and in-store Wi-Fi availability. Use of online or mobile lists (14%) and downloading a retailer/loyalty program app on a mobile phone to receive information or offers (14%) are among the most cited forms of in-store digital engagement in use today among KSA respondents, with about 42% and 43%, respectively, willing to use them in the future. About one-in-10 KSA respondents say they log in to store Wi-Fi to receive information or offers (12%). 45%, however, are willing to use this option in the future. Mobile coupons are used by 11% of KSA respondents, and 43% say they're willing to use one when it is available. The growth of online CPG sales has been driven in part by the maturation of digital natives, the consumers who grew up with digital technology (especially Generation Z). These consumers have an unprecedented enthusiasm for and comfort with technology, and online shopping is a deeply ingrained behavior. For example, 36% of Generation Z (ages 15-20) respondents say they're ordering groceries online for home delivery, compared with 18% of Millennials (ages 21-34), 21% of Generation X (ages 35-49) and 21% of Baby Boomers (ages 50-64) respondents. Younger respondents are also the most willing to use all of the e-commerce options in the future. Increasingly, retailers are introducing e-commerce models that make it even easier for tech-savvy, time-crunched consumers to get the items they need. Eleven percent of KSA respondents say they use an automatic online subscription service, in which orders are routinely replenished at a specified frequency, and almost two-thirds (65%) are willing to do so in the future. In 2011, Tesco (Homeplus) introduced the first virtual supermarket in a South Korean subway system, and the model has spread to other markets. Today, 15% of KSA respondents say they're already using a virtual store and two-thirds (66%) are willing to use them when they become available. A smaller number of consumers are using “click and collect” services in which consumers order groceries online for pickup at a store or other location. 17% of KSA respondents say they order groceries online and pick them up using a drive-thru. Slightly fewer order online and pick them up in-store (16%) or for curb-side pick-up (13%). More than half of KSA respondents, however, are willing to use these online options in the future (62% for drive-thru, 62% for in-store and 58% for curb-side pickup). Virtual baskets don't necessarily mirror physical ones. In fact, the relationship between the two is often an inverse one. So which categories have the most potential for digital success? Generally, stock-up categories like personal care and household products are prime selections for e-commerce inventory. As an example: 33% of KSA respondents say they intend to buy toothpaste online in the next six months, followed by shampoo/conditioner (32%). Consumers have more shopping choices than ever, and as channels proliferate, protecting and building store loyalty is no easy task. To keep customers coming back for more, understand what drives them to leave one store for another. Money makes the world go round so it's no surprise that price is the top driver of store switching behavior—by a wide margin. In the KSA, 68% say price, followed by quality (54%) are store-switching motivators. Store cleanliness (51%) and special promotions (50%) are drivers for half of respondents, while store staff (30%) is a reason for about one-third. Selection/assortment (28%) and convenience (25%) are factors for one-quarter (25%) of respondents. While digital is here to stay, the majority of consumers will continue to shop for the bulk of their purchases in store — even if the channels they're using are changing. Shoppers will use whatever format best suits their needs for convenience, choice and value. Therefore, it is critical that retailers and manufacturers leverage physical and digital assets to optimize the in-store experience. — SG
