Food and Drink E-Commerce in New Zealand

2020 IMPACT

Online grocery shopping helps register significant growth for channel

Food and drink e-commerce registered double-digit growth in 2020, especially since COVID-19 was a significant trial driver for new consumers who had not made purchases online before. In the early phases of 2020, with strict lockdown restrictions and consumer fears of contracting the virus, consumers flocked to stockpile pantry essentials in preparation of potential lockdowns due to uncertainty surrounding the pandemic.

Limited capacity and capabilities create challenges, as players invest in building their services to better suit consumer needs

Food and drink e-commerce recorded a strong growth in 2020, which helped boost sales significantly following the effects of the pandemic on consumer lifestyles and shopping preferences. Despite the strong surge in sales, the unprecedented demand made it challenging for businesses to deliver to consumers due to limited capacities and capabilities.

COVID-19 pushes retailers to build omnichannel strategies and capabilities

The surge in e-commerce and increase in New Zealanders shopping online has led to significant growth in the category, with COVID-19 being the driver pushing consumers to try this new way of making purchases from the comfort and safety of their own homes. Food and drinks e-commerce is expected to grow strongly over the forecast period, as supermarket chains such as Countdown and Foodstuffs have experienced massive spikes in new customers doing their shopping online, and this shift in channel preference is expected to bring about a longer-term change in consumer shopping behaviour.

RECOVERY AND OPPORTUNITIES

High delivery costs and ensuring freshness of food pose as challenges for players

Groceries have played an important role in the strong growth of e-commerce. Demand for necessities and groceries do not fluctuate depending on uncertain economic conditions (unlike apparel and footwear, for example, which is dependent on economic conditions), which makes food and drink e-commerce an attractive channel through which to grow and expand their businesses.

New platforms with a renewed focus on local businesses expected to push growth for the category

COVID-19 accelerated the growth food and drink e-commerce was experiencing prior to the pandemic, as a broad spectrum of consumers was introduced to the channel. The pandemic pushed many consumers to trial purchasing online and previous barriers to buying online, with concerns regarding food freshness, safety and secure payments, changed as consumers valued the convenience and safety benefits more.

Challenges continue for drinks retailers, with more regulated laws and controls needed

Many retailers started offering an e-commerce option for consumers who wanted a more convenient way to shop, as the pandemic caused a significant shift in consumer lifestyles. Despite the growing popularity of e-commerce and omnichannel models, liquor specialists such as Liquorland and Liquor Centre still face the challenges of ensuring the retailers control every aspect of the delivery in order to meet orders, and ensure correct age verification upon delivery.