eCommerce

What The Grocery Giants Are Doing To Respond To The Consumers’ Shift Online

eCommerce had a hard time penetrating the grocery aisle prior to the pandemic, as consumers preferred things like picking out their own produce.

But mounting concerns about health and safety amid the pandemic have motivated a consistently rising share of shoppers to try ordering their groceries online for delivery.

Whereas only 3.9 percent of consumers that PYMNTS surveyed had switched to grocery shopping online as of early March, 14.8 percent had reported making the switch by April’s end, according to PYMNTS’s Navigating The COVID-19 Pandemic: The Post-Pandemic Reset. And our most recent data set shows certain segments of consumers are edging toward making online grocery purchases a permanent part of their shopping habits.

For example, our survey found that 31.1 percent of millennials have gone online to manage their retail lives during lockdown and plan to at least partially continue doing so in the future. The same can be said of 30.3 percent of Generation X, and 30 percent of bridge millennials who have leapt across the digital divide and plan to stay there.

Holding onto digital channels also seems to be the preference of more affluent consumers. We found that 38.1 percent of all consumers who plan to continue using digital channels as much as they do now even after the pandemic earn more than $100,000 annually.

Perhaps it’s not surprising that a rash of reports arose recently of consumers waiting days or even weeks to snag online grocery delivery and pickup slots. After all, demand boomed in the era of social distancing.

In fact, major grocery players such as Amazon, Walmart, Target and Ahold Delhaize all used their recent first-quarter earnings calls to highlight expanded digital grocery capabilities. Given the massive push of consumers toward digital — and the highly desirable demographic segment that intends to stay there — it’s unsurprising how hard the biggest names in the grocery game are pushing to advance their digital options.

For example, Amazon, the recipient of sharp consumer criticism for long wait lists for digital grocery delivery, focused hard on that expansion of capacity.

“We increased grocery delivery capacity by more than 60 percent and expanded in-store pickup at Whole Foods stores from 80 stores to more than 150 stores,” Amazon Chief Financial Official Brian Olsavsky noted during the company’s recent earnings call with analysts and investors.

Walmart also had a lot to say about its expanded efforts in grocery when CEO Doug McMillion spoke to investors about earnings on Tuesday (May 20).

“Before this crisis, we were already seeing robust adoption of online pickup and delivery,” he said. “As this crisis created the need for social distancing and required people to stay at home, customers embraced the pickup and delivery experience even more. My feeling is that once this crisis is more under control, people will have seen the benefits of that service and will likely continue to use it. It will become part of the ‘new normal.’”

He noted that Walmart had expanded slot capacity to meet the demand swell and increased the number of general merchandise items available for purchase through Walmart’s online order/curbside pickup service.

US President and  CEO John Furner also said had seen strong and consistent adoption of its Delivery Unlimited subscription grocery delivery program. He reported that the program saw “really good growth in the number of people who are using the service all across the quarter, and [we] expect more and more consumers around the country are going to be looking for delivery options. I think … we’re fortunate to be positioned at Walmart in a way where we can deliver from the store. We can have pickup orders ready.”

When Target released its earnings some 24 hours later, CEO Brian Cornell used much of his time speaking to analysts to tout Target’s own grocery offerings. He boasted about the chain’s “unique digital strategy” and its rich array of fulfillment options, including “our rapidly growing same-day services.” Those include in-store pickup, curbside service and Shipt, the delivery platform that Target purchased in 2017.

“In support of our digital strategy, we placed our stores at the center of fulfillment, which gives us both speed and efficiency,” Cornell said. “This structure also allows our teams to pivot seamlessly when our guests’ channel preferences change.”

And it wasn’t just the big-box retailers with massive general merchandise businesses that saw digital explosion during the first quarter. European grocery conglomerate Ahold Delhaize — parent firm of grocery chains Food Lion, Giant, Hannaford and Stop & Shop — reported U.S. online sales increased 42 percent during the first quarter.

Ahold Delhaize plans to accelerate its eCommerce investments, including faster build-outs of click-and-collect points and home delivery fulfillment centers. CEO Frans Muller noted the goal going forward will be keeping the firm’s rapidly expanded digital audience during a recovery period that looks like it will both be turbulent and laden with unknowns.

“While it is still too early to know which paradigm shifts will emerge from the COVID-19 crisis, we continue to prioritize investments in accelerating our digital and omnichannel capabilities, as well as improving our store fleet, in order to grow our share of wallet,” the CEO said in a statement.

A Permanent Shift Has Likely Already Begun

As “essential” businesses, grocery stores have never closed down during the various state governments’ enforced social distancing rules, which means their road to recovery won’t be comprised of many reopenings.

But consumers began to voluntarily shift to digital commerce for their groceries anyway. What they’ll do as more brick-and-mortar retail reopens remains unknown.

It’s notable how many people told PYMNTS their plans include staying in and keeping with their newly established digital retail routines for the next seven or so months. That means the grocery business has likely already started in what will be a protracted process — perfecting the digital grocery run for the average shopper.

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