Amazon’s BB #:283186 entry into retail grocery reminds me of the Cold War.
The Soviet Union was definitely an evil empire. (Just ask my Russian émigré friends who grew up there.) Nevertheless, its capacity for military threat was constantly overstated—sometimes deliberately (to keep the military-industrial complex well funded), sometimes out of genuine fear.
Amazon in the supermarket world strikes me as kind of an equivalent. A recent article in Slate quotes Jon Springer, executive editor of Winsight Grocery Business, on the industry’s reception of the Amazon purchase of Whole Foods in 2017: “According to Springer, the sale ‘was received as a monumental blow’ in the grocery industry. ‘Stock of all the conventional supermarkets and the Walmarts of the world just got devastated by this one announcement.’ The fear wasn’t so much about what Amazon would do with Whole Foods specifically; it was just the fact that big, bad Amazon was finally entering the grocery business in a major way.”
But, as I have said before, I suspect that Amazon has more obstacles in its way than many people realize, as suggested by its clumsy handling of Whole Foods.
The question shifts to the future of online ordering and grocery delivery. They are here to stay. And they are of great benefit to the elderly, the disabled, the agoraphobes, the people who are compulsively busy. These categories alone add up to a huge market segment.
No one can say how much of home grocery delivery will stick once the pandemic is completely over. But I tend to agree with John Karolefski, editor in chief of CPGmatters, who, in a comment to a recent article in RetailWire, wrote, “Demand for food delivery services will decrease as more consumers resume their traditional shopping patterns; that is, shopping in the grocery stores where they can select their own produce and meats.”
Some tout the advantages of having your produce and meat selected by “professionals” instead of your ham-handed self—but then do you really trust Mr. Bezos’s harried cart hoppers to pick your avocados and boneless ribeye for you?
In any event, Supermarket News cited a poll taken in late July 2020, at the height of the pandemic, which found that even then, two-thirds of shoppers still preferred to make purchases in physical stores.
Retailers are expecting shoppers to come back in force. “A new survey of retail leaders in grocery and other channels reveals a shift back to in-store marketing as shoppers return to brick-and-mortar locations,” reports Lynn Petrak in Progressive Grocer.
What will be the decisive factor? One thing: the pleasure of grocery shopping. For some, with limited transportation or too many hours dumped on them in the workplace, grocery shopping is a hassle in a long line of hassles. They no doubt welcome home delivery and will continue to do so.
But consider this: shopping constantly appears at the top of the favorite leisure activities of Americans. And this definitely includes grocery shopping.
After all, the typical American supermarket is large, spacious, clean, and comfortable, with innumerable items attractively displayed. It’s a pleasure to visit.
Think also about this: grocery shopping is guilt-free shopping. You have to do it anyway. It’s not like a trip to the mall, from which you are almost certain to return with a bunch of items that you didn’t need and probably don’t really want.
Moreover, the growing sectors of the population are those who most enjoy shopping. A 2020 survey by Acosta, reported in Supermarket News, found that “multicultural shoppers find the grocery shopping experience enjoyable. Acosta found that 72% of African-American, 65% of Hispanic and 61% of Asian-American consumers surveyed enjoy shopping for groceries, compared with 56% of Caucasian/Non-Hispanic consumers.”
Oh, and there’s the cost. Of course, you’re going to be charged for home delivery: it’s a service, and services cost money.
In addition, we’re told, you have to tip: “When it comes to tipping for grocery delivery, a 15–20% tip is a good rule of thumb. . . . Don’t forget to add the tip to your grocery budget! If you know you’re going to have groceries delivered twice this month, just add a little extra to your grocery budget to make room for the tip.”
So in addition to the actual delivery charge, that’s 15-20 percent. If you’re on a tight budget—or if you just like going to the store—that “little extra” may soon look like wasted money.