Online grocery shopping growth shatters pre-pandemic estimates

Written by James Shea

According to a new report, growth in online grocery shopping has exploded in 2020. Driven by the pandemic, food retailers have seen a 43 percent increase in online shopping in 2020, nearly double the rate in 2018.

The report, a collaborative effort between by Mercatus and Incisiv, is based on surveys from 60,000 people and 48 million data points. It explores changes in online shopping behaviors in 2020 and what it means for the grocery industry. But it’s not only about online sales. The report says 87 percent of shoppers were satisfied with their preferred brick-and-mortar retailer and intend to remain loyal.

“The growth of online grocery in 2020 and its predicted long-term impact, coupled with customers’ continued loyalty to brick and mortar, makes it clear that these avenues must complement each other in creating a great customer experience across a grocer’s entire brand,” said Sylvain Perrier, president and CEO at Mercatus. “In order to round out the loyalty to online channels, this data makes it clear that brands should make investments in digital functionality, especially regarding product search, discovery and product information,”

Overall, the pandemic has fundamentally changed how people shop. The report says that safety is a top priority, and 50 percent of shoppers report drastic changes in shopping habits. As well:

  • 40 percent say they have reduced their frequency
  • 46 percent have changed their preferred fulfillment method
  • 48 percent of respondents preferred delivery over curbside pickup
  • over 90 percent of online shoppers expect to continue shopping online after the pandemic.

“COVID-19 is the primary driver for the significantly accelerated adoption of online shopping in grocery; it has also driven fundamental lasting changes in consumer behavior,” the report said.

Change in behavior varies greatly by age. Half of shoppers who are between the ages 25-44 have adopted online grocery shopping. That compares to only 36 percent of people over the age of 65. Older people reported more loyalty to a particular brand.

“Preference for pickup in-store has shrunk to low double digits, millennials prefer curbside pickup, while home delivery is the top choice for customers in the 65+ age band,” according to the report.

When shopping online, customers expect a positive and easy experience. Many reported low satisfaction with product substitutions and cancellations.

“Online adoption, price sensitivity, and demand for enhanced digital features are highest for millennials,” according to the report.

The report concludes the grocery stores need to make the proper investment in online shopping. It is expected to be 21.5 percent of industry sales by 2025, but the report warns that grocery stores must not adopt a “digital-first” philosophy. The loyalty is to the physical presence, and retailers must focus on product choice and convenience. Kroger, Lowes Foods, Brookshire’s, Target, Weis and Giant were noted for their successes with online ordering in the report.

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