Black Friday has long been hailed as the Super Bowl for retailers. But Turkey Wednesday – the day before Thanksgiving – is considered most grocers’ busiest day of the year when shoppers are scooping up the essentials for their Thanksgiving meal or nabbing last-minute items someone forgot. An increasing number of consumers looked to digital channels to purchase ingredients for Thanksgiving dinner this year, however, which has the added advantage of skipping crowded supermarkets and long checkout lines.
For the first time ever, the majority of consumers – 54% – are doing their holiday shopping online, according to data from PricewaterhouseCoopers. This kind of momentum has led a number of retailers to rethink their holiday promotion strategies, including food retailers.
And when it comes to Black Friday, most retailers are now putting in-store deals online and getting a jump on the Cyber Monday traffic, according to Digital Trends.
Online Grocery: slow & steady
In 2018, the online grocery market was valued at $632 billion, doubling since 2016, and some outlets like Nielsen and the Food Marketing Institute anticipate it reaching $1 billion in the coming years. Today, over 63% of consumers report interacting with a grocer in some digital way, a 7% increase from 2017. This includes everything from checking advertisements, creating shopping lists, and hunting down promotions.
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Still, only about 10% of US consumers regularly order groceries online and the services are more popular in densely populated urban areas, where time-crunched millennials seem more receptive to digital shortcuts in their daily lives. While other retail segments like electronics and apparel have enjoyed meteoric digital sales growth, grocery has moved much slower due to a number of unique factors in the space.
Unless a grocery retailer is delivering items to several homes in the same neighborhood, the margins are daunting, The Atlantic points out, with grocery stores already combatting some of the skinniest margins in the retail game.
Other roadblocks to online grocery’s growth are consumers’ leeriness over letting a stranger pick their perishables, dealing with perishable items that can’t be left on a doorstep indefinitely, and disfavor over unwanted substitutions when the store is out of the specific product that the consumer ordered.
Grocery pickup, which encompasses services that let consumers shop and buy online while picking up in-store or curbside, has gained more traction with shoppers than delivery services, however. A considerable number of grocers have tried to add an online delivery option either by developing a platform in-house or outsourcing the project to a third-party logistics provider like Instacart, which claims to reach more than 80% of US households or Target-owned Shipt.
Despite any increasing demand, online grocery in either form has been a wartorn space full of stiff competition and plenty of casualties. Last week, Walmart-owned Jet.com announced it’s pulling the plug on fresh grocery delivery in NYC, which is considered by many to be the battleground royale for grocery delivery, just one year after launching the service.
Walmart purchased Jet.com for $3 billion in 2016 to compete with digital powerhouse Amazon with hopes of expanding Jet’s grocery delivery service throughout Boston, Philadelphia, and Washington DC, but now it’s closing the Bronx fulfillment center that would have served as the central nervous system for the offering.
Online farmers’ market, which offered customer pick-up from local neighborhood hubs, Farmigo closed in 2016 while the historic failure of Webvan back in 2001 around the dot com bust was perhaps a signal that the model would be tough to crack.
I may live in Northwest Arkansas, the home of retail giant Walmart, but I live in a rural community well outside of town. Grocery delivery is not an option for sparsely populated regions like mine, which makes sense given the unappealing market opportunity. Still, the convenience seems appealing at times especially when my NYC-based editor, Louisa Burwood-Taylor, tells me that she’s a die-hard FoodKick/FreshDirect user. She couldn’t live without either service now that she has a toddler keeping her busy, but they also offer better selections compared to Brooklyn’s slim and often past-it looking pickings. They also don’t tend to offer pasture-raised, grass-finished meat despite the staggering number of operations in upstate New York.
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