For some American shoppers and grocers, it took a pandemic to push them online.
As the coronavirus spread in the spring, some customers downloaded grocery shopping apps for the first time and bought more groceries than usual through e-commerce rather than in stores.
That translated to a larger share of grocery shopping moving online. U.S. online shopping accounted for 5.1% of grocery sales at the end of 2019 and rose to 6.6% as of April 12, according to a Bain & Co. report released Thursday. The report said it also increased in places including United Kingdom, France and Italy.
The trend has laid bare an unpleasant reality for grocers: As they sell more online, their profits are squeezed. Shifting consumer behavior caused by the coronavirus pandemic has created new urgency for grocers to fix the broken business model, particularly if there’s a second wave of infections, Bain said.
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“In some sense, it’s a wake-up call,” said Steve Caine, one of the report’s authors. “You can’t just run it at a loss. You can’t ignore the fundamental economic equation any longer. You’ve got to begin experimenting, particularly with the revenue model, to get to a path towards sustainability.”
Online grocery shopping has gotten new attention as consumers use the approach to reduce risk during the pandemic. Many grocers already have a mix of online offerings. Walmart delivers to the home and offers curbside pickup of online orders. Target customers can buy online and retrieve their purchases in stores, by drive-up or through Target-owned home delivery service Shipt. And Kroger and other grocers have used third-party companies like Instacart to pick and deliver groceries.
They’re investing in new ways, too. Target is adding hundreds of fresh and frozen items to its same-day online grocery shopping assortment. Kroger is building high-tech facilities across the U.S. with British robotics company Ocado to help fulfill online grocery orders. Its first facility is expected to open in 2021 in a Cincinnati suburb.
Grocery shopping rose across the board — in stores and online — as Americans cooked more at home and restaurants temporarily shut during stay-at-home orders. Some e-commerce numbers have been eye-popping. Walmart’s e-commerce shot up by 74% in the first quarter, with much of that fueled by groceries. Kroger, the country’s largest supermarket chain, saw a 92% jump in its first quarter.
But analysts and investors have questioned whether that represents a true shift or a coronavirus-related blip that will fade away as Americans opt to pick out their own produce and browse store aisles again.