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For Grocers, There’s No Going Back On E-Commerce

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By Jim Dudlicek / NGA Director, Communications and External Affairs

Last summer, I advised retailers not to underestimate the demand for online grocery shopping.

Looks like that’s turning out to be good advice.

The numbers are in for January and data indicates that consumers are continuing to embrace e-commerce. In all likelihood, they’ll continue to use online shopping as an option, even after the end of pandemic is declared and folks are free to roam supermarket aisles and enjoy the sensations of brick and mortar shopping without restrictions.

So, for independent community grocers who have ramped up their e-commerce platforms, keep it up. But there is a caveat – more on that in a bit.

According to the Brick Meets Click/Mercatus Grocery Shopping Survey fielded at the end of January, the total U.S. online grocery market racked up $9.3 billion in sales that month as nearly 70 million households placed an average of 2.8 orders for delivery, pickup and ship-to-home services. The delivery and pickup segment captured $7.1 billion in January 2021, accounting for 77 percent of all online grocery spending during the month, the survey reported.

Total sales grew 15 percent in January compared to November, driven largely by a 16 percent increase in the number of households buying online. Even so, January’s overall usage rate fell short of the record 76.7 million households who shopped online in April 2020, when Americans suddenly found themselves living under stay-at-home orders.

While the average number of total online grocery orders placed by monthly active users for January was essentially flat versus November, deliveries and pickups collectively gained nearly six percentage points of order share, accounting for 66 percent of all online orders completed during the first month of the year.

The public’s overall embracing of online grocery shopping remains firm. Now here’s the caveat: According to the survey, strong gains in households shopping online during January were tempered by sharp declines in the leading indicator “likelihood to use a specific service again,” which measures the share of customers likely to use same provider within the next month.

“Even though many grocers remain capacity constrained – especially with pickup – others are growing market share as they staff up or expand pickup to a larger store base,” Brick Meets Click’s David Bishop explained. “While throwing more labor at the issue isn’t ideal, this, along with improving assembling productivities via enhanced pick and pack practices, is vital to remaining competitive in the near term and not inadvertently giving your customer a reason to shop elsewhere.”

Even before the pandemic, competition in the grocery arena had reached a point at which retailers could no longer afford to stand still. Perpetual improvement, self-evaluation and innovation are table stakes. This statement is even more true after the seismic changes of the past year.

So, when it comes to e-commerce, there is no going back. To ensure sales growth and customer loyalty, there is only forward.

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