The recently completed merger of Amazon and Whole Foods Market has dramatically altered the future of online grocery if only because it widely expands the potential playing field for two already unique and formidable food retailers. The Amazon-Whole Foods union is the latest addition to an already teeming online grocery sphere inhabited by the likes of Instacart, Uber, Peapod, FreshDirect, Wal-Mart, Kroger, Blue Apron, Graze and scores of others. If anything, the merger points to the breadth of possibilities ahead for consumers as they adopt digital grocery shopping within their already crowded portfolio of food retail choices.
While shopping online for groceries is on the uptick, The Hartman Group’s Food Shopping in America 2017 report finds that it has yet to detract from the number of in-person trips to traditional brick-and-mortar food retailers. In the past three years, the number of consumers ordering groceries online has increased six points (29% of shoppers say they ordered online in the past three months in 2017 compared to 23% in 2014 and 18 percent in 2012).
Our research suggests that online shopping is an additional grocery channel rather than a replacement to current ones. In fact, online grocery buyers actually shopped in-person at more grocery retailers than other shoppers. One hypothesis for this is that online shoppers may simply be more engaged grocery shoppers overall – and are willing to try new stores and channels and are on the hunt for interesting items and deals.
Another reason for this behavior likely relates to the overall decline in pantry stocking behavior (fewer big trips) that we have been documenting for years and the ongoing rise of small trips to a broad range of stores.
Although online grocery shoppers are a minority among overall buyers, there are clearly demographic differences pointing to more growth in online grocery in the future:
- Age and having kids in the house seem to drive online grocery shopping. No matter their age, parents with kids in the house over-index for online grocery shopping.
- Millennials are far more likely than Gen X to shop online for groceries, while boomers lag far behind younger consumers.
- Men and women are equally likely to shop for groceries online, but men tend to spend a higher share of their grocery budget online (an average of 8% for men vs. 6% for women).
Convenience and new options are both current enablers to online grocery shopping, while we find that the biggest barrier to online grocery shopping is simply enjoying shopping in-person in brick and mortar food retailers. This emotional factor is the biggest barrier to ordering groceries online and one online grocery services may find hard to surmount.
When asked why they hadn’t shopped online for groceries, almost half (48%) of shoppers who have not shopped online for groceries told us that they enjoy “shopping in-person more.” Another 35% said they don’t like someone else picking out their products, followed by 33% who don’t want to buy fresh produce, meat or seafood online. These three barriers are significantly higher for baby boomers than for millennials and Gen X.
The future of online grocery shopping
Online grocery has grown significantly in the past few years. Its key demographics (younger consumers and parents) make it poised for further growth. Current shoppers using online services are generally much more pleased with the overall experience when compared to non-online shoppers. Importantly, online has the potential to deliver where brick and mortar shopping really suffers. Specifically, when shoppers have less control over their circumstances.
Online grocery’s main benefit is a key need: convenience. Its biggest barrier is emotional, in that many people actually enjoy grocery shopping in-person. This fast-moving and changing channel has the potential to make huge waves in the overall grocery shopping landscape, especially by stealing trips that are necessary but not enjoyable.
Brick and mortar retailers need to be aware of online’s potential to disrupt the entire shopping landscape and should be building and/or improving their online services. It will be critical to watch the outcomes of recent mergers between online and brick-and-mortar behemoths. To keep shoppers in-store, focus energies on elements of shopping that are unique to the in-store experience – the ability to tangibly explore products in an inspiring atmosphere. As online shoppers increasingly avoid less enjoyable trips, these in-store elements are the ones they will likely favor when they do want to shop in-person.
As CEO of The Hartman Group, Laurie drives the vision, strategy, operations and results-oriented culture for the company's associates as The Hartman Group furthers its offerings of tactical thinking, consumer and market intelligence, cultural competency and innovative intellectual capital to a global marketplace.
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