The coronavirus outbreak is already changing the way we shop for groceries in a major way. Some supermarkets have implemented new, contactless ways to pay. Many more of us are ordering online to avoid going into stores.
Once the outbreak has ended, though, some of these new grocery-shopping habits may be here to stay. And this could further intensify competition in an already cutthroat grocery market like Charlotte’s.
Shopping online for groceries has never been as popular as shopping online for other consumer goods like T-shirts or laptops or books. Last year, online grocery sales made up an estimated 6.3 percent of total grocery spending in the U.S., up from 5.5 percent the prior year, according to the research firm Brick Meets Click.
Physically going into the grocery store is a regular weekend errand for many of us. In a store, it’s easier to put together dinner recipes on a whim based on which fruits, vegetables, and meats look the freshest.
For years, grocers have been trying to figure out ways to improve the online shopping experience they offer, and to get people to shop online more, says Roger Beahm, a marketing professor at Wake Forest University. Many have partnered with delivery companies like Shipt and Instacart. When Amazon bought Whole Foods in 2017, it renewed urgency in grocers’ desire to figure out e-commerce.
The coronavirus outbreak has provided a need for customers to shop online for groceries.
For one, it’s a safe way to avoid contact with other people. It’s also convenient, especially for parents with kids at home full time now that schools are out. When people shop online for groceries, they tend to feel less influenced by in-store marketing materials, too, Beahm says.
Kristin McCabe, a mom in south Charlotte, is one such shopper who started shopping online for groceries amid the coronavirus outbreak. When it started, she went to Publix, where there was very little social distancing going on. There were lines drawn out showing people how much distance to maintain, but hardly anyone paid attention. It made McCabe nervous.
“After that I’m like, I am not stepping foot in another grocery store,” McCabe says. Since then, she’s been shopping online through Publix, Aldi, and Target for groceries.
The numbers show that more people are shopping online these days: In March, sales from online grocery shopping surged 233 percent, Brick Meets Click estimates.
Whenever you create a “trial opportunity” for shoppers, a certain percentage of that trial is going to stick, says Beahm.
“That’s what we’re going to experience as we move into the post-coronavirus phase. A larger percentage than ever of shoppers will now continue buying their retail grocery online,” Beahm says.
The surge in demand has overwhelmed some grocers, though. Harris Teeter, for instance, is operating at over maximum capacity. That has become a source of frustration for customers, who’ve complained about wait times and out-of-stock items, the grocer has said.
“Many retailers were caught shorthanded by the sudden whipsaw of customers who normally come into the store now wanting to buy online,” Beahm says.
When I went into Harris Teeter’s system to test an online order on Monday, and it provided five possible delivery time slots for Tuesday. When you order delivery, it’s $9.95 for orders $50 or more, then the store adds a $4.95 “picking fee.”
Choosing the store pickup option didn’t have any time slots open until Wednesday afternoon. At $4.95, though, picking up at the store is cheaper than delivery.
Grocers will have to evolve their business models accordingly to keep up with new demand for online shopping, Beahm says. Ultimately, this could lead to a more seamless shopping experience.
Retailers will, for instance, start improving their supply chains and figuring out ways to get products directly from warehouses to customers’ homes without going through stores first. This’ll mean customers get grocery orders faster, Beahm says.
“We won’t see those (changes) as much as consumers. They’ll be invisible to us. But they will happen, and there will be benefits,” Beahm says.
The grocery delivery company Shipt currently provides delivery from about a dozen food retailers, including Harris Teeter, Lidl, and Bi-Lo. The company employs more than 5,000 “shoppers,” in Charlotte, and plans to grow that number in light of recent demand.
“We’ve seen an unprecedented rise in demand in recent weeks, including a record-breaking week for orders delivered last week,” a Shipt spokeswoman said in an email Monday.
Nationwide, customer order volume is up more than 400 percent year-over-year for Instacart, another grocery delivery service. The size of each customer’s grocery order has grown 25 percent from March to April, the company says.
To handle the surge in demand, Instacart has hired more than 150,000 “shoppers” nationwide since March. These employees are in charge of picking out and delivering customers’ grocery orders. Instacart would not provide data on its sales or employment in Charlotte.
Locally, Instacart says it partners with about 15 retailers, including Costco, Food Lion, The Fresh Market, and Sam’s Club.
Krista Goff, who lives in the Steele Creek area, started shopping for groceries online for the first time last month through Instacart from Sam’s Club and Publix. She’s pregnant, so she wanted to avoid unnecessary exposure to other shoppers.
Goff decided to price compare, though, and realized that the cost of her order was pricier through Instacart than it would be from directly ordering through the Sam’s Club app. Aside from service and delivery fees, each item seems to be marked up, too. Goff says she probably won’t continue shopping online exclusively after the pandemic ends.
“I actually enjoy going to the grocery stores with my husband on Saturday mornings so we never would have entertained the idea of using a delivery service before all of this happened,” Goff says.
To respond quickly to changing shopper habits during coronavirus, grocery companies are evolving in other ways that could also be here to stay.
Earlier this month, Publix rolled out a new, contactless way to pay for groceries payment option for the first time. When checking out, customers now can place a contactless pay-enabled credit or debit card next to a contactless reader. It avoids the need to insert a credit card into the PIN pad, Publix says.
Similarly, Walmart last month launched a contactless pay option for customers who use the Walmart Pay option on the Walmart mobile app. Customers can elect to have their groceries dropped off on their doorsteps without a signature required.
In a recent Facebook discussion about the future of grocery shopping, Jon Springer, executive editor of Winsight Grocery Business, said coronavirus will accelerate trends in automation in the grocery industry.
Walmart, for instance, recently started testing driverless cars to make deliveries. Automation could both shape the grocery shopping experience, and ultimately replace some grocery jobs.
“Robots don’t get sick and robots aren’t going to be asking for more hours or higher wages,” Springer said.
One more thing is for sure: Even when restaurants and bars open back up, customers are likely to spend more on groceries than they do at restaurants, at least for a while, says Beahm.
That’s because the U.S. is likely in a recession now. Over 730,000 North Carolinians have filed for unemployment since mid-March. When people have less money to spend, they’re less likely to dine out.
In a recent securities filing, Kroger, Harris Teeter’s parent company, cited “potential long-term shift in customer behavior toward eating more food at home” as a factor that’ll affect its business.
McCabe, the south Charlotte shopper, says she normally likes going into a grocery store to shop. But she’s now comfortable placing her grocery orders online and will continue to do so if necessary.
“We used to eat out a lot and we don’t now,” McCabe says. “We’ve done takeout, but I’m definitely cooking more.”