Online grocery shopping is the primary competition for today’s multi-channel supermarkets, according to a study conducted by Brick Meet Click, Barrington, Ill., with support from MyWebGrocer, Winooski, Vt.

Online grocers, or Basket Bandits, dominate on all dimensions—number of sites, reach, share of trips and share of spending.

Amazon is the single biggest playerin online grocery, even with AmazonFresh in limited rollout. It attracts 48% of all online grocery trips, and its share of spending already equals that of multi-channel supermarkets at 32%. Plus, its share of grocery trips goes up significantly, as households increase the number of online trips they make in a month.

Multi-channel supermarkets win a significant share of the online business once they get established in a market, and so do their direct competitors. That’s why Basket Bandits capture 25-50% more spending.

Bottom line is,consumers are beginning to change where and how they buy groceries. If multi-channel supermarkets don’t move to meet these emerging needs, spending will continue to shift online to direct competitors and Basket Bandits. Local market conditions will determine the size of the shift and where the spending goes.

Based on a survey of more than 12,000 digitally connected grocery shoppers across the United States, this study:

• Identifies and classifies the different types of online competition facing supermarkets.

• Describes how they are currently sharing the market.

• Evaluates the strengths and weaknesses of these competitors in comparison with multi-channel supermarkets.

These findings will help grocery and food retailers make both short-term and long-term decisions about how to:

• Protect current business and acquire new business from competitors who are slow to respond to changes in consumer behavior.

• Develop a vision of how to win sales as consumers change the way they buy food and groceries.

The data in this study was collected from three regional markets. The averages that result from combining the data provide an understanding of the overall competitive landscape that is evolving, but it’s important to recognize that the progress of online grocery will not be uniform.

Therefore, this report also includes information about the differences among markets in the presence and penetration of the main types of competitors. These variations can provide insight into how the competition may unfold in a given market.

The challenge for supermarkets is that when consumers start buying some of their groceries online, they spread their shopping broadly across a variety of sites to find what they want.

Today, the traditional supermarket/CPG marketing channel is being outflanked by these online options. The study shows that more than 40% of digitally connected shoppers have made the jump to buying some groceries online. Current trends indicate that more households are making the shift every day – to get specific items they can’t get in store, to buy at lower prices or to take advantage of conveniences like subscription buying and delivery for immediate consumption. If multi-channel supermarkets don’t offer similar opportunities, significant sales leakage will occur.

The good news is that this study shows that multi-channel supermarkets and direct competitors can capture a significant share of the online business when they establish a strong presence in local markets. There is clearly a role for one-stop-shopping alternatives to play in the competitive landscape for online grocery.

However, customer satisfaction scores show that there are four important areas where multi-channel supermarkets have an opportunity to improve.

• Ease of reviewing product information

• Limited opportunities to get additional discounts using coupons

• Receiving all the items ordered

• Consistent notification of substitutions

Assuming current trends continue, supermarkets will find purchases continuing to shift to new and more specialized shopping options, a shift that will be difficult to neutralize with traditional offers.

So what is the way forward? The findings of this study clearly establish that multi-channel supermarkets canfind a strong position in the competitive landscape for online grocery. Those who succeed will:

• Offer online shopping experiences that are “best in class” or at least on par with other sites their customers are shopping (because consumer expectations are strongly shaped by those experiences).

• Become skilled at delivering the blend of product and experience consumers are seeking, and make sure that their online experiences complement the appeal of shopping in store.

• Strike a balance between what’s unique and appealing to customers and what’s familiar and expected.

Among the biggest challenges will be finding ways to reduce the cost of fulfilling online orders and delivering a personalized online experience that meets shoppers’ expectations.

Among the biggest opportunities will be establishing new collaborative relationships with CPG brands that give the brands a way to grow their business while complementing the retailer’s brand-building effort.

The results will cement customer loyalty, win a greater “share of wallet” from core customers and expand the appeal to secondary shoppers to shift more sales to your store.

For supermarkets that are already selling online:

• Evaluate your shopper’s online shopping satisfaction across multiple activities.

• Identify shopping occasions where there are immediate opportunities to drive sales increases, like ordering food for immediate consumption.

• Collaborate with innovative CPG brands to bring shopper insights to digital merchandising.

For supermarkets that don’t yet sell online or have been slow to roll out:

• Take steps to expand the number of customers with whom you have digital connections, and identify what can be done to strengthen digital engagement before offering online shopping options.

• Evaluate opportunities to offer online ordering in prepared foods, deli and bakery areas where consumers are already familiar with (and expect) online ordering.

• Assess the competitive landscape in your market to see how much your customers are spending online and which categories are shifting to online competitors.

For CPG brands, findings highlight opportunities to:

• Identify which supermarkets are successfully expanding into online grocery, and prioritize them as potential online marketing partners.

• Work with progressive supermarkets to establish the presence of your brand online using affinity promotions and personalization with the goal of earning an established position on the customer’s shopping list.