Which way is the pendulum swinging with in-store vs. online grocery shopping?

As COVID-19 has receded, retailers of all stripes have reported shoppers returning to brick-and-mortar stores after an explosion in online transactions during the pandemic. But new research paints an unclear picture of how the trend sits with grocery shoppers.

A study released this week by payments and commerce infosite PYMNTS.com found that, on average, only 44% of 2,426 consumers polled make most of their “common grocery item” purchases at physical stores, down from 63% in early 2020. “And this is just the beginning,” the “Changes in Grocery Shopping Habits and Perceptions” report said.

“A small but rapidly growing share of consumers now buy all their groceries online, led by the Millennial and Bridge Millennial age groups,” PYMNTS stated. “While the vast majority of consumers still at least occasionally shop at physical grocery stores, the trend of hybrid shopping—buying groceries both online and in-store—is quickly becoming the norm.”

Online-only grocery shoppers on the rise?

Of shoppers surveyed by PYMNTS, 77% have reduced grocery store purchases for at least one category of items. Nonfood items represent most of the cutbacks cited, including cleaning supplies (48.2%), personal and health care products (48.1%) and paper goods (47.4%). More than a third (37.7%) of consumers named packaged items as a category where they’ve cut in-store purchases, as well as food segments such as frozen (36%) and canned (34.6%) foods, fresh produce (33.9%), and fresh meat/seafood (33.2%).

Source: Grocery Doppio, January 2023: State of Digital Grocery Performance Scorecard, stores vs. digital dollar share.

PYMNTS pointed to growth in digital grocery shopping as pulling consumers away from in-store transactions. Its research revealed that the average share of shoppers buying no groceries from brick-and-mortar stores climbed from 2.2% just before the pandemic to 37% currently.

“We also detected a reduction in the average number of goods purchased per visit to physical grocery stores, from an estimated six before the pandemic to four now,” the report said.

The trend is similar in terms of share of consumers. Prior to COVID-19, 0.2% of consumers bought all of their daily essentials online, compared with 7.2%—about 16 million U.S. consumers—today, PYMNTS reported. The top reasons cited by shoppers for going online versus going to stores were convenience (36.2%) and high prices/lack of benefits or deals in stores (31.8%).

“The trend toward hybrid shopping—buying groceries both online and in-store—is also increasing, albeit more slowly. Thirty-nine percent of consumers now buy their groceries through a mix of physical and digital channels, up from 37% pre-pandemic,” the PYMNTS study said. “Across all age groups, the share of hybrid shoppers remained relatively steady despite the rise of all-digital shoppers, underscoring the systemic shift toward digital channels.”

Stores the choice for most shoppers

But is there a systemic transition from brick-and-mortar to online retail channels? A survey released Tuesday by Theatro, a mobile communication platform for frontline retail associates, indicated no such trend at this time.

Of 600 U.S. adults polled last month, 91% report doing at least half of all their shopping at physical stores. Sixty-four percent do most (37%) or all (27%) of their shopping in stores, while 28% do about half of their shopping in stores and half online. Also, 87% shop in retail stores at least once per week, including 19% once daily and 13% multiple times daily.

Source: Theatro 2023 Retail Customer Experience Survey, in-store shopping experiences.

“Consumers prefer physical retail for a lot of reasons, such as the ability to see and feel products before buying them, and the immediate gratification of taking a product home,” according to Theatro CEO Chris Todd. “But they’ve also become more accustomed to the advantages of e-commerce, such as avoiding long lines and having an almost infinite amount of product information at their fingertips. This makes them more impatient with the in-store experience.”

The pandemic had a big impact on consumers’ channel behavior. Theatro’s research found that 39% shop less often at physical stores compared with pre-pandemic, while 24% shop more often. About 38% currently shop in-store about the same amount as they did before COVID.

What’s more, grocery stores aren’t generating good feelings from in-store customers post-pandemic. Forty-one percent of consumers polled by Theatro said their in-store experiences are “less enjoyable” versus pre-pandemic, 21% report they are “more enjoyable” and 38% indicate they’re about the same.

Among retail channels, supermarkets were cited by 38% of shoppers as the store where they’re most likely to have an “unenjoyable” shopping experience, followed by 34% for department stores, 30% for convenience stores, 23% for discount stores, 18% for drug stores, 17% for specialty retailers and 16% for apparel stores.

Besides being able to see and touch products in-person and getting their items immediately, customers named the social aspect of shopping, the ability to ask questions and get help on the spot from staff, and simpler returns as the main advantages of shopping in physical stores. Their chief complaints about in-store shopping included inadequate staffing, poorly trained staff, long lines, limited product availability, finding items and parking.

“Consumers still love shopping in stores,” added Todd. “They just expect more from the experience than they are currently getting in many cases—including from their encounters with store employees.”

In-store shoppers lost are grocers gain online

Even if brick-and-mortar grocery retailers are losing in-store shoppers, other research shows they’re picking them up at the digital end.

Incisiv and Wynshop’s latest State of Digital Grocery Performance Scorecard, released on Tuesday via their Grocery Doppio website, reported that third-party online grocery providers saw hefty losses in 2022. E-grocery sales via third parties dropped from $3.3 billion in January 2022 (31.3% of digital grocery sales) to $1.9 billion (18.1% share) in January 2023. Grocer websites accounted for 75.2% ($8.1 billion) of digital grocery sales through last month, while grocer apps represented 6.7% ($700 million).

Source: Grocery Doppio, January 2023: State of Digital Grocery Performance Scorecard, stores vs. digital channel share.

Click-and-collect sales (including curbside and in-store) climbed again in January, up 4.6% to $6.2 billion, accounting for 57.9% of all online grocery orders for the month, while delivery’s share declined to 42.2%. The scorecard noted that the uptick marks a continuation of a “slow but steady increase” in pickup’s share of e-grocery orders since January 2022, when click-and-collect tallied a 53.3% share versus 46.7% for delivery.

That’s important for brick-and-mortar grocers, which by and large use their own employees for preparing pickup orders while third-party providers often handle much of the delivery orders.

Stores accounted for 85.3% of total U.S. grocery sales versus 14.7% for online as of January 2023, the Grocery Doppio study said. Sales by stores advanced 7.4% to $62.3 billion in January 2023 from $58 billion in January 2022, whereas digital grocery sales rose 2.9% to $10.7 billion from $10.4 billion over that period. Online basket size rose 39.7% during that time span, and the average number of items in the digital basket grew by four.

“Since Grocery Doppio began tracking the market, we have seen two irrepressible trends month after month,” noted Charlie Kaplan, chief revenue officer at Wynshop. “Grocers are taking more of the overall digital grocery market from third parties, and curbside pickup continues to gain in popularity with shoppers. Both trends underscore the importance to grocers of improving digital operations in 2023.”