Will more Americans make e-grocery delivery a weekly habit?

Discussion
Photo: Getty Images/marekuliasz
Jul 20, 2022

Online grocery shopping is a weekly habit of a segment of the population, according to a new study.

One in six consumers (15.8 percent) said they purchase groceries online and have them delivered to their home weekly, according to PYMNTS’ “ConnectedEconomy Monthly Report”. While this is fewer than the near quarter of customers (24.6 percent) that purchase non-grocery products from websites like Amazon.com, Etsy or eBay every week, it nevertheless indicates that a significant number of shoppers have folded e-grocery into their routine for more than just occasional stock-up purchases. The percentage of shoppers using e-grocery monthly or less frequently was 16.8 percent. The numbers for weekly use of curbside pickup stood at 15.6 percent.

Online grocery shopping experienced an unprecedented wave of trial and adoption in early-2020 when the implementation of social distancing guidelines throughout the U.S. drastically limited the amount of in-store shopping people could do, and fears over potentially contracting COVID-19 kept many customers at home. The question of what e-grocery will look like in the long term has become a bit of a moving target, as record inflation and new variants of the novel coronavirus continue to rattle the economy and impact consumer habits.

One certainty, however, is that e-grocery is a habit for many more than it was pre-pandemic. A Coresight survey last month found that 54.3 percent of customers had purchased groceries online at least once within the previous 12 months. This number is far higher than the 36.9 percent for 2019.

A recent “Bricks Meet Clicks/Mercatus Shopping Survey” reported in The Produce News found online grocery spending up six percent year-over-year in June, rising to $7.2 billion. Spending for the entirety of Q2 was up one percent year-over-year. Delivery in particular was up six percent over 2021, but down for Q2.

The $7.2 billion represents a drop from the $8.7 billion in total e-grocery spend found in the Mercatus Shopping Survey covering the numbers for March, reported by MarketWatch. When that report was released, there was speculation that inflation was driving customers back into stores because of the added cost of e-grocery.

DISCUSSION QUESTIONS: What do the weekly use statistics for delivery and pickup mean for grocery operations? What are the best-in-class strategies and tactics for dealing with e-grocery demand?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"In addition to the operational focus, investment is needed in reliability to ensure things like substitutions are minimized to improve the customer experience."
"I bet grocery footprints will start to shrink if online continues to rise."
"It will come under greater pressure as inflation bites and people review paying distribution charges."

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21 Comments on "Will more Americans make e-grocery delivery a weekly habit?"


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Neil Saunders
BrainTrust

Online grocery will continue to grow. Although it is worth saying that it is dwarfed by sales made in stores and customer visits to stores – that’s important as there is often way too much hyperbole surrounding online that leads some to think it’s the be all and end all. That noted, with low margins in grocery allied with the costs of online fulfillment, the priority is efficiency and productivity to produce profitability. Regular, habitual purchases are helpful here as they make planning somewhat easier. In addition to the operational focus, investment is needed in reliability to ensure things like substitutions are minimized to improve the customer experience.

Georganne Bender
BrainTrust

I am not an online grocery shopper because I know I will miss too many things online that I discover on the sales floor. Plus, I don’t trust store shoppers to choose the same meats and produce that I would choose. That being said, I use Instacart weekly to send groceries to an elderly relative who lives 800 miles away. In this instance, the ability to order online has been a godsend.

Some of us are too busy to shop or are in situations like mine, others just hate grocery shopping. Whatever the reason, I believe grocery delivery and pickup will continue to grow.

Jenn McMillen
BrainTrust

I bet grocery footprints will start to shrink if online continues to rise. Just as restaurants have turned to ghost kitchens for efficiency, grocery may try its own version to keep picker carts out of the aisles.

Gary Sankary
BrainTrust

I often see comments that consumers want to return to shopping in stores. For the majority, that may be the case. For a significant number (of us), retailers enhancing curbside and home delivery and making it far more viable has created an opportunity for us to shop and receive products without having to go in a store. 15 percent of consumers is a significant number. Significant enough that grocers should be paying attention. Key success metrics: easy-to-shop experiences online, or on a mobile device, fast order turn-around, and making it easy for customers to receive the product.

Jeff Weidauer
BrainTrust

E-grocery was growing before the pandemic, but it got a boost that mostly stuck. Most of those opting out now are doing so because of cost, but e-grocery will continue the upward trend. For operators, the greatest challenges remain: connecting online and offline experiences, and managing the high cost of delivery.

Melissa Minkow
BrainTrust

Online grocery numbers had nowhere to go but up, so I’m not surprised to see the lift. However I still don’t think for U.S. consumers it will ever be a category where we prefer to shop online over in-store. This is one space where the physical store simply cannot be replaced by an online experience, no matter how good it is.

Dick Seesel
BrainTrust

One-sixth of consumers shopping weekly for home-delivered groceries is a significant number. The number suggests that the convenience factor outweighs the safety factor in our “new normal” world. (I hesitate to call it post-COVID.) Food retailers need to stay nimble as they deal with all sorts of “last mile” strategies.

Gene Detroyer
BrainTrust

Online will continue to grow. Does that mean there will be no more use for brick-and-mortar grocery? Of course not. Does that mean grocers need to look seriously at these two animals? Yes.

Unlike omnichannel for most types of retailers, for grocery retailers must start thinking about how to separate the operations of in-store and online. Operationally they require different implementation. The answer is not more pickers in the aisles.

To efficiently service the online customer and eliminate the Rube Goldberg-esque process that most grocery retailers use, the retailer must either set up dark stores or mini distribution centers or separate the footprint of online from that of in-store shopping within the store.

Matthew Pavich
BrainTrust
Online grocery should continue to grow – it’s simply too convenient for people who remember how much time was spent every week shopping for food. Also, if my family is any indicator – it actually saves money because you’re less likely to buy impulse items when purchasing online. Although this does present numerous challenges to retailers, it also gives them a lot of opportunities and a better set of more accurate shopper data than previously. This data can inform the best-in-class strategies that are needed to thrive in this new environment. One example of this is the ability to analytically identify better product substitutes (to prevent some of the head scratching ones that happen today). Promotions are also vastly different online than in-store and it’s safe to say that traditional promotions (i.e. endcap placement) will need to be reconsidered to account for how people shop online. Tomorrow’s winners are using the best promotional analytics and AI platforms to address this and further adjust as trends evolve. The list of things to consider goes on (operations,… Read more »
Patricia Vekich Waldron
Staff

Food (and wine) are my passions, including shopping for interesting items and inspiration, and even I’m experiencing some home-cooking fatigue. Weekly specials and meal kits have been a pleasant, tasty and energizing surprise! If grocers can provide meal solutions, innovative offers and great communication (delivery status and product availability) at a fair cost consumers will opt to be served.

Natalie Walkley
BrainTrust

Online grocery will continue to grow in popularity, especially as younger generations gain more spending power. I personally prefer online grocery shopping and curbside, because I get a tailored list of all my recurring purchases which make it even faster. But ultimately, it is a convenience and will have a premium price tag (~10 percent more per item in my experience), so that may filter out price-sensitive shoppers.

Andrew Blatherwick
BrainTrust

It is true that e-grocery has established and maintained a higher level of use than pre-pandemic, but it is still significantly lower than for other sectors. It will come under greater pressure as inflation bites and people review paying distribution charges. The e-grocers also need to up their game if they are going to get to significantly higher percentages as poor availability and high level of substitutes, some of which are unacceptable, need to be resolved. The question of the environment must also come into play at some point, the costs of burning fuel both economically and environmentally may become unacceptable.

Ken Morris
BrainTrust

It’s clearly decision time for grocery chains and e-delivery. MFCs and CFCs are the only way to compete with the Kroger/Ocado and the Publix/Instacart/Fabric etc. alliances. These robotic pick-pack-and-ship solutions need to be part of everyone’s strategy before it’s too late and the giant players squeeze everyone else out. 

I’ve said it before: The way to win customers’ hearts with delivery is filling orders accurately, communicating clearly regarding substitutions, and offering shorter and shorter windows for arrival times. To do this, retailers absolutely need to have real-time stock visibility.

Ananda Chakravarty
BrainTrust

Slow and steady growth is what we’re seeing right now. The question is, where does it reach a saturation peak and does the rate of adoption slow down? I would speculate that at some point it will – primarily due to the proximity and ease of visiting grocers nearby and the fragmented nature of buying groceries. Delivery is still a smaller part of the business and grocers continue to encourage curbside and in-store visits. costs are exorbitant for a large percentage of the population who won’t or can’t afford the additional delivery costs when a grocer is less than a mile away. There will be socioeconomic disparity in adoption.

Warren Thayer
BrainTrust

When I was a kid, my dad and I delivered milk in glass bottles door-to-door, from our family farm. Regular customers “subscribed” for delivery of specific items, once or twice a week. We expanded our offerings beyond milk to eggs of different grades and sizes, light and heavy cream, chocolate milk, butter and bread. It required getting up at 4 a.m. to be on the road very early, to beat any traffic (not much in the ’50s and ’60s) and to have it on customers’ doorsteps before they went to work. Customers left us notes of changes to orders or (imagine!) called my mother to provide updates. We worked very hard to keep our customers happy and buying more, and brainstormed ideas to grow regular sales. I think supers and Instacart types might do well to focus more attention on some of these methods, particularly automatic subscriptions for regular delivery of often-purchased items.

Liz Crawford
BrainTrust

It’s good news in many respects to have regular replenishment shoppers on delivery. However, this also means that grocers need to be mindful of driving digital impulse buys. There isn’t any captive audience waiting in the check-out line … so sales of impulse items like gum, candies, magazines, etc. may be lost.

John Karolefski
BrainTrust

There are studies and then there are other studies. One recent one finds that online grocery purchases and BOPIS have plateaued, and that buying in a physical store will be the top option for food shoppers. I believe it. Folks want to squeeze the melons, select the cuts of meat, and browse the store for new products and bargains. The challenge for grocers is to make food shopping more convenient and enjoyable. Anyone expecting or predicting a digital boom in grocery shopping will be disappointed.

Christina Cooley
Guest

e-Grocery adoption will continue to rise. Those who have already started ordering groceries online will continue to do so. As more grocery stores roll out the offering and have services and subscription programs, consumer awareness, consideration, and usage will grow.

There are many reasons why consumers are attracted to ordering groceries online. During the pandemic, it was a safety benefit, but in addition, it is a huge time saver, very convenient for meal planning, and likely attracts a customer base that might not have shopped at that particular grocery store otherwise.

J.D. Power conducted a survey on this topic in early 2021 and at that time, among those who had used curb-side pickup or delivery services, 51% had done so for groceries, while 83% were still/also shopping for groceries in-store. People are likely to fall into a blended mix of wanting a grocery store they can run into to grab what they need while having the convenient option to order online and have it delivered.

Brad Halverson
Guest

A significant number of grocers and researchers I speak with believe the 15% e-grocery adoption figure will plateau, and if anything, growth will be limited to a few % points going forward — as we see the experience offered now.

Any future meaningful growth will come by expanding on things like store driven replenishment platforms, building more effective customer engagement platforms, and changes to the supply chain relationships so customers enjoy a greater selection of products delivered, well beyond what’s offered between the four walls of a store.

Tara Kirkpatrick
BrainTrust

Absolutely. Mobile activity on the apps of the top US grocers is at a record high right now – primarily because shoppers are downloading to get digital coupons and loyalty discounts – but expect to see online ordering grow along with it. As more shoppers end up interacting with the grocer online/mobile to begin with, it creates a tipping point for more e-activity. To embrace demand and make it a competitive asset to your business, store leadership should invest in its tech stack, from order management system upgrades to mobile service provider support.

John Hennessy
BrainTrust

Customers seldom move away from convenience. Think about the last time you walked into a bank. You don’t have to. You don’t. Grocery delivery is bound to follow a similar pattern. Maybe not for every item and category, but definitely to remove the time and tedium of replenishing packaged goods. Add retailer membership programs to the mix and you are sure to increase home delivery. Prime has trained shoppers to click and get. The challenge is being the grocer who does it best. A 90% fulfillment rate and substitutions against a backdrop of near perfect ecommerce order execution in non-grocery channels will not be an acceptable service level. If done right, you can cut store visits and time in-store in half or more and sell more to the new, bifurcated shopper.

wpDiscuz
Braintrust
"In addition to the operational focus, investment is needed in reliability to ensure things like substitutions are minimized to improve the customer experience."
"I bet grocery footprints will start to shrink if online continues to rise."
"It will come under greater pressure as inflation bites and people review paying distribution charges."

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