Retail

Grocery Tracker: Food Markets’ Lag In Online Presence

Grocery retailer Winn-Dixie opened a second location of its next-gen, upscale store concept in Tampa, Florida, in the beginning of November. The remodeled store focuses on organic, local and prepared products. Additionally, a store-in-store called “Naturally Better” includes additional natural products and a café (grocerants to the rescue, see?). Forty-eight additional locations are in the works across the southeastern U.S.

In other organic grocery news, former Sprouts Farmers Market CEO and current Chairman Doug Sanders is reportedly stepping down from his board position effective Feb. 20 of next year. Sanders will be leaving to become CEO of an unnamed technology company.

Elsewhere, a new tax is set to be levied on sugary beverages sold in restaurants and supermarkets in five more U.S. cities. In San Francisco, Oakland and Albany, California, consumers voted to see a one-cent-per-ounce tax on all sugary beverages, joining Berkeley, California, which instated a similar tax two years ago.

Chicago residents will also see a one-cent-per-ounce tax. Customers in Boulder, Colorado can expect a two-cent-per-ounce tax, which is expected to double the price of a two-liter bottle of soda. The funds collected will go to cities’ public health and wellness programs.

Our final grocery topic this week: As 2016 draws near to its close, it has become increasingly clear that the traditional grocery industry lags behind considerably in online sales compared to other retail sectors.

Overall, online retail in the U.S. has seen uninterrupted growth since 2011. In 2015, grocery purchases accounted for less than 2 percent of the $341 billion spent online. In the third quarter of 2016 alone, American consumers spent over $101 billion on eCommerce purchases, 4 percent more than in 2015. Eighty-six percent of grocery shoppers still solely shop at brick-and-mortar locations.

In truth, the number and diversity of products offered even in your typical grocery store don’t translate well to an online marketplace. Your average grocery store held about 47,000 different products in 2014. Flash forward to 2016, and the numbers haven’t changed much.

Compare that to an average of just under 9,000 products in 1974, and the problem becomes clear. While consumers do like an assortment of retail options in their online or physical marketplaces, there comes a point when variety overwhelms rather than entices. Nearly 40 percent of consumers will abandon a retailer’s website because of an “overwhelming choice of options.” (Think ‘too many things on the diner menu’ anxiety and multiply it by a few hundred.)

Transferring the volume of items the average grocery store carries into the eCommerce space is a staggering feat for grocers and risks overloading consumers with online options. Combine this with worries over maintaining consistent pricing, product quality and adequate delivery infrastructure, the task of moving groceries online can feel insurmountable for merchants.

But it’s not impossible. Online grocery sales are expected to more than double in the U.S. by 2020 as platforms improve and more businesses make the online leap. If past trends are any prediction of future behavior: Where merchants move online, consumers will follow.

For more details on the future of grocery sales, take a look at this month’s Vantiv Omnicommerce Tracker, powered by PYMNTS.com.

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