Grocery Stores Are Still Winning, but for How Much Longer?

The experience of the grocery store has not changed much over the span of time. Anywhere you go, there are the aisles, the lights, the end caps of on sale items, the carts, the check-out lines – all nicely positioned under the ever-pleasing, softly playing contemporary music bed. It’s a model that has worked. It is a model we trust. Get the food you need to feed yourself and your family, bag it up, pay for it, and take it home.

No matter where you go, whether you know it or not, the draw of the grocery store is the locality. Whether it’s a franchise of a larger chain or a single mom-and-pop establishment, the grocery store is the purest form of local shopping on a global scale. Nowhere else in retail is the origin of goods so vast and yet able to reach so into the smallest crevices of our communities. Food literally comes from near and far, and the grocery store lives and breathes by the consumer never having to give it another thought.

That is, until a pandemic hit, and consumers were forced to become intimately familiar with inventory shortages, delivery schedules, and supply chain failures. As images of empty shelves circulated and panicked shoppers filled our news feeds, the situation became dire, and no one cared about the grocery store model anymore. Restaurants were closing. Hoarding and panic-driven shoppers were filling their carts with non-perishables and toilet paper in preparation for what was certainly the end of time. Suddenly, the locality of grocery stores was gone. Suddenly, that blissful ignorance of how food arrived at our stores was gone. COVID-19 brought to light the varied and largely error-prone supply chain and distribution points of failure. As a result, consumers were not pleased, and they began to break free from the model. Online shopping and ecommerce, largely viewed as the pinch hitter to the in-store grocery experience before, was getting its turn at bat. And to a large degree, the crowds did go wild. But was it enough?

Fast forward to today, where the lockdowns and stay-at-home orders are being lifted all over the country. Life is returning for a cautious and optimistic population that is pretty much tired of being under house arrest.

According to a recent study by Global Data 17 June 2020, food retailers are still struggling to meet demand for online deliveries. Only about 3-4 percent of grocery spending in the U.S. was online before the pandemic, but that’s since surged to 10-15 percent, according to research by Bain & Company.

Grocers and delivery services that support grocers are seeing higher app downloads than ever before. Consumers are getting more familiar, more agile, and more connected, but how will the grocers meet those demands? How will they set a new course and a new model?

There is an opportunity for grocers through advancing digital commerce, but the window is small. Consumers won’t wait for the stores they love to rise to the challenge and meet their needs; they will simply find a store that does.

According to Gartner, “As people rely more on digital commerce for daily necessities, commerce organizations — especially those selling essentials such as grocery and personal protective gear — should expect traffic and demand spikes to their sites and apps.¹ At the same time, product delivery capacity can be severely impacted due to transportation restrictions and lack of staffing. As offline activities move online, applications and network capacities also face scalability challenges. Organizations should use the following checklists.”

Find out more about how COVID-19 is negatively impacting some retail grocers’ business performance and how leaders can mitigate risk with digital commerce initiatives.