Kroger’s customers love to order groceries online

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Discussion
Source: kroger.com/onlineshopping
Feb 10, 2016
George Anderson

Kroger, by all accounts, has a winner with its ClickList online grocery ordering and in-store pickup system. Many quotes, whether from customers or company executives talking about their customers, use the word “love” to describe their feelings about the service being rolled out in markets across the U.S.

Last year, Kroger announced plans to offer ClickList at up to 1,200 of its stores, roughly 45 percent of its locations. Recently, the retailer said it would expand the service in its Cincinnati home market as well as offering it for the first time in the Richmond, VA area.

The service, which includes a $4.95 fee for regular orders and $7.99 for expedited ones, gives customers a choice of 40,000 SKUs. Orders are placed online and then filled by Kroger associates in pickup locations. Customers arrive at a designated time and store staff places orders directly in their car.

To induce trial of the service, Kroger is offering to fulfill the first three orders for free in the Cincinnati area. Katie Kirwin of Amberly Village, OH has used the service twice so far and plans to continue.

“With five kids, they eat all the time, and it’s always the same stuff — so you just click, click, click. It’s so easy,” she told WLWT. “I love it.”

Is online grocery, particularly with in-store pickup, ready to take off in a big way across the U.S.? What challenges remain to widespread adoption of services such as those offered by Kroger?

Braintrust
"As Walmart, Kroger and others make online grocery more widely available, shopper awareness and adoption is likely to accelerate."
"Going through the store with a shopping cart or basket is not fun in a traditional supermarket. Waiting in queue to checkout is definitely not fun, neither is self-checkout especially for produce or bulk goods. So, why not re-imagine the experience and focus on convenience?"
"It’s a no-brainer. Consumers are digitally pre-shopping lower and lower consideration purchases. Retailers need to offer e-commerce (or at least a great digital shelf) to accommodate that pre-shopping."

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23 Comments on "Kroger’s customers love to order groceries online"

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Keith Anderson
BrainTrust

In appropriate markets, online grocery pick-up has great potential in the U.S. Kroger has been measured in refining its offer and rolling it out, and their approach appears to be paying off.

As Walmart, Kroger and others make online grocery more widely available, shopper awareness and adoption is likely to accelerate.

Adrian Weidmann
BrainTrust

The click-and-collect economy is poised to explode. It makes tremendous sense from the shopper’s point of experience. As with anything that disrupts the status quo it will take discipline to identify and implement all of the required workflows and logistics to support this initiative. If done correctly, I would expect the increased throughput would make this capability very profitable. It will put pressure on the in-store shopping experience. Those shoppers that come into the store should be rewarded for their visit. The foodservice industry is having great success with click-and-collect and the grocery industry could be a tremendous benefactor of the successful implementation of this capability.

Ken Morris
BrainTrust

I believe the time has come for this process in grocery. The early attempts at online grocery were really centered on home delivery before the advent of GPS and intelligent traffic routing. No wonder most of these endeavors failed as they could never work out the most efficient route, wasting gas and time. Today’s technology offers a way to temper transportation costs and make this a service that could truly work.

The buy online pick up in store (BOPIS) for grocery solves the other reason that the early attempts at online grocery failed — delivery times. With BOPIS the onus is back on the customer to complete the process. This will catch on quickly across the country as its time has arrived.

Mohamed Amer
BrainTrust

Online grocery with in-store pickup is in the early phase of offer and adoption similar to the U.S. experience in mid-20th century. Going through the store with a shopping cart or basket is not fun in a traditional supermarket. Waiting in queue to checkout is definitely not fun, neither is self-checkout especially for produce or bulk goods. So, why not re-imagine the experience and focus on convenience? The supermarket does the work, you drive by, the bags are loaded into your car/SUV and off you go. The ideal scenario does not involve the customer ever having to leave their vehicle.

Execution is not easy and existing parking lot layout is not ideal. Yet the future looks bright, very bright, on this front.

J. Peter Deeb
BrainTrust

In-store pickup is the best transition from the tedious task of grocery shopping to the much more complex challenge of order delivery. This will catch on to be the best and most convenient way to shop, particularly for staples. The obstacles to this process are similar to delivery, with perishables, meal solutions, impulse purchases and the costs of picking the orders as stumbling blocks to be worked out. If order size does not keep up with current basket rings, retailers will need to be more creative in marketing to this consumer group.

Richard J. George, Ph.D.
BrainTrust

I believe so. Due to final-mile costs, the cost of collecting is cheaper than delivery. Lead times between ordering and collection are shrinking. Less of a security and availability concern. However, the biggest challenge from online shopping with home delivery is that it takes visits out of the store.

The Kroger online shopping option not only serves as a convenient option for customers, but it also increases spending. It increases the possibility of bringing customers into the store. A Tesco test in the U.K. found that customers who shopped online as well as in-store spent twice as much as in-store shoppers only.

However, I believe the real impact of potential click-and-collect options is on the center of the store. I envision a day when COS is significantly diminished. Many of the COS products will be purchased online from the brick-and-mortar retailer and delivered to the store for direct placement into a consumer’s vehicle. This will then free up consumers to shop enhanced and exciting perishable departments, then proceed to a designated area and have their online purchases placed into their vehicles.

Mark Heckman
BrainTrust

While this approach to e-commerce in the food retailing channel is not new, Kroger appears to be finding a sufficient enough audience for pickup service to become a mainstay in their portfolio of offerings.

In the past, grocers who attempted to provide home delivery and in-store pickup services could never make the numbers work and many exited the program as an unaffordable expense. It was always a matter of logistical cost to the retailer and insufficient demand from the consumer.

Fast forward to 2016, technology and a much more receptive audience are improving the grocer’s ability to cost-effectively pick, store and deliver the groceries to the shopper, whether it be in the parking lot or at their door step. Certainly the cost of such services will continue to limit the expansion of such services, but if retailers can at least break even with these services, I believe they are here to stay and will continue to proliferate.

Bob Amster
BrainTrust

BOPIS adoption is imminent across the grocery industry. Add to this a mobile app from which you can order, through which you are assigned an order number or barcode, drive up to a scanner station, (roll down your window), and get directed to a numbered pick-up space at which your order is waiting for you and you are done! What a way to shop for groceries! Imagine, you place the order while you are still in your office, and you pick it up on your way home …

Of course, the quality and freshness of the produce will have to be top-notch or returns and customer dissatisfaction will ensue; clerks will have to be available in all weather conditions to help you identify your order and load it into your vehicle.

On the plus side, the retail establishment can always reprint the order YOU placed so there are few if any questions about “where is my whatever?”

Roger Saunders
BrainTrust
The path to purchase is multi-dimensional for all merchandising categories. Groceries are no exception to this practice. Kroger and Walmart, as well as other grocery retailers, wholesalers and manufacturers have to get on-board and work with consumers’ evolving comfort with this omnichannel move. Based on the January, 2016 Prosper Monthly Consumer Survey results of over 7,000 adults 18 and older, 6.7 percent of them shopped for groceries via a desktop/laptop over the past 30 days. That compares to 5.7 percent of Adults 18 and older in September, 2014. During that 16 month period of time, Kroger shoppers who used a desktop/laptop for grocery shopping in the past 30 days jump from 5.3 percent (0914) to 5.7 percent (0116), while Walmart shoppers actively rose from 5.3 percent (0914) to 7 percent (0116) using a desktop/laptop device. Identical basis point jumps for occur for these three segments for shopping with a digital device: smartphone/tablet — adults 18 and older, 1.9 percent to 2.9 percent in the past 30 days, Kroger 1 percent to 2.3 percent, and 1.8 percent to 3.1 percent for Walmart shoppers. The consumer is racing ahead. They’ll still go to the store, but digital is now part of their lives… Read more »
Kim Garretson
Guest
Kim Garretson
6 months 13 days ago

This success is not a surprise to me, considering that Kroger hired away from Proctor & Gamble Alex Tosolini to head innovation there. Alex spent years as the global head of e-business at the largest CPG company tracking evolving consumer trends in direct online ordering, so he was the perfect choice to drive an innovation like this.

Gene Detroyer
BrainTrust
Once upon a time, back in my parents’ day (1950s), the weekly trip to the supermarket was an event. The shopping list was made out in the order that one walked through the store. Mom would always come home with a surprise or two. Now my colleagues are describing that shopping experience as “tedious;” “not fun.” Our lives have changed! Of course my mother did not work, now everybody’s mother works. What was once an event has become a necessity. That changes the entire mindset on how to get it done. So, the real question is not “how do we change people’s behavior?” It is, “behavior has changed, how do we offer our customers what they need?” What the customer needs is to never go in the grocery store again. It accomplishes little or nothing for them, at least on their regular purchases. Let’s make their life easy. Order online and pick up at their convenience. On the way home from work, between shuttling kids between activities. In combination with other errands. This is one of those trends that, even when the laggards try it once or twice, there is no going back. For the retailer it is heaven sent,… Read more »
Dan Raftery
BrainTrust

Smart business move for Kroger and the other retailers around the country who are testing and developing similar services. Certainly not suitable for all shoppers, but clearly where society is headed and habits are forming. And habits are pretty important in the grocery world.

Dan Frechtling
BrainTrust

BOPIS without curbside pickup is like fast food without drive-thru. The indulgence of staying in your car is even greater in grocery shopping, where the average trip is 45 minutes (60 minutes or more on weekends).

The economics of in-store pickup have proven to be formidable, but curbside could be the missing piece that attracts repeat shoppers and makes the numbers work.

Investments are a significant hurdle. Variable costs include hiring and training extra staff to pick and pack orders, especially during peak order times. Fixed costs include constructing pick up areas outside and accommodating lines. Opportunity costs include loss of impulse purchases.

It will be interesting to watch what happens in the test markets. I suspect the early movers here will gain share of shopping trips. But as Kroger, Meijer, Walmart, Giant Eagle, Peapod and others expand curbside, the playing field will level off quickly and we’ll see if shopper trial becomes habit and if this mode “sticks” like drive-thru has.

Shep Hyken
BrainTrust

The smart grocery shopper will take advantage of the in-store pickup. It’s all about convenience.

The challenge is adoption. For this to work, the effort the store makes must be in alignment with the number of customers taking advantage of the service. Dedicating labor to just a few customers is expensive. Scaling it to many is more cost efficient. Once the customer sees just how easy it is to use in-store pickup, as the Kroger customers have, they will adopt.

Lee Kent
BrainTrust

This is a service that needs to be offered. I say “needs” with intention because it fulfills a need for the busy shopper who is picking up staples and such.

There will always times said shopper will want to peruse the aisles in order to get inspiration or, like my husband (the shopper in our household) wants to see what is on the managers special table. Oh yes, Kroger has changed that label to something like “yahoo specials.” (you can tell I don’t venture into the store very often.)

The challenge will be in delivering the service while maintaining costs. This will likely involve additional help, unless the picking can be designated to slower hours. So it’s all in the timing and getting those orders right.

And that’s my 2 cents.

Ross Ely
BrainTrust

The technology for online grocery and in-store pickup is maturing just as shopper demand for these services is accelerating. The confluence of these factors should result in significant growth for online grocery in 2016.

Some retailers have been slow to embrace these industry trends and will be late adopters of these technologies. There are numerous operational challenges including integration with the point-of-sale system, efficient models for picking and packing the groceries and algorithms for substituting for unavailable products.

However, leading retailers are making progress in addressing these challenges and all grocers ought to be moving aggressively to meet shopper demand for these services.

Gajendra Ratnavel
BrainTrust

They will have the same challenges as any BOPIS retailer. However this pickup drive-thru is very neat. I think the designated time together with the drive-thru concept will help with the long line ups. At least if you are waiting, you are waiting in your car where you have some entertainment and are sitting down.

Lee Peterson
BrainTrust

Sure it’s ready to go big, you know why? Because the in-store experience, especially middle-store, is downright awful at traditional grocers. Think of the massive time savings as well.

Giant Eagle has a great system going now where they bring it out to your car and ring you up mobile. That, to me, is much better than pickup in-store (I get the ad-sale attempt with in-store, but customers don’t). Besides, if the traditional grocers don’t do this, Amazon will.

Jason Goldberg
BrainTrust

It’s a no-brainer. Consumers are digitally pre-shopping lower and lower consideration purchases. Retailers need to offer e-commerce (or at least a great digital shelf) to accommodate that pre-shopping.

Kroger, ClickList forces them to get closer to their digital shoppers, and start to develop their digital merchandising muscles. Then when you see a meaningful segment of Kroger shoppers want to use the fulfillment features, and it’s a clear win.

50% of all CPG growth over the next 3 years is coming from digital. It’s past time for grocery to jump into the digital pool, and the water is fine!

James Tenser
BrainTrust

Yes, I think click-and-collect is a practice whose time has come for grocery retail. But no, I don’t favor in-store pickup. This is not a traffic-driving tactic, it’s a convenience service.

Far better to create a designated car pickup location adjacent to the building, and even designated drive-up locations strategically located along commuter routes, as Carrefour and Casino pioneered in France a couple of years ago.

It would appear the Kroger correctly reads this opportunity, since ClickList orders are delivered to shopper’s vehicles. I suspect many shoppers will adopt blended behaviors — store visits alternating with C&C pickups. With 1,200 locations, Kroger is on track to confirm this hypothesis and crack the code.

Craig Sundstrom
Guest

Once again, semantics: will online grow? Certainly, and to the extent that the numbers are small now, the percentage increase will inevitably be large. But I don’t think it will ever be more than a small share of total sales: almost the whole of progress in food distribution over the past century (literally; Piggly Wiggly has its centennial this year) has been toward more and more self-service, and while there will always be some who don’t want this and will be willing to pay others to shop for them, I don’t see a wholesale reversion to 1915.

Herb Sorensen
BrainTrust

I didn’t see any report of significant reaction by the general shopper population. The good book says that “He that is going to battle shouldn’t celebrate like he who is returning.” Let’s get some demonstrated success before we cheer anecdotal evidence.

Marc de Speville
Guest
Marc de Speville
6 months 1 day ago
So the online grocery genie is finally getting out of the bottle in the USA — fortunately for customers, unfortunately for retailers. Why? There’s simply no escaping the fact that online adds more cost and complexity than sales. The costs are of course lower for in-store/curbside pickup vs home delivery, but so is the potential for incremental sales. Experience in the UK and France, where online grocery is much more advanced than in the USA and still growing fast, shows that first-mover advantage tends to be quite short-lived as all major players fight to attract/retain higher spending customers. Cannibalisation quickly becomes the norm and pricing collapses, further accelerating the shift to the unprofitable online channel and undermining the profitability of stores. In France, the “Drive”-thru service is offered for free. No wonder penetration jumped from 1% to 5% of the total grocery market in just five years. How long will Kroger be able to continue charging $4.95 for click and collect in the US, when Walmart is busy rolling it out free, and online newcomers like http://vrstudios.com/ are offering home delivery for the same price? Surveys in Europe show that most customers prefer home delivery to pick up at store, when the… Read more »
wpDiscuz
Braintrust
"As Walmart, Kroger and others make online grocery more widely available, shopper awareness and adoption is likely to accelerate."
"Going through the store with a shopping cart or basket is not fun in a traditional supermarket. Waiting in queue to checkout is definitely not fun, neither is self-checkout especially for produce or bulk goods. So, why not re-imagine the experience and focus on convenience?"
"It’s a no-brainer. Consumers are digitally pre-shopping lower and lower consideration purchases. Retailers need to offer e-commerce (or at least a great digital shelf) to accommodate that pre-shopping."

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