Online Grocery Reaches Critical Juncture

Essential retail is starting to show some consistency as the acute phase of the COVID-19 crisis enters its second month. New research from several sources shows that consumers are changing the way they shop for consumer packaged goods (CPG), groceries and dining. In short, consumers are ready to shop online for essential items, when they had not been willing to do that before the coronavirus pandemic.

For example, Nielsen’s most recent purchase tracking shows that for the two weeks ended March 21, 2020, CPG sales (in-store and online) increased $8.5 billion from the two weeks prior. That’s 15 times the average. It’s also much higher than other categories. The research also shows that consumers are spending more on food at grocery stores as families eat more meals at home. In total, Nielsen week-over-week growth of consumable products in-store increased 21 percent, while sales of non-consumable products decreased 2 percent.

Now let’s take online trends. The exact opposite happened between the consumable and non-consumable categories. For the two-week period ending March 21, sales of consumable products declined week over week and sales of non-consumables increased. “With reports of significant delays in delivery availability and consumer accounts of canceled orders due to too many out of stock items, the reality is that online fulfillment was unprepared for the massive surge in demand,” said Nielsen.

The survey found that by mid-March, one-quarter of shoppers said they would shop online more frequently — or even for the first time — in order to avoid public places. That trend is expected to continue. In the two weeks ended March 21, upwards of 35 percent more people had shopped online for CPG items compared with a typical week.

“This means the industry is now at a critical juncture,” said Nielsen. “Historical behaviors aside, the reality today is that so much of the situation remains unknown. The outcome will depend on how long the situation lasts and what economic ramifications it causes. It’s a “new normal” for everyone, which means things will remain unsettled for the immediate future. For example, forecasting sales and shipment allocations three months from now may be just as challenging as planning for the next two weeks. That means manufacturers and retailers need to leverage available assets and resources to make the most up-to-date and informed decisions while adjusting appropriately as the situation unfolds. And while the online growth is astounding, point-of-purchase is relative, based on the category, and understanding behaviors in the total marketplace — both online and offline — is critical.”

A survey from curated meal planning provider eMeals has found online and offline supply chain problems. During the week of March 18 to 23, shoppers could not find 40 percent of the grocery items on their shopping list, the survey found. In addition, respondents reported a 55 percent increase in spending on their weekly shopping. The survey found people are cooking dinner at home six nights of the week and that increased online grocery shopping has meant delays in fulfillment because of the high demand.

“Shopping and cooking habits have clearly been impacted by the coronavirus outbreak. Short supplies at grocery stores, restaurant closings, and the need to reduce the number of shopping trips to limit exposure are changing behavior, including prompting more consumers to use online grocery services for curbside pickup or home delivery,” said eMeals CEO Forrest Collier. “With 97% of respondents to our survey saying that they plan to continue using online grocery in the future despite order delays or cancellations, it’s likely that one of the lasting effects of this pandemic will be to accelerate the widespread adoption of online grocery.”