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Grocery Gets With the Program

It should be no surprise that e-commerce is growing (although it still only comprises a bit over 10% of total retail sales). In fact, it has been growing briskly for over 20 years, and it seems that we have no limits as to the types of things we will all eventually be purchasing online. It is also clear that many consumers prefer a blend of "bricks and clicks" with options for both delivery and pick-up and access to both websites and apps. Nowhere is this social and technological trend being felt more than in the grocery channel, and grocers are rapidly changing their business models in response to this new reality.

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The e-commerce portion of the grocery channel grew by 26% in 2017, far exceeding any of the brick-and-mortar formats, and now stands at $26.7 billion a year. Growth is expected to propel E-grocery to $36.5 billion by 2022. Indeed, when Wal-Mart purchased and Amazon bought Whole Foods Markets, it was clear to grocers that times were a changin'. In response, some retailers are moving freezers, coolers, and shelf stable product racks to the front of the store as pick up points for online purchases, amidst a major store remodeling trend in the industry that is even affecting how parking lots are arranged.

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Nearly 50% of orders are placed at night and so staffing at late hours has increased so that items can be picked and packed during off hours. Indeed, instead of killing jobs, E-grocery seems to be creating all kinds of technology, warehouse, and logistics jobs. The downside is an increase in congestion during peak hours as employees and customers jockey for the best heads of lettuce, but these sorts of kinks will be ironed out in due time. Perhaps grocers will have separate facilities for pick-up in the near future. There are simply too many upsides and it looks like E-grocery is here to stay.


Discussion: What emerging issues do you see developing for grocers? What would deter you from ordering groceries online and picking them up? Would you rather have them delivered?

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