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.

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.

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.

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.

All good observations. We included multiple inputs in developing the algorithm to come up with this projection including overall grocery sales (historic) and projected growth, historic share and growth of online grocery, incremental sales of online grocery and growth post-pandemic, consumer preferences by age and demographic bands and overall digital maturity projections of grocers. The industry has shown that they can quickly adapt to consumer needs (quicker than we would have thought) so the operating models necessary to accommodate this kind of growth we believe are possible.

Omnichannel capabilities are already table stakes — almost every grocer (and mass merchant selling grocery), c-store, and specialty retailer is moving towards omni in some capacity or another. Some exceptions for sure, but rare. For market share, omnichannel isn’t the main driver however, it’s just one of the pieces. The trend is clear, and only the timing will differ based on localized circumstances.

The second question is more meaningful, and multiple studies as well as retailer financials clearly show that multichannel purchasers are more profitable, buy more product, and frequent a store more with higher long term value. The causality of this is unclear (it may be that the brand is driving the higher value) but grocers should still pay more attention to servicing these customers or enabling customers to become comfortable with all avenues of engagement.

Other people on this discussion are “skeptical.” I call this a load of hooey. It’s a vendor enabling grocery eCommerce saying how big the market will be, and it contradicts what all the independent analysts are saying and what we can see with our own eyes. It’s not happening at this rate. We’ve seen eCommerce share peak in May and already decline. We will see a couple extra point move this year, but we are far from 21.5%. Happy to take a bet from the Mercatus CEO or anyone else. This isn’t even close.

In the years to come, every grocer and retailer will need a digital presence. But delivering a functional omnichannel experience is a key part of any successful digital strategy. It doesn’t matter how loyal a customer is to your brand; if your digital offerings are clunky, siloed, poorly optimized or unintuitive, you will lose their digital business.

By 2022, mobile commerce is predicted to grow by 68%, making a mobile app solution one of the best ways to build an omnichannel digital experience for your customers. Delivering a performant app solution is a win-win: customers will love it for the convenience and simplicity, and retailers and grocers will benefit from securing customer brand loyalty.

But businesses should be wary about building an app solely because it is trendy. A good app solves a real need in your consumer base. A bad app is worse than no app at all. In the case of grocers, it’s crucial that any digital app offering provides real-time inventory visibility and streamlined shopping experiences customers want.