Starting off on a positive note, data shows that the online grocery sector saw a huge sales boost during Thanksgiving. While a grocery sales boost is to be expected during the holiday for excessive eating (and subsequent, sleepy regret), it’s the “online” qualifier that’s got grocers intrigued.
Unata, a digital solutions provider for grocery retailers, found there was a 19-fold increase in online grocery sales for regional U.S. grocery retailers compared to in-store sales during the Thanksgiving shopping period (defined as Nov. 11–28 of this year). Additionally, Unata found that stores saw an average increase of 22.6 percent in online interactions during the Thanksgiving period, and unique users on grocers’ websites rose an average of 20.3 percent.
While most retailers have found that their respective consumer bases have begun to move online in droves, groceries have seen a major lack of digital interest among U.S. food shoppers.
The highest percentage of online grocery purchases can be found in South Korea, at 16.6 percent, followed by Japan at 7.2 percent, the U.K. at 6.9 percent, France at 5.3 percent and Taiwan at 5.2 percent. In the U.S., online grocery sales only account for about 1.4 percent of the current market — leading some to believe that the whole online grocery idea would be a bust.
But the sudden uptick in online sales around the Thanksgiving holiday shows that consumers may be more willing to go online for food than current numbers suggest. At least during busy seasons, customers are wary of crowded or understocked brick-and-mortar stores, and staple purchase items make it easier for shoppers to pick what they want out of the fray of online grocery product options.
While the future of groceries may be online, the future of meal kits may not be in the hands of startups. Tyson Foods Inc., Campbell’s and Hershey Co. are all reportedly in talks with online couriers to break into the meal-kit market, spelling trouble for startup operations, like Plated, Blue Apron and Germany’s HelloFresh.
As of now, the meal-kit market is still rather small — only 3 percent of consumers surveyed by NPD Group had reportedly tried a meal-kit service. They’re generally a bit on the pricier side than the typical grocery shopper wants to invest in, costing between $10 and $12 on average.
If Big Food — with its penchant for mass production, greater infrastructure and worldwide reach — was able to penetrate the meal-kit space, it could offer consumers more affordable and more ready-to-cook options. This could potentially draw in a larger consumer base, but it could also pull current subscribers away from the long prep times and higher prices that currently populate the meal-kit ecosystem. Food for thought.
But it could all be for naught. Retail giants Amazon and Walmart both gave consumers additional peeks into their grocery store concepts.
Walmart has opened its second fuel station and grocery pickup concept store in the U.S. — this time in Thornton, Colorado. The new Walmart store lets customers pick up grocery orders they had placed online that day. While Walmart has been expanding its grocery pickup at existing store locations since 2015, this new store is exclusively devoted to facilitating online grocery transactions. Additionally, customers can purchase gas, coffee and convenience store quick-fix items at the pickup locations.
Meanwhile, Amazon released a video on Monday (Dec. 5) that shows its physical store concept for Amazon Go. It’s like looking into the future.
Shoppers use the Amazon Go app to enter the store via digital turnstiles. The stores will be integrated with a combination of AI, machine learning and computer vision to automatically add the physical products shoppers gather into a digital shopping cart.
The accompanying Amazon Go app automatically charges users’ Amazon accounts when they leave the store. No checkout lines, no cashiers, no registers — no waiting required.
The stores are slated to offer grocery store staples, pre-made options and meal kits. The first store is scheduled to open to the public in Seattle early next year, with plans to open 1,999 more in the next decade.