First, consider that we’ve been forecasting 15 percent of grocery sales done online for a good 20 years – we just keep on moving out the timeline. So I’m skeptical about the 21.5 percent. Remember that forecasting is hard, especially when it involves the future (to paraphrase Neils Bohr). Given lots of people are going to be omnichannel themselves, it’s probably not good to give primacy to any one shopping mode.

There is no doubt that online grocery will grow. However I am extremely skeptical that penetration will reach 21.5 percent in just five years. First, you cannot look at increased online grocery penetration and shopper numbers which resulted from the pandemic and extrapolate it forward. Not all of the changed habits will stick as the virus abates. Indeed, a lot of habits are already unwinding to some extent. Second, while a lot of shoppers do like online grocery shopping for some things, they find it very hard to do all of their food shopping online. As the research itself points out, that means there is still a preference for physical stores. More advanced online grocery markets, like the U.K., show there are limits to growth because of this. That should not be underestimated when coming up with future projections. And finally, even if the demand were there, there is very little chance that grocery retailers could service such a high level of demand in such a short period of time. The build-out of capacity, the… Read more »

Fluid omnichannel operations are table stakes NOW. Real-time inventory visibility is an essential enabler as has been commented on for a number of years. Without the visibility, inventory will likely spiral as new channels and approaches are added. Add to this the promise of Amazon doing same-day grocery delivery in many markets and it is creating the perfect storm. Grocers must operationalize their stores and their data across the business in order to respond.
COVID-19 has become an accelerator of change. The new models and approaches (like curbside pickup) are harming already super slim margins. Action must be taken from a data and operations perspective.

Actually, I think they are table stakes now. It’s just that different chains are in very different places in implementing all the new processes. I learned a big lesson from my daughter and three-year-old grandson. She can load him in the car and deal with him all through the store, or she can shop from the kitchen table and pick up curbside. The pandemic may have made this necessary, but the time saved from having to shop the whole store with a toddler is important. Time saved — it’s a permanent behavioral change regardless of what happens with the virus.

Data like this highlight the table stakes investment in omnichannel. I am reminded that omnichannel is about customers, not channels. The goal of omnichannel marketing is creating a seamless, convenient, customer focus to shopping. The gold standard target market are those customers who purchase online and pick up in-store.

Research indicates that these combo shoppers spend more than online only and in-store only.
The heuristic I think that drives this behavior is the empty shopping cart when they enter the store. Customers use the fullness of the shopping cart as an official calculator of spending. If they purchased their necessary groceries online which are ready to be placed in the car, the shopping calculator resets. This gives the shopper permission to visit the high margin front of store perimeter and augment the shopping trip with fresh flowers or a recently baked bread or even tonight’s dinner.

They already are. Shoppers still shop multiple stores even within a channel. This has been reduced somewhat by pandemic shopping habits and retailers with good online and pickup services have benefited. To steal some of those shopping trips back, retailers who don’t match up online yet will have to.

I don’t know if online will be over 20 percent in five years. But I will make a prediction.

Projecting what we have seen in terms of the acceleration of technological tools over our lifetime, and the greater speed of technology change in the last few years, I will predict that within 10 years 80 percent or more of grocery sales will be online. In 10 years every cost hurdle, technological hurdle, delivery hurdle, will be eliminated. People will be living completely different lifestyles. Even today, at the Samsung Experience, they have a refrigerator that has technology that will order your groceries for you. If you didn’t have to think about what went in the refrigerator or went in your cabinets, why would you even think about going to a grocery store?

Slim margins limit grocers’ tech adoption, so they’ll need a medium- to long-term horizon for omnichannel solutions to become commonplace. Inventory visibility is essential, as consumers’ top complaint in March and April was out-of-stock merchandise, both in stores and online.

Research proves omnichannel shoppers spend more, making them more engaged and valuable than single-channel shoppers. According to Harvard Business Review, omnichannel shoppers spend more per visit, shop more frequently, and are more loyal and likely to recommend a retailer.

Grocers that invest in adapting to consumers’ multi-channel needs can boost loyalty and lifetime value per customer.

Online grocery forecasts have always been tricky. I myself dramatically over-forecasted online grocery back in 2000 when Webvan and others had raised tons of money and were building highly automated grocery fulfillment centers. From my own source of credit card transactional data (90 million credit/debit cards) we can see the online percent of groceries growing from 2 percent to 3 percent pre-pandemic, then up to 5 percent through June. 20+ percent of the market in five years is, in my mind, possible, but not the most likely scenario. I suspect that many grocers (not Walmart and Kroger, mind you) will happily shuffle online priorities to the back burner as soon as COVID-19 passes in order to get back to a focus on what they see as their core brick and mortar business. This will be a mistake that will yield share to Amazon and other digital aggressors, but will also inhibit the overall growth of the online grocery market.

Product accessibility and shopping convenience are extremely important for a positive customer experience. Given that seamless omnichannel operations and real-time inventory visibility are already table stakes in this highly competitive market.

How long? We need this now, and some grocers are already there. The pandemic moved up the timeline of the existing technology being adopted by retailers. Those that are sitting on the sidelines are going to end up playing catch-up. With more than 20 percent of business coming from online, it’s a viable channel to exploit. And I predict that number is low.

The COVID-19 pandemic has served as a great acceleration for the rise of e-commerce sales to unprecedented levels. However, as most of the other BrainTrust members have shared, I too am quite skeptical that digital grocery sales will make up 21.5 percent of sales in five years’ time.

More realistically, once things stabilize somewhat with the pandemic, we should expect that consumers will return to the grocery store while others who have shifted to online ordering only will continue to do so. In a margin crunched business, a seamless omnichannel operation requires the infrastructure, technology, human capital, process reengineering, and ongoing training to make it successful. So while the percent of online-only business may not be 21.5 percent, it will fall somewhere in the mid- to late-teens.

Grocers are challenged to pivot their operations to meet the relentlessly changing consumer behaviors. The clear winners in the digital touchless commerce race will be those that deliver an excellent and consistent customer experience the fastest, and at a lower cost to serve.

A seamless online/offline experience with the option for shoppers to do either on any given day is the Holy Grail. But real-time inventory visibility is the number one barrier to online shopping growth. Until grocers can provide accurate in-stock information, shoppers will be wary of going all-in.

I think it’s “on” right now. COVID-19 forced the inevitable; multi-fulfillment options not only for grocery, but all of retail. And the technology is there, that’s not the issue. The issue is grocers (and many retailers) are struggling with huge footprints in both number and size as a hangover from the old “bigger is better” mode of the 1980s. Converting all those aging fleets will be expensive and almost UN-doable. So therein lies the conundrum: do and maybe go bankrupt, or don’t do and definitely go bankrupt.

Think of the advantage newer players like Amazon, Lidl and Aldi have: they can design stores from scratch right now that fit the multi-fulfillment operational model of the next generation. That is, until the drones step in – yikes.

It is not surprising that more people were shopping grocery online during the pandemic and also not surprising that many of them may continue to do so. The percentage will continue to increase. However what was very telling from this research is the very low percentage that moved to pure play online retailers. They still want to be able to see and stay loyal to the grocery store they are used to. Also what is so important is that online grocery sort out the really important issues of delivery slots and, critically, substitutions. They need to ensure that short life and fresh product is managed very carefully providing high quality and fresh produce or they will lose out. Once again it comes down to getting the supply chain right. The growth in BOPIS/click and collect and curbside pickup will be a big factor as this adds to the convenience of grocery shopping. It is no surprise though that Amazon has started opening their new Fresh stores to provide that element of grocery shopping that consumers… Read more »

Online/”remote” grocery shopping has been around almost as long as online shopping, in general. I believe Peapod started in Chicago around 1989, and I ran one of the first stores to fulfill it. It has had major fits and starts over the decades, however I think consumers still relish the touch and smell of physical food shopping and the online growth will be a drop in the overall bucket for years to come.