Cancel OK

There’s no going back for online grocery

kroger ocado
Photo courtesy of Kroger Co.

Online grocery retail had already been steadily growing, but with the COVID-19 pandemic, with people homebound, it has exploded.

“Grocery retailers have to realize online order and click-and-collect will become 30 to 40 percent of their business,” said Brittain Ladd, global business and strategy consultant based in Dallas, April 28. “That’s not in the future. That’s this year.”

He said since the shelter-in-place orders took hold in mid-March, no retailer is meeting consumer demand for online grocery.

“They’re all trying and using the same tools: an online platform; deliveries with Instacart or Shipt; in-store employees picking product inside the store,” he said, and they’re all hiring more employees. “I don’t see anyone hitting it out of the park.”

Walmart BB #:143789, Kroger BB #:100073 and HEB BB #:106490 are doing better than other retailers at filling demand, he said.

Another analyst, Stewart Samuel, program director at IGD Canada, agreed that Kroger is shining with online grocery.

“Retailers have done an incredible job in meeting the surge in demand, which has been unprecedented,” he said April 28. “Recruitment has been undertaken at a rapid pace, enabling retailers to meet this demand… [but] demand has outstripped supply even as extra capacity has been added into the system.

Ladd said automation is the only clear solution he sees.

“Grocery retailers should turn their stores into big vending machines,” he said. “They need to dispense groceries quickly and at any time.”

He said technology companies Autostore and Swisslog have created an automated system in the United Kingdom with Asda, which is owned by Walmart, which could be a solution.

Samuel said several U.S. retailers have already started projects with e-commerce fulfilment, and the pandemic will accelerate that.

“There will be increased interest in these types of solutions as well as ‘dark stores’ as the volumes for online shopping are expected to remain at an elevated level,” he said. “However, this has to be done in the context of each company’s broader ecommerce strategy. “

Ladd said 20 percent to 40 percent of grocery customers who use online grocery during the pandemic will want to continue when lockdowns are over.

As for fresh produce, Ladd said retailer must get better at selection.

“Most consumers look at fresh foods as ‘inspect and select.’ Most consumers have avoided buying these online so retailers must master picking the freshest of the fresh,” he said.

Samuel said he’s seen perishables hold their own online, as basket sizes usually match in-store sales numbers.

But retailers can improve “product imagery, descriptions and inspiring shoppers with meal ideas are key to driving growth online.”

Greg Johnson is Director of Media Development for Blue Book Services