The Race For Online Grocery Shopping Heats Up

In a year full of strange outcomes and unexpected changes, the world of grocery shopping stands out for special mention. It was previously one of the last holdouts against large-scale digitization as consumers remained committed to seeing foodstuffs with their own eyes before buying them. But the pandemic is changing all of that, and companies large and small are racing to accommodate booming digital grocery shopping.

Here are some of the latest big moves:

Groceries Feed Into Walmart’s Q2 Earnings

When Walmart announced Q2 earnings earlier this week, the nation’s largest retailer announced twin blowout performances in both its eCommerce and same-store sales. Same-store sales rose  9.3 percent year on year, while eCommerce saw a massive 97 percent jump following a 74 percent jump in Q1.

The chain doesn’t break out grocery sales, but CEO Doug McMillon did give groceries a shout-out as a factor in the quarter’s same-store sales bounce. He also called it a major contributor to Walmart’s 27 percent year-on-year growth in average ticket size.

McMillon added that if the grocery category continues on its current trajectory, it will add $8 billion to the company’s top line by 2021’s end.

Walmart’s New Instacart Partnership

That’s an outcome Walmart would doubtlessly like to see come to fruition, hence its newly minted partnership with Instacart to offer same-day delivery service to rival Amazon’s offering via Whole Foods.

The companies are testing the service in four California and Oklahoma markets, with an eye toward a national launch in 2021.

“The new partnership brings thousands of items — from groceries, alcohol and pantry staples to home decor and improvement, personal care, electronics and more — at everyday low prices from Walmart stores to customers’ doors in as fast as an hour,” Instacart said.

Walmart is far from Instacart’s first partner in this arena. The delivery firm already partners on grocery delivery with Aldi, Costco, Albertsons, Kroger, Sam’s Club and Target.

Groceries Help Target’s Q2

Speaking of Target, Walmart’s main brick-and-mortar competitor also announced much stronger-than-expected Q2 results this week, pushed largely by the combined strength of grocery and digital services.

In fact, digital grocery sales did so much for Target’s bottom line that the firm announced plans to roll out grocery pickup and drive-up service at 1,500 U.S. stores, or almost 85 percent of the total. The chain further announced it will be expanding its “pickup assortment” that customers are able to order to include thousands of fresh food and frozen grocery items.

“It’s yet another way we’re making Target America’s easiest — and safest — place to shop,” the big box giant noted in its announcement.

Target initially began to roll out the pickup service in June, when the new offering made its debut at 400 of the chain’s Midwest stores.

Kroger’s Big Digital Bet

Think pieces were circulating a year ago about the risk that grocery giant Kroger could face from the likes of Walmart and Amazon, but the chain is battling back.

Kroger is quietly implementing some digital enhancements it’s been building in the background for the past three years. The first big move was the introduction this month of an online marketplace to enhance the popular Kroger Ship service and widely expand the digital assortment of private-label products that Kroger has on offer.

Through the integration with software-as-a-service (SaaS) marketplace platform Mirakl, shoppers will be able to access 50,000 additional products in areas such as international food, housewares, specialty items, toys and natural and organic items.

“Our customers are increasingly turning to our eCommerce solutions provided at Kroger.com for their grocery and household essential needs,” Kroger group vice president of product experience Jody Kalmbach said.

Kroger’s digital sales shot up 92 percent in Q1, PYMNTS reported.

Ahold Delhaize’s Latest Moves

Kroger isn’t the only traditional grocer making a big push into digital this year. Stop & Shop owner Ahold Delhaize NV announced plans earlier this week for putting more resources toward online shopping operations.

Chief Financial Officer Natalie Knight told The Wall Street Journal that COVID “was kind of a wake-up call for us.”

Ahold intends to outfit roughly 1,100 U.S. retail locations for click-and-collect customer self-service shopping by year’s end. It’s also investing in hand-held shopping technology, in addition to programs to make it easier for customers to pay from the store floor without having to see a cashier.

The firm has reportedly also turned some of its focus away from brick-and-mortar locations in favor of developing a strong omnichannel strategy over the long haul. That will be a very big shift in operations, as eCommerce only accounted for 3.6 percent of its $27.5 billion in U.S. revenues during 2020’s first half.

Amazon’s Expanding Reach

Amazon is in many ways the original mover in digital grocery, but is building out its physical footprint.

A mere three years after buying the Whole Food grocery chain for $13.4 billion, Amazon is pushing to open more of its own Amazon Go grocery stores in Seattle, California, Chicago and Washington, D.C., the Seattle Times reported.

But Amazon is also thinking global when it comes to groceries. This week, the eCommerce giant announced an agreement with British supermarket chain Morrisons to bring free same-day grocery delivery to the chain.

“Morrisons on Amazon” will start in Leeds before expanding to millions of U.K. Amazon Prime members in coming weeks. Morrisons has 494 U.K. stores that serve 624 million customers a year.

“Morrisons on Amazon will build on our partnership with Amazon, making our good quality, great value food even more accessible through Amazon.co.uk and the Amazon app,” Morrisons CEO David Potts said in announcing the deal. “It will give more and more customers the option of receiving Morrisons groceries straight to their doorstep, including freshly prepared products from our brilliant Market Street colleagues.”

The deal is an extension of a four-year-old Amazon/Morrisons partnership that saw the eCommerce giant install hundreds of its delivery lockers in the company’s supermarkets.

The Future

So what happens next? How will consumers shop in the future, and what will the ideal digital/physical mix for grocery shopping be? That remains to be seen.

But if the behavior of the people who are selling food is any indication, going to the grocery store will likely forevermore be a far more of a digitized experience.