The name Piggly Wiggly might not mean much to shoppers today, but anyone who’s visited a grocery store in the past 100 years has experienced its impact. The first Piggly Wiggly opened in 1916 and revolutionized grocery shopping by introducing the self-serve supermarket. Previously, customers handed their shopping lists to a clerk who would then fetch the items. The Piggly Wiggly model reduced lines, cut prices, and quickly became the new normal.
Fast forward to 2020 and another revolution is taking place. COVID-19 has changed the way many people shop, and that includes groceries. Data from Inmar Intelligence shows that nearly eight out of ten consumers have purchased groceries online during the pandemic, a 19% boost from 2019. Mercatus reports that online grocery sales in the U.S. increased from $1.2 billion in August 2019 to $7.2 billion in June 2020. With this surge in supermarket e-commerce, retailers are competing to capture online grocery sales – and the race is heating up.
Grocery Retailers are Adapting to the Rise in E-Commerce
As you might expect, the largest online retailer in the world is charging full speed ahead. During the outbreak of COVID-19, Amazon expanded pick-up options at Whole Foods to more than 150 locations. In September, the retail giant opened Amazon Fresh to the public, its first high-tech grocery store designed to offer a seamless shopping experience with Alexa features, smart shopping carts, and clerk-less checkout aisles. Then, in October, Amazon announced free, one-hour grocery pickup at all Whole Foods locations in the U.S. for Prime members who place orders totaling $35 or more.
Walmart is not taking these advancements in stride. As the largest grocery retailer in the U.S., Walmart had been trailing Amazon in online grocery sales until this year. According to TABS Analytics’ 8th Annual Food and Beverage Consumables Study, Walmart surpassed Amazon in its total share of online grocery transactions with 30% (compared to Amazon’s 27%). Continuing this momentum, the retail giant announced in August that it had partnered with Instacart to offer same-day delivery in sample markets across California and in Oklahoma.
Meanwhile, Target and Kroger are also ramping up efforts. Accounting for about 11% of online grocery sales, Target announced in August it was expanding pickup services nationwide. Kroger is focusing on the shoppable recipe experience by implementing smart food platforms and artificial intelligence technology that converts recipes into shopping lists.
Online Grocery Shopping Will Grow Beyond the Pandemic
By all accounts, the growth in online grocery shopping is not a temporary change caused by a pandemic, but rather, an inevitable one accelerated by it. A new study by Incisiv and Mercatus investigated online grocery shopping behavior and concluded that people will continue to purchase groceries online even after the pandemic ends. The 46-page report, entitled eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopper Behavior, projects that online purchases will account for 21.5% of total grocery sales by 2025 – an estimated $250 billion market. Additional highlights of the study include the following key findings:
COVID has not just increased adoption of online shopping, it has fundamentally changed how consumers shop. With safety concerns being top of mind, slightly more than 50% of respondents have changed the way they shop. Almost 1/3 of shoppers have opted for another destination (mostly to other brick-and-mortar retailers), 40% have reduced their frequency, and 46% have changed their preferred fulfillment method with more than half of respondents preferring curbside pickup over delivery.
Adoption of online grocery shopping has exploded, but shoppers have remained far more loyal to their brick-and-mortar grocers than to any online-only alternatives. While 87% of shoppers are satisfied with their preferred brick-and-mortar retailer and intend to remain loyal, they experiment with different online retail options. Overall online grocery shopping adoption has grown to 43% in 2020 (vs. 24% in 2018), but online shopping at a preferred retailer is constant at 26%.
Shoppers are satisfied with online purchase options but demand more customization and personalization. Only 58% of shoppers are satisfied with the online shopping capabilities offered by their preferred brick-and-mortar retailer. They express high satisfaction with payment and fulfillment options, but would like more functionality added to online promotions and advanced product searches.
CHANNEL KEY TAKEAWAY
Shopping is much more than a transaction between a buyer and a seller. It’s an experience; one that can and should always be improved in a way that benefits both parties. In 1916, a man named Clarence Saunders dreamed up a new experience for grocery shoppers. He provided customers with the power to browse, compare items, and build their “shopping basket” – a brand new term back then, but one that remains a core principle of the shopping experience today.
In 2020, grocery shopping baskets are shifting online. It’s up to retailers to adapt with new features that support changing shopping behaviors, just as supermarkets did decades ago with innovations like prepackaged products, display cases, and sale items. Smart technology paves the way for retailers to revolutionize the grocery shopping experience, and customers can look forward to features that incorporate exciting tools like artificial intelligence and augmented reality. This year has seen a lot of change in how people bring food into their homes, but there’s more to come – much more. It’s quite possible that 2021 will be the most influential year in the history of grocery shopping since the first Piggly Wiggly opened in Memphis all those years ago.
About Channel Key
Channel Key is a full-service channel management marketplace consulting agency that has helped generate $250M in Amazon sales for retail brands around the world. Complete 360-degree services include marketplace strategies, content development, marketing and advertising, catalog management, marketplace and fulfillment setup, ongoing consulting, and much more. To learn about how Channel Key can help increase sales for your business, contact us today for a free consultation.
Ryan Faist is the Corporate Marketing Content Manager for Channel Key. As an accomplished marketing professional, journalist, copywriter, graphic designer and problem-solver with experience on both sides of the media, Ryan is passionate about discovering creative, effective ways to help businesses exceed their marketing and communication goals.