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The Future of Grocery Shopping

July 9, 2021


With consumers often forced to cook meals at home during the pandemic, grocers witnessed radically different shopping behaviors from their customers. For example, Michael Browne (@mbtravel), Executive Editor of Supermarket News, reports, “Panic-driven, stock-up shopping drove massive grocery store visit growth in the first few weeks of March 2020.”[1] Everyone remembers empty store shelves once occupied by toilet paper, hand sanitizer, and cleaning supplies. Eventually, panic-buying gave way to more routine shopping habits; nevertheless, grocers are wondering what the future holds. Few expect this year to be as profitable as last year. Journalists Esther Fung (@estherfung) and Jaewon Kang (@_jaewonkang) explain, “Pandemic lockdowns forced restaurants to close and then limit service, but supermarkets and grocery stores were spared because they were deemed essential. Customers stocked up on food and other goods. Those dynamics helped boost U.S. grocery sales by 11% in 2020, more than triple the growth of the previous two years, according to data from the U.S. Census Bureau. But as more Americans get vaccinated, they are showing a desire to eat out again and may spend less money filling up their cupboards and refrigerators.”[2] As the grocery scene changes, Dawn Valandingham (@Valandingham123), Senior Vice President of Retail at SPINS, writes, “Retailers need to ask themselves how they [will] meet the needs of shoppers who have a new outlook on food, work and daily life.”[3]


Confronting the New Normal


“We are at an exciting and somewhat perplexing moment,” Valandingham writes. “We’re all tiptoeing back into so-called normal life after an abnormal year. We’re all eager to look ahead, but we can’t escape the changes that are already popping up, whether that’s more flexible work-from-home policies or lingering concerns about health and wellness. How are retailers supposed to plan ahead with one foot in the past and one in the uncertain future?” Good question. The answer may be difficult because, as Ethan Chernofsky, Vice President of Marketing at Placer.ai notes, “2021 is going to be mired in the unique challenge of trying to make sense of certain sectors in a world where year-over-year data could be heavily misleading.”[4] Consumer Packaged Goods reporter Paul Hiebert (@hiebertpaul) suggests several recent reports can help answer that question. He writes, “Apart from more revenue, life in quarantine has also altered behavior and accelerated trends in the grocery industry.”[5] He goes on to discuss “highlights from half a dozen recent reports aimed at showing what might be next for shoppers, retailers and manufacturers.”


Online Grocery Sales

Hiebert reports a study by analytics company 1010data found, “Today, mass delivery, buy online, pickup in-store (BOPIS) and curbside pickup sales are happening in previously unthinkable proportions.” Valandingham adds, “Curbside pickup, mobile apps and e-commerce purchases helped shoppers overcome their concerns about in-store shopping while allowing them to get the groceries they needed (and keep you busier than ever). Now that shoppers have experienced that convenience — not to mention that many reluctant customers will be slow to return to pre-lockdown behavior — they will expect to continue seeing these going forward. For a busy parent who needs to go from the office to pick up a kid at school and then get home to make dinner, an online order with curbside pickup is a timesaver.”


Grocery Delivery

According to Hiebert, a study by CB Insights found, “Funding for meal and grocery delivery companies hit $8.6 billion in the first quarter of 2021, up nearly 120% compared to the preceding quarter.” Although Hiebert believes increased investing in delivery companies shows consumers are going to continue to use food delivery services, I believe increased food prices might motivate consumers to avoid delivery services in favor of picking up their own online purchases in order to save money. Journalist Sam Silverstein (@SilversteinSam) reports a survey conducted by Inmar Intelligence found, “Price has emerged as the top consideration for consumers when they decide where to shop for food.”[6] And, Lisa Palmer, Chief Executive Officer of Regency Centers Corp., notes, “It’s the most cost-effective to have the customer pick their own goods.”[7] Nevertheless, Fung and Kang report, “Instacart added more than 200 new retailers whose food it started delivering in 2020, and it also started pickups from about 2,000 new locations last year. The company said its transaction volume remains higher than before Covid-19, and it says consumers like its services because it saves time.”


Natural and Plant-based Foods

According to Valandingham, “Although we heard a lot about everyone baking bread and worrying about weight gain, shoppers didn’t abandon their love of good-for-you products. Natural products became kitchen staples for many shoppers — perhaps because health was the biggest priority for everyone. … Even after the early-lockdown stockpile, natural products continued to outperform conventional items.” Hiebert notes, “While online shoppers have long been OK with purchasing shelf-stable goods through digital channels, they’ve shown some resistance to fresh items. The pandemic seems to have changed this. In its ‘US Online Grocery Survey 2021,’ Coresight Research found a greater percentage of people who purchase groceries online now put fresh fruit and vegetables in their carts (up 13.4 percentage points). Similar increases occurred for frozen food, bread and other baked goods and fresh dairy products, meat, fish and eggs.” In addition, Hiebert reports, “Data from Instacart’s new ‘Plant Power’ report suggests plant-based food has grown from a niche category into something approaching mainstream throughout the pandemic.”


Private Labels

Hiebert reports that private label products are selling better. “In 2020,” he writes, “food and beverage private label brands, such as Costco’s Kirkland Signature line and Kroger’s Simple Truth, continued to chip away at the market share held by name brands, according to another report from Coresight Research. Store brands, which tend to be cheaper, outpaced name brands in sales growth for the fourth consecutive time last year, increasing 13.7% compared to 2019.” Silverstein reports that private label goods may sell better this year because of inflation. He explains, “The [Inmar Intelligence] survey found that almost 57% of shoppers view private label products as being of lower quality than name brands even though they sense that house brands tend to be less expensive. Still, in a reflection of the dominant role price sensitivity is playing in purchasing decisions, nearly 87% said they buy store brand items to save money.”


Advanced Technologies

Grocers continue to lean on advanced technologies to attract customers. For example, the Shelby Report notes, “Albertsons Companies and Google have entered into a multi-year partnership to make shopping easier and more convenient for millions of customers nationwide. … The two companies have been collaborating behind the scenes for the past year and … are debuting several new enhancements. Albertsons Cos. has engaged with numerous teams at Google, integrating with Google Search and Maps to help shoppers more easily find what they need, making it simpler to shop with Google Pay and infusing Google Cloud AI technologies such as Vision AI, Recommendations AI and Business Messages into operations to create the world’s most predictive grocery engine.”[8] Nadejda Alkhaldi, a research associate of the Data Analytics Laboratory, writes, “COVID-19 is ruthlessly shaping ordinary stores into supermarkets of the future. They must accommodate all the new grocery shopping trends from panic-buying to delivery and pickup options, all with disrupted supply chains. Grocery retailers are responding differently. Some are cutting back on the number of products they sell, some are skipping distributors and contacting product manufacturers directly, and some are giving their brick-and-mortar stores a complete digital overhaul. No matter which line of action your company has selected, AI retail solutions will enhance your operations significantly.”[9] She notes the top AI applications in retail are customer care, quality control, inventory management, personalization, pricing, and fraud detection. She concludes, “Implementing AI in grocery shopping enables you to overcome all the pandemic-related hurdles while still letting your customers enjoy the sight, smell, and feel of products. However, incorporating AI is not a one-time task. It is a long process that requires changes of a store’s internal processes and culture.”


Concluding Thoughts


Valandingham observes, “It might feel a bit uncertain right now, but this is a chance to strengthen your relationship with shoppers and establish yourself as the retailer who knows what consumers are looking for in their new routines.” Adding to the uncertainty are the consequences of inflation. As Silverstein notes, “Consumers are changing their food-shopping strategies against an inflationary backdrop that shows overall prices are rising more quickly than costs for food.” Nevertheless, Chernofsky sees a bright future for grocers. He concludes, “Instead of a picture of decline, one of significant long-term potential appears. Top grocers are actually trending in the right direction and could be heading into a period of unique strength. While COVID’s health effects seem to be dissipating, the economic consequences will last far longer. This should buoy grocery as it provides a cost-conscious alternative to eating out. Additionally, greater flexibility in work from home should allow more people to shop when they want, enabling them to have longer visits driving larger basket sizes. These factors among others should give the grocery sector an extended lift.”


[1] Michael Browne, “Grocery visits are down year over year — but looks are deceiving,” Supermarket News, 2 April 2021.
[2] Esther Fung and Jaewon Kang, “Grocery Owners May Struggle to Match Last Year’s Success,” The Wall Street Journal, 13 April 2021.
[3] Dawn Valandingham, “Life after lockdown: 5 tips for retailers on planning ahead,” Supermarket News, 15 June 2021.
[4] Ethan Chernofsky, “Making Sense of Grocery,” Placer.ai Blog, 1 April 2021.
[5] Paul Hiebert, “The Future of Grocery Shopping in 6 Charts,” Adweek, 25 May 2021,
[6] Sam Silverstein, “Rising food prices are prying shoppers from their favorite grocers, survey shows,” Grocery Dive, 19 My 2021.
[7] Fung and Kang, op. cit.
[8] Staff, “Albertsons Cos., Google Partner To Reinvent Future Of Grocery Shopping,” The Shelby Report, 30 March 2021.
[9] Nadejda Alkhaldi, “Supermarkets of the Future: Deploying AI in your Grocery Store,” Itrex Group, 7 May 2021.

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