Online Grocery Sales Are Up, but Will It Last?

Despite the convenience of online orders, shoppers still prefer to visit a physical store for food.

May 29, 2020

ALEXANDRIA, Va.—Like millions of other American shoppers, Bonnie Russolillo of Long Island has been forced by the pandemic to purchase groceries online. While the experience was better than she expected, she would prefer to walk the aisles herself.

“If I feel it’s safe, I’d much rather do my own shopping,” Russolillo, 62, told Bloomberg.com. “It’s much different than going online and looking at pictures.” 

Online grocery sales have surged as much as 200% this year, according to Bloomberg.com. Earnest Research reports that the $840 billion grocery industry has been one of the few bright spots amid a pandemic that has crushed the economy. Walmart, Amazon and Instacart are reaping the rewards, and some e-commerce prognosticators believe the online grocery industry has finally hit an inflection point that’s been expected for years.

But how much of that spending shift will stick? Problems with online food shopping persist for both consumers and retailers. Online is expensive to operate, and supply chains have been upended, producing limits on capacity and inventory. The shopping experience can be technically confusing, especially for older consumers. And despite the pandemic, Americans still like to squeeze their cantaloupes and eyeball their rib-eyes.

Russolillo and her husband, Ray, learned that ordering produce online can be tricky. “The picture showed a bunch of bananas. So, we ordered what we thought was one bunch of bananas,” Ray said. “The delivery came, and we got one banana. Who buys just one banana?”

In the early days of the pandemic, it seemed as though buying online groceries would become routine. “The customer demand we expected over the next two-to-four years has happened in the last two-to-four weeks,” Apoorva Mehta, CEO of Instacart, said in early April. Visits to Walmart’s online grocery site that month soared more than fourfold, according to data tracker SimilarWeb, fueling the retailer’s fastest quarterly sales growth in almost two decades.  

But even in those cities hit hard by the pandemic, 7 in 10 consumers have continued to visit stores for groceries and other merchandise, according to McKinsey & Co. In states with more relaxed restrictions, the figure is more than 8 in 10. More than one-third of shoppers say they’ll decrease their use of web groceries or stop ordering food online altogether when shelter-in-place restrictions ease locally, according to a survey conducted for Bloomberg by CivicScience.

Among those who use online grocery pickup services, only half include fresh produce in their orders primarily due to concerns over quality, reports Field Agent, an industry researcher. Consumers like to see and select fresh food in physical stores, according to research from Evercore ISI.

The next few months will be critical in assessing the lasting effects of the pandemic on shopping habits. Recent data is muddied by stockpiling in late March and early April, as well as government stimulus checks that buttressed consumer spending as millions of workers were laid off.

“What drove the rapid increase in online grocery’s penetration? It was fear—fear of catching the virus,” says David Bishop, a partner at retail sales and marketing firm Brick Meets Click. “Anyone who is rooting for online to stay at this rate, unfortunately, is rooting for the virus.”

Coronavirus Resources

NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.

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