Bloomberg reports on new McKinsey & Co. surveys saying that "even in cities hardest hit by the pandemic, more than 7 in 10 people have continued to visit stores for groceries and other essentials."
Some context from Bloomberg:
"Online grocery sales have surged as much as 200% this year, according to Earnest Research, part of a broader boom in home cooking now that thousands of restaurants are closed. The $840 billion grocery industry has been one of the few bright spots amid a pandemic that has infected about 1.7 million Americans, killed almost 100,000 and crushed the economy. Walmart Inc., Amazon.com Inc. and startup Instacart Inc. are all reaping the rewards, and some e-commerce prognosticators say the online grocery industry has finally hit an inflection point promised for decades.
"But how much of that spending shift will stick is guesswork. It’s difficult to predict lasting behavior changes from a fear-fueled surge - growth peaked more than a month ago. Problems with online food shopping also persist. The operations are expensive to run, and limits on capacity and inventory abound right now with supply chains upended. The shopping experience can be clunky and confusing, especially for older consumers. And one thing the pandemic hasn’t changed is that Americans still like to squeeze their cantaloupes and eyeball their rib-eyes."
The story goes on:
"Among those who use online grocery pickup services, only half include produce in their orders primarily due to concerns over quality, according to Field Agent, an industry researcher. Fresh food is the thing that consumers are most likely to buy in physical stores exclusively once the pandemic subsides, according to research from Evercore ISI. Items like bottled water, pet food and other bulky, non-perishable household staples have better prospects online, due to the hassle of lugging them out of stores."
- KC's View:
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The most important thing to remember about online grocery shopping vs. bricks-and-mortar stores is that it really isn't an either-or proposition. It is all about the "and."
Of course shoppers are more confident in the ability of retailers to deliver on an e-grocery promise that focuses on packaged products as opposed to fresh foods. That simply makes sense, and that's one of the things that the pandemic has made clear - when it comes to products such as toilet paper and paper towels and laundry detergent and cookies and cereal and soft drinks and all those sorts of things, there is absolutely no advantage to going into the store. In fact, there is an enormous advantage of having such things delivered, or even having regular purchases locked into an auto-replenishment program.
Not necessarily so when it comes to fresh foods … though as retailers become more accomplished at e-grocery, and earn consumers' trust over time, that also may change.
One of the things that this all does is point us toward one future of the supermarket business - in which the stores are smaller and more focused on fresh food and service, in which there is a limited selection of grocery on shelves, with a broader selection available online, in which customers can access delivery and pickup services, in which stores and customers are serviced by micro-fulfillment centers and dark stores that reduce costs and increase responsiveness, in which shoppers don't have to think about certain categories because they are part of an auto-replenishment eco-system that keeps them satisfied and in-stock with regularly purchased items.
That's just the beginning of one future. (Not every future, to be sure.) But it is a future that, at its core, is relentlessly customer-centric.
But one note … this is a future that companies like Amazon already have envisioned. So it isn't like this is some wild, futuristic speculation.
Not everyone agrees with me on this, to be clear.
The New York Times "On Tech" newsletter has a piece the other day by Shira Ovide in which she argued that "the most helpful shopping ideas right now are coming from blah big box stores like Walmart and Lowe’s. It’s surprising, yeah. And Amazon, the company that’s determined to reinvent everything, is kinda boring."
She wrote that sure, "Whole Foods stores are offering home deliveries now. But it’s other retailers that are rethinking how their physical stores can work hand-in-hand with online shopping … Amazon’s digital experiments for grocery shopping outside Whole Foods are interesting, but they lack oomph. Three years after Amazon opened two drive-in grocery pickup outposts in the Seattle area, there are still only two. Amazon doesn’t do small things. If these pickup spots are still experiments, it’s a good bet Amazon doesn’t think they’re working."
But I would argue that there is "working,:" and there is working.
Sometimes even ideas that don't work out, or are not worthy of rollout, provide all sorts of learnings about what is possible.
You want oomph? I think we may see a lot of it in the supermarket industry, from a number of players. But I wouldn't count out Amazon just yet.
