The pandemic has been a watershed moment that will forever change the way groceries are bought and sold. As more consumers purchase groceries online, companies like Instacart and Shipt have seen massive growth in demand—in fact, Instacart recently turned its first profit.
While consumers have been placing more online orders than ever before, the need for physical stores still exists. As of June 8, our COVID-19 Data Dashboard shows that some cities, including Tampa, Denver, New Orleans and San Francisco, have reached or are approaching pre-pandemic grocery spending levels. This might suggest that consumer behavior is shifting, and their needs are realigning, which helps us better understand what the “new normal” for grocery shopping will look like.
The unexpected ecommerce boost
Grocery ecommerce has been picking up steam over the last several years, thanks in part to Amazon’s acquisition of Whole Foods and its Amazon Fresh service. Researchers expected sales ecommerce food and beverage sales to increase by 19% in 2020 alone, and that prediction emerged long before the pandemic completely changed the retail landscape.
As the stay-at-home orders set in, March was particularly eventful, with approximately 39.5 million consumers (31% of U.S. households) using an online grocery delivery or pick-up service. Comparatively, that’s more than double the 13% (16.1 million consumers) that used digital grocery solutions in August 2019, according to consulting firm Brick Meets Click.
Online grocery continued its upward trend in April, with 40 million consumers placing orders. This increased usage (and subsequent sales lift) highlighted consistently in-demand product categories, most of which center on health and personal care, household goods, and shelf-stable pantry staples. Today, our analytics show purchases have moved toward summer essentials, including insecticide, ice, premixed cocktails, fruit juice, graham crackers, prepared salads, ice cream sundaes, beef, sports drinks and baked beans. It’s worth noting that while ice has remained a popular item for several weeks, the demand for sunscreen—the leading product category by sales lift during the week of June 1—seems to have tapered off.
Mixed-mode shopping is the future
Social distancing forced consumers to rethink their daily lives – from where they work and eat to how they acquire everyday essentials, including groceries. It has led to a significant transition in both in-person shopping and online ordering. And while these changes may not be permanent, the benefits of grocery delivery are not likely to be forgotten.
As states open up and store traffic reverts to pre-pandemic levels, consumers may gradually return to retail while still using online options to fulfill the need for specific products. For example, consumers may prefer to visit a physical grocery store to pick out individual pieces or packages of meat, fish and vegetables. Still, they may find that ordering toiletries online is more efficient for them. The key to future success is to offer a variety of options that satisfy consumers wherever they are and whenever they need something.
Anticipating these changes, many retailers have already invested in developing a superior in-store experience. They’ve brightened their stores, widened their aisles and improved signage to make shopping an enjoyable outlet. Many have developed apps to help consumers navigate to their desired items, while some cater to shopper needs with staff who eagerly help in any way they can. These traits are going a long way toward the evolution of what it means to shop in person. At the same time, grocery delivery offers a level of simplicity and convenience that many consumers took advantage of during the pandemic and will continue to crave as states open up.
That’s why grocery stores must offer a mixed-mode approach to shopping, even though consumers may still lean in favor of in-store grocery purchases. Online market share has hovered in the low single digits for several years, but it is now likely to remain higher than it has ever been.
The future of grocery shopping is both in-person and online
Recent events shifted how and when consumers shopped for their most essential items, strengthening the need for grocery delivery, which has become more than a nice-to-have offering that retailers should consider. It is now a core component for retailers to serve shoppers in multiple channels. Most consumers who have ordered online during the pandemic say they will do so again in the future. The stores that “win” will be the ones that expertly combine in-store and digital experiences in a way that is equally convenient and effective. By staying on the front end of this evolution in commerce, grocery stores can continue to satisfy their customers, regardless of their shopping preferences.
Quotient Technology Inc. is a digital promotions, media and analytics company.Favorite