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Has online grocery shopping hit its sales ceiling?
Coresight’s “U.S. Online Grocery Survey 2022” report found 54.3 percent of U.S. adults had purchased groceries online in the past 12 months, well above the 36.9 percent doing so in the pre-pandemic 2019 year but down from 59 percent in the 2021 survey.
The study, as reported by Supermarket News, further found 46.9 percent plan to buy groceries online in the next 12 months, down from 49.5 percent who said so in Coresight’s 2021 survey.
“The drop in intent to shop through e-commerce signifies that online grocery shopping has largely stabilized from its pandemic highs, albeit at higher levels than pre-pandemic times,” Coresight wrote in the study.
On the positive side, the survey showed more consumers increasingly adopting online as their preferred buying method.
Customers doing the bulk of their grocery shopping online grew to 28.3 percent (almost all/all, 11.8 percent; most, 16.5 percent) in Coresight’s 2022 survey. That compares to 24.7 percent (almost all/all, 10 percent; most, 14.7 percent) in 2021 and 14 percent (almost all/all, 4.3 percent; most, 9.7 percent) in 2020.
“This indicates that the online channel now captures a meaningful share of full-basket grocery shoppers,” Coresight observed.
A new survey from FMI found half of online food shoppers shop online every two weeks or more. In 2015, only seven percent reported ordering groceries online within the previous 30 days.
Convenience and value, including avoiding in-store impulse purchases, were seen as big draws for online grocery shopping. Sixty-two percent of online-reliant shoppers believe online shopping saves more time than in-person shopping, while 40 percent say online is better than in-person at helping them discover new products.
Still, 43 percent of grocery shoppers in FMI’s survey believe they get better quality products when they shop in-store, as opposed to just 17 percent who believe the same about online shopping. Even those who shop online at least some of the time said that 70 percent of their grocery trips are done in-person.
- Infographic: Online Grocery Shopping — US Consumer Survey – Coresight
- Share of U.S. shoppers buying groceries online stabilizes – Supermarket News
- Hybrid Grocery Shopping Is Transforming the Food Retail Landscape, New Survey Finds – FMI/Business Wire
- FMI Report Takes a Deeper Dive Into the Hybrid Shopper – Winsight Grocery Business
- Has a new, hybrid shopper emerged out of the pandemic? – IBM
- Convenience, More Than COVID Safety, Spurs Continued Digital Grocery Shopping Practices, According to New ACI Worldwide and PYMNTS Study – ACI Worldwide
- New Survey Reveals 54.3 percent of U.S. Consumers Bought Groceries Online in Past Year – Packworld
- The Digital Go-to-Market: Shoppers Now Buying Groceries Online at More Than Four Times the Rate of Purchase in 2017 – PowerReviews
Discussion Questions
DISCUSSION QUESTIONS: Do you see the shift toward online grocery shopping in the U.S. retreating or creeping rather than accelerating ahead over the next few years? Should grocers reprioritize investments to address a shift back to in-store shopping?
Poll
Loading …BrainTrust
Christine Russo
Principal, Retail Creative and Consulting Agency
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Ultimately, I believe online grocery shopping will continue to retreat, but it will remain a permanent fixture in grocery retailing. Notwithstanding extraordinary events like the pandemic that can dramatically change purchase behavior, grocery retailers will need to continue to invest in their online services and be prepared to ramp-up or down depending on conditions.
I think there remain a significant number of people who prefer to pick out their own produce, and who are less than satisfied with the replacements they get via online ordering.
It’s not going away, but I do think growth will stop its rapid acceleration.
It will continue to increase if the experience is frictionless and special and the product is in stock and the produce is fresh. When there are stock-outs or rotten product, then the customer will lose trust and revert back to picking and packing their own. It’s about the experience.
In revenue terms, online remains a small part of the overall grocery market. While the proportion will increase over time, some of the acceleration seen during the pandemic is unraveling. There are a few reasons for this. First, online grocery shopping is not as easy for everyone as it is sometimes made out: large numbers of consumers find it easier to nip to the store which they are now more comfortable doing than during the peak of the pandemic; some, especially older shoppers, also like visiting grocery stores. Second, online can come with delivery costs attached which people are less willing to pay during times of hefty inflation. Third, we are now on the move more so folks can fit physical shopping in between other errands like commuting. All this underlines that some of those online forecasts during the pandemic were mighty silly!
As the pandemic has subsided, we are probably seeing the new normal rate of online grocery shopping. While the pandemic accelerated online grocery shopping, I don’t expect to see a significant bump in more consumers adopting online grocery shopping, unless we have another event that makes online shopping more convenient or safe.
Historically, online grocery had always been way behind the predicted curve, representing about 10 percent to 15 percent of grocery. With the pandemic receding and, as we discussed yesterday, free curbside pickup perhaps disappearing, expect it to stay well below 20 percent.
There’s no question in my mind that online grocery sales will retreat from here. Without a pandemic, it can be a useful tool for no more than a minority of consumers — perhaps 5 percent to 10 percent.
Now that people have returned to in-store shopping, I expect to see some erosion of online shopping. I firmly believe that it’s here to stay, especially curbside pickup. Customers have come to appreciate the convenience of the service. There’s also room for delivery in the mix. I expect to see fees change for consumers using these services, and I expect that will dampen demand. But best-in-class grocers have learned to meet their customers where and how they want to be reached. Demand will remain strong enough that these services will remain a credible part of a unified commerce-focused grocery strategy.
If e-grocery availability and quality selections improve, more consumers will shop for food online. As more shoppers return to grocery stores, long lineups test our patience. Time savings, convenience and care will make online grocery even more appealing.
Grocers may reallocate resources to stores over the short term yet they need to keep investing in robust e-grocery. Availability, smart substitutes, agile pricing, unique assortments and fast delivery are e-grocery priorities.
For the many years I was hostage to the crazy hours of commuting, working and family life, delivery would have been a life saver. That was then. And then the pandemic completely changed the shopping dynamic for everybody — temporarily. People have recalibrated how they think about grocery shopping, slightly. I think grocers have a huge opportunity to drive in-store shopping with how they handle fresh fruit/vegetables and meat. Those are products people like to peruse and choose. Canned soup and packaged pasta don’t need the same level of inspection. For people who consider grocery shopping to be drudgery, online shopping is a great fix. For those who view it as a discovery process, in-store shopping will remain the choice.
You would expect that the online share will fall after the last couple of years but overall it is still significantly higher than pre-2019. There will be shoppers who want to shop in-store because they can choose their own short-life and fresh produce, there are also the shoppers that want convenience and will continue online. This becomes a debate for our own purpose. There will be a mix and shoppers will continue to shop online and in-store, let’s continue to watch the movement but not make it a preoccupation. There are more critical factors in retail right now.
I think online grocery shopping will stabilize with no major shifts either way over the next few years unless we have another pandemic or other anomaly that drives shoppers online.
I think grocers should continue investing in e-commerce to make the experience better by adding more value to the shopper to address their needs (meal ideas), better use of less data to drive more suggestion or prediction engines (helps the first point), also invest in stores to ensure they are enjoyable to shop. I think I’d also tie up with developers, communities and tap into some more creativity to have formats that are integrated into a larger lifestyle areas. Most grocery stores are pretty dull, just warehouses with a few elevated areas. People like to be social; take some risks — create some more interesting concepts that break the mold.
I see online grocery shopping accelerating in the coming years. Online grocery shoppers may pay for shipping, but they’re at a unique advantage when it comes to finding great products. The in-store experience here in SoCal is packed and chaotic. Whereas online shoppers can easily see a retailer’s full inventory and purchase strategically.
As they say, time is money. A lot of young(ish) professionals hustling daily in the city would rather add $30 to their bill than spend 2.5 hours dealing with the grocery shopping ordeal.
As long as shoppers perceive online as providing convenience (which it does) and value (now suspect with inflation and additional last-mile fees), there is no reason to believe that online is going to fade away. The pandemic accelerated the demand for online grocery products. Recall that online grocery shopping used to be drastically below other non-food categories and still is. The pandemic gave customers permission to try online and many have continued to purchase online, albeit with shifts in some food categories. Supermarkets need to continue to offer convenience and value online while making the brick-and-mortar options more attractive as customers return to stores.
Online grocery shopping has passed a temporary peak, but I wouldn’t describe it as a “ceiling.” Expect it to continue to increase at a measured pace.
Many more shoppers discovered in the past two years that online grocery ordering is a useful tactic in their total pantry management strategies. The experiences weren’t totally satisfactory all the time, but they were good enough.
As the Law of Divided Loyalty tells us, all shoppers are split shoppers. They have always purchased from multiple food retailers to live their best lives.
Now we see shoppers also blending their in-store and digital shopping tactics to suit their needs in each moment. Each will find their own equilibrium — balancing cost, convenience, control, complexity and experience.
We’ll certainly continue to see generational differences in these behaviors. Younger, and more time-pressed households will find more value in digital shopping services. Older and less mobile shoppers have strong incentives for home delivery too.
Retailers have no choice but to continue to invest in their in-store experiences. It’s as hotly competitive as ever, and shoppers’ expectations only increase. They need to keep refining their digital experiences too, because the name of the game is to capture the largest share of wallet possible.
I may sound like a broken record, but I’m going to continue to stand on my “convenience platform” and emphasize convenience is more popular, important, and relevant today than before the pandemic. Online grocery shopping is convenient. It’s here to stay. Different retailers will emphasize (or de-emphasize) this service. That’s up to them. Just know that convenience is a differentiator.
Or declining (?): it’s hard to believe this boost wasn’t largely due to the pandemic. Remember when people on RW were suggesting stores be closed and all shopping be online (names withheld to protect the guilty!) and it’s not inconceivable we may actually see some pullback. I also remain wary of surveys that hype numbers based on “some” saying “most people buy online” sounds a lot more impressive than saying “12% of grocery spending is online” (or whatever the actual number is).
All that having been said, the values seem to be higher than I expected them to be. Whether or not they have plateaued, I know not.
Retreating, then creep back to where it was on the timeline in terms of volume and dollars spent. Investments have been focused on concepts like curbside pickup, which constitutes a healthy portion of online grocery. I don’t think grocers ever shifted investments away from in-store shopping. All of retail grocery has driven and continues to drive in-store shopping. Online remains secondary, and is still used as a tool to encourage in-store shopping.
Ironically, Mercatus and Brick Meets Click published results today showing May online sales year over year against the same month in 2021 had increased by 1.7%. I haven’t seen the details in this report, but I believe we will still see slight, small increments in growth going forward, rather than have hit a “ceiling.”
New growth is based on how much more grocers can create value, remove steps, or engage with customers. Example, auto-replenishment now testing at Albertsons (partner Replenium), customers get discounts on frequently bought products for a discount (cans, boxed food, cleaners, HBC), without having to shop for or worry of running out.
It’s not a zero sum game. We did some consumer research on this recently in North America, which is behind the curve on grocery eCommerce historically, and while it was clear almost every generational cohort preferred things like picking their own produce or prepared foods, many were now 1) invested in eCommerce for the “set it and forget it” replenishment items (including some center store staples, but also “ancillary” products like cleaning supplies and pet food), and 2) leaning into grocer digital experiences for discovery and trip planning.
If the composition of share of wallet changes substantially, or the expectation of “hybrid” trips grow (pickup of reserved bulky goods at the end of a “normal” trip), it’ll still change the dynamics of the grocery retail experience.
Online grocery will decline on a dollar basis and for the near term a percentage basis as well. Consumers are shifting back to pre-pandemic shopping behaviors. Inflation is causing shoppers to tighten their budgets and a $7-15 delivery charge now feels even more excessive. Long-term we should see gradual continued adoption of online grocery if the costs of delivery continues to go down. The current math and costs simply don’t work. Only when automated driverless delivery becomes real (late 2020s at best) will we see greater online grocery adoption that takes meaningful share from brick-and-mortar.