During the height of the pandemic, online grocery shopping spiked. Some consumers, who discovered the convenience of shopping online for groceries, have continued to do so — many more consumers have returned to in-store shopping. As consumers settle into more normalized routines, it’s fair to ask what the future of omnichannel grocery shopping looks like. Omnichannel marketing specialist Michael Applebaum observes, “From ghost kitchens to AI-powered micro-fulfillment centers to new tactics for e-commerce, retailers and brands are finding ways to meets the needs of tomorrow’s grocery shopper.”[1] In this article, I want to focus on the e-commerce portion of omnichannel grocery sales and the numerous innovations taking place in that space.
The Future of Online Grocery Shopping
Applebaum reports, “The trajectory of grocery e-commerce sales over the past two years is marked by several peaks and valleys, many of which were driven by factors directly related to the pandemic (vaccination rates, the delta and omicron surges, etc.). The exact percentage of grocery sales coming from e-commerce depends on the source and method of analysis, as well as whether the researcher includes non-consumable items in its category definition.” To demonstrate his point, Applebaum notes, “Coresight Research, which uses proprietary data plus data from IRI e-Market Insights, estimates that U.S. online grocery sales grew 17.9% [in 2021] after 94.4% growth in 2020. In 2022, the firm [expected] the market to expand 32.4%, supported by ‘pandemic-induced online shopping stickiness.’ By contrast, eMarketer found the online grocery market rose by 64% and 12% in 2020 and 2021, respectively, and is forecasting a 20% jump [for 2022]. The company pegs the U.S. market at $122.39 billion in 2021 and projects it will nearly double to $243.67 billion by 2025.”
Although there are studies that conclude most consumers prefer shopping in-person for their groceries, it’s clear from the data presented by Applebaum that e-commerce grocery sales are not going away. Some experts predict online grocery sales will plateau somewhere between 10% and 15% of total grocery sales in the years ahead, while others believe they will top 20%. Those figures are high enough that they can’t be ignored by grocers — which is why grocers continue to experiment with their omnichannel strategies. Industry journalist Peyton Bigora indicates another reason that grocers continue to focus on e-commerce is that digital natives, like members of Generation Z, are becoming a more important consumer cohort.[2]
What’s Happening in the Online Grocery Space?
As noted above, younger grocery shoppers are now entering the marketplace. Bigora predicts they will change how and where grocers will advertise. She explains, “Generation Z is proving to be a catalyst for new marketing tactics and media opportunities for grocers across the industry. Simply advertising products is not going to cut it, and this younger generation, regarded for its activism, won’t hesitate to make that known.” As noted above and explained below, where grocers advertise will likely change dramatically. Following are a few of the emerging trends in the area of online grocery shopping.
Gender Differences. One of the surprising online grocery shopping trends that has emerged is that men shop online more often than women. The staff at PYMNTS.com report, “Everyone needs groceries, but a massive divide exists in how women and men buy theirs. Men use the internet to place grocery and restaurant orders more often than women, showing a particular taste for same-day delivery apps like Instacart. Many women, on the other hand, prefer to inspect their groceries in person before buying, with 11 million more women than men opting to shop for groceries in stores.”[3]
Online Advertising and Apps. Like in other retail sectors, consumers use their smartphones to price check items while grocery shopping. As a result, Applebaum reports that consumer packaged goods (CPG) manufacturers have been motivated to invest in more digital tactics, like retailer ad platforms. Steve McGowan, head of shopper activation and strategic partnerships at Mondelez International, told Applebaum, “We have shifted our spending at a customer level from traditional tactics to more digitally native tactics over the past few years. Specifically, from a shopper marketing perspective, the percentage of spend on digital over the past 3-4 years has grown from 20%-25% of total investment to more than 2.5 times that amount.”
Grocery Delivery. When groceries are ordered online, there are two primary ways consumers obtain their orders: curbside pickup or home delivery. Although curbside pickup is a costly option for stores, consumers like it. The PYMNTS.com staff notes, “Pickup expansion can be especially key to attracting online customers, considering that this fulfillment method is the most popular among shoppers.”[4] A shopper survey conducted by the company found, “45% of men and 36% of women buy groceries online for curbside pickup. Meanwhile, 43% and 35%, respectively, order in advance for home delivery, and 42% and 28%, respectively, use same-day delivery aggregators.” With inflation predicted to remain relatively high in the coming months, curbside pickup is likely to be a more attractive option than home delivery as consumers continue to tighten their belts.
Increased Automation. As noted above, many stores still fill online orders from in-store inventories. In some areas, however, Nina Firgo, a marketing expert at KNAPP Systemintegration, reports that some chains are centralizing online operations. She explains, “Food retailers are predominantly depending on central fulfillment centers (CFC) and micro fulfillment centers (MFS) to process their e-commerce orders. Businesses are increasingly reaching for innovative ways to process their orders, essentially moving towards full automation.”[5] She adds, “One of the reasons why grocery e-commerce is moving towards fully automated warehouses is simply because it’s more economical. Automation comes with reduced error rates as well as improved and faster picking processes. This in turn increases throughput and efficiency. Another reason why automation is booming is that highly automated concepts mean employees no longer need to do the heavy work. Food retailers as well as consumers benefit from this model, as they receive their ordered items quickly and in the best quality, which is complemented by flexible solutions for the last mile.”
Social Commerce. Grocery sector journalist Emily Crowe observes, “Whether through ads, influencers or short-form videos on social media, back-end upgrades that make the buying process more seamless, or myriad other tactics, investing in ways to engage the digital shopper has never been more paramount for retailers.”[6] She adds, “While some of today’s digital shoppers are simply looking for an easy way to place an order and be on their way, many others use social media platforms, food blogs or recipe sites to find inspiration for meals.” Bigora adds, “When trying to establish a social media presence independently, some grocers have tapped into current TikTok trends as well as popular hashtags.”
The Metaverse. Looking further into the future, the Grocery Dive staff asks, “Do consumers want to grocery shop in the metaverse?”[7] They note, “Non-food retail has made significant strides in entering immersive virtual worlds this year, but it’s unclear whether the same success will translate to the grocery sector.” According to the staff, “Albertsons is the first grocer to sell and deliver tangible goods in the metaverse.” The Metaverse is mostly an unexplored space. Freelance writer Dennis Mitzner, who routinely explores the interplay between technology, culture, and politics, insists, “How consumers engage online is changing rapidly.”[8] He adds, “In many ways, immersive commerce is an extension of traditional ecommerce as it creates new and improved customer experience by utilizing new tech.”
Concluding Thoughts
With most consumers now being omnichannel shoppers, it follows that online grocery shopping is here to stay. That means that grocers, like retailers in other sectors, need to master omnichannel operations to remain competitive. As digital natives become a larger percentage of grocery shoppers, online grocery shopping will likely become a significant portion of total grocery sales. In response, grocery advertising will likely undergo significant changes in order to be on the same platforms favored by younger generations. In the years to come, real-world and virtual-world shopping are likely to merge.
Footnotes
[1] Michael Applebaum, “Next-Gen Grocery: Reshaping the Future of Omnichannel Grocery,” Path to Purchase IQ, 5 April 2022.
[2] Peyton Bigora, “Gen Z’s demands and values are redefining grocers’ online presence,” Grocery Dive, 21 September 2022.
[3] Staff, “Grocery Habits Reveal Wider Online Gender Divide,” PYMNTS.com, 30 November 2022.
[4] Staff, “Grocery Delivery Expands as Retailers Compete for Digital Spending,” PYMNTS.com, 14 December 2022.
[5] Nina Firgo, “Innovations in E-grocery,” KNAPP Blog, 18 August 2022.
[6] Emily Crowe, “Engaging the Digital Shopper,” Progressive Grocer, 20 October 2022.
[7] Staff, “The Friday Checkout: Do consumers want to grocery shop in the metaverse?” Grocery Dive, 16 December 2022.
[8] Dennis Mitzner, “The Rise Of The Metaverse, NFTs And Immersive Commerce,” Forbes, 26 October 2022.
