Online grocery shopping takes over Japan
A new study from IGD Asia shows that online grocery shopping has increased its role in the life of Japanese consumers. Daily shopping trips to retail stores have decreased dramatically during the lockdown period and shoppers have been encouraged to explore alternative channels like online grocery. Now, the risk of COVID-19 infection along with the ongoing shift in demographics are key drivers, e.g. more households have two people working and so saving time is becoming more important.
In convenience retailing, the big three, 7-Eleven, FamilyMart and Lawson, have all seen a decline in total sales year-on-year. Larger average basket size per customer has not been able to offset a significant decline in customer footfall, according to IGD Asia. The leading retailers in Japan have traded online for many years, but limited traction and high logistical costs of have been barriers to significant investment and penetration. However, there have been some key developments prior to COVID-19, with partnerships formed to share the burdens and maximise key strengths of each business, e.g. Aeon and Ocado, Lawson and Uber Eats, Rakuten and Seiyu (Walmart) and Amazon and Life supermarket.
Many retailers have struggled to meet the surge in online grocery demand. Aeon said it is hiring more staff to help pack online grocery orders. The retailer expects online grocery sales to grow 50% and account for about 10% of sales by the end of February 2021. The shift towards online grocery in Japan is interesting because penetration has historically been low relative to developed markets. Online grocery is estimated to account for less than 5% of Japan’s total grocery sales.
Luke Jensen, executive director of Ocado Group, said, “When people increase their use of online, they stay with it rather than going back. In Japan, we’d expect there to be a step up in the growth of e-commerce.”
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