Online grocery shopping grows amid ‘pandemic-induced channel stickiness’

About 60% of U.S. consumers now buy groceries online, and the same percentage of these shoppers plan to do so at the same frequency or more once the COVID-19 crisis subsides, according to a new study by Coresight Research.

Of 1,652 U.S. adults polled in April, 59% said they’ve purchased groceries online in the past 12 months, up from 52% in 2020 and 36.8% in 2019, according to Coresight Research’s U.S. Online Grocery Survey 2021: Post-Surge Prospects” report, released May 20.

Similarly, 59.8% of online shoppers plan to buy their groceries that way at around the same frequency or more frequently post-pandemic, with 12.6% saying they’ll do so much more often, 11.6% slightly more often and 35.6% at about the same rate, Coresight found. Nearly 30% plan to purchase groceries slightly less frequently (15.3%) or much less frequently (14.3) online when the pandemic eases, while 6.3% expect to stop online grocery purchases.

“The health crisis was a significant catalyst in accelerating online grocery adoption and transformation in 2020 and into 2021. With the pandemic keeping consumers at home and away from stores (and restaurants), we estimate that total U.S. food and beverage e-commerce sales grew to $55.5 billion in 2020, up 81.1% year over year — a vastly greater increase than any recent year,” Deborah Weinswig, founder and CEO of Coresight, said in the study. “We believe that the pandemic-induced channel stickiness will support further online growth among retailers. Grocers have a unique opportunity to capitalize on shifting trends and the still-evolving e-commerce consumer experience.”

Related:Online grocery sales shrink 10% in April

In gauging shopper intent, Coresight’s survey revealed that 49.5% plan to buy groceries online in the next 12 months, down from 62.5% in 2020 — during the heart of the consumer stockpiling phase of the pandemic — but well over the 39.5% expecting to do so in 2019.

“In our three prior surveys, we saw expectations of buying online in the next 12 months exceed the proportion of respondents that had bought online in the past 12. However, this year, for the first time, we saw a 10.5 percentage point difference between the ‘had bought’ and ‘expect to buy’ proportions, with the latter dropping to 49.5%,” Weinswig noted. “The drop in spending intent through the online channel signifies that the unprecedented online grocery growth rate of 2020 will be hard to sustain as consumers are set to return (partially) to prior ways of living and spending.”

Just over 83% of respondents said they do a small amount (less than one quarter) to almost all of their grocery shopping online, up from 78.5% in 2020 and 68.6 in 2019. In 2021, 10% reporting doing nearly all and 14.7% doing most (more than half) of their grocery shopping online, versus 20.1% between one-quarter and one-half and 38.4% making less than a quarter of their grocery purchases online.

Related:U.S. online shoppers exhibit need for speed

Of all respondents, the proportion that had bought groceries online in the past 12 months/expect to buy groceries online in the next 12 months (% of respondents)

Since 2019, the percentage of consumers saying they do almost none of their grocery shopping online — once or twice in the past year — has nearly halved, shrinking from 31.4% to 21.5% in 2020 and to 16.9% in 2021.

“We saw the biggest year-over-year uplift in the proportion of shoppers doing a large amount of their shopping online, suggesting that the U.S. grocery e-commerce market now captures a meaningful share of full-basket grocery shoppers,” explained Weinswig. “The trend data shows a steady decline in the proportion of respondents doing ‘almost none’ of their grocery shopping online. On the other end of the spectrum, we recorded the most considerable increase in the proportion doing ‘all or almost all’ of their shopping online, which suggests a shifting landscape in which more grocery shoppers are conducting large-basket shopping online.”

Online grocery shoppers: How frequently they expect to buy groceries online once the coronavirus crisis subsides (% of respondents)

Core perishables categories saw the biggest gains in online purchases from 2020 to 2021, including fresh fruit and vegetables ( 13.4%); fresh dairy, eggs, meat and seafood ( 10.3%); frozen food ( 9.8%); and bread and baked goods ( 7.8%).

Other categories tallying online sales increases included household cleaning and paper products ( 6.6%), alcoholic beverages ( 6.1%), pet care ( 6%), cold non-alcoholic drinks ( 4.1%), hot beverages ( 3.9%) and chilled prepared foods ( 2.6%). The only categories seeing sales decreases among online shoppers from 2020 to 2021 were packaged shelf-stable groceries (-1.8%) and personal care and diapers (-0.8%).

This year, the top product categories that consumers buy online are household cleaning and paper products (67.4%); packaged non-fresh food (66.7%); personal care and diapers (62.3%); fresh produce (52.5%); frozen food (51.7%); bread and baked goods (49.5%); fresh dairy, eggs, meat and seafood (49.2%); and pet care (47.6%).

“We asked shoppers what grocery products they had bought online in the past year and, unsurprisingly, household cleaning products ranked highest as consumers have become increasingly focused on home hygiene amid the pandemic. Our past surveys indicated some resistance to buying fresh food categories online. This year, however, social distancing and stay-at-home measures induced many consumers to increase their use of e-commerce to buy fresh foods,” Weinswig observed.

“The increase across almost all categories indicates that consumers were, on average, buying more categories online as they increasingly adopted e-commerce as a channel for regular grocery shops and not just for ambient and nonfood store goods, although those kinds of products constitute the three most-bought categories,” she added.

Online grocery shoppers: Retailers from which they have bought groceries online in the past 12 months (% of respondents)

By far, Amazon and Walmart remain the top venues for online grocery shoppers, but respondents to Coresight’s survey reported that they’re shopping online for groceries less at the two retail giants.

In the past 12 months, 53.2% of those polled bought groceries online at Amazon (-9.4% from the 2020 survey), while 50.9% did so at Walmart (-2.6% from 2020). Other retailers cited as online grocery shopping destinations by respondents — and saw increases in e-customers from 2020 to 2021 — included Target at 28.3% ( 5.4% from 2020), Costco at 17.3% ( 2.1%), Whole Foods Market at 14.5% ( 1.3%), Sam’s Club at 14.4% (change N/A), The Kroger Co. at 14% ( 0.1%), Aldi at 10.8% ( 2.6%), Publix at 8.7% ( 2%), Albertsons Cos. at 5.7% ( 1.4%), BJ’s Wholesale Club at 5.2% (change N/A), Ahold Delhaize USA at 5% (-0.3%) and Southeastern Grocers at 1.4% (-1.1%).

Among online grocers, 4.3% of consumers cited FreshDirect ( 1.5%) and 4.4% cited Ahold Delhaize USA’s Peapod (-0.4%).

“Among respondents who bought groceries online in the last 12 months, Amazon remains the most-shopped retailer. However, the proportion of online grocery shoppers buying on Amazon slid by 9.4 percentage points compared to 2020. The share of Walmart — the second most-shopped grocery retailer — also declined, albeit to a lesser extent. Amazon now has only a marginal lead over Walmart in terms of the proportion of online grocery shoppers buying from the retailer,” Weinswig wrote in the report.

“The percentage of online shoppers buying groceries from most other retailers we ask about rose compared to 2020 (except for Ahold Delhaize, Peapod and Bi-Lo/Harveys/Winn-Dixie), suggesting that they stepped up their efforts to serve customers online and build out omnichannel models to deliver groceries, thus capturing a greater share of online shoppers at the expense of Amazon and Walmart,” she pointed out. “With the exception of Amazon, the landscape is dominated by multichannel retailers rather than online pure-plays, albeit often with the assistance of service providers such as Instacart.”

Online grocery shoppers: How much of their total grocery shopping is done online (% of respondents)

On the fulfillment side, home delivery is seeing a faster consumer uptake than pickup, Coresight found. Of those surveyed, 55.5% said they mainly get their online grocery orders via delivery, up from 53.8% in 2020 and 47.5% in 2019. Forty-three percent of respondents primarily use click-and-collection service, down from 44.7% in 2020 and 49.5% in 2019.

And clearly, delivery users want their orders faster: 42.7% of consumers used same-day delivery in the past 12 months, and 26.1% opted for delivery in two hours or less. Over 46% made scheduled deliveries, while 16.8% used pickup only.

“Speed is of the essence when it comes to online grocery delivery,” said Weinswig. “Retailers should leverage their store networks efficiently, automate fulfillment processes and improve last-mile operations to keep pace with consumers’ demand for increased speed in home delivery.”

Online grocery services get high marks in customer satisfaction, Coresight’s research showed. Almost 82% expressed satisfaction in terms of delivery/pickup on-time performance, product and time slot availability and quality of service, with 28.2%”very satisfied” and 48.7% “quite satisfied.”

“COVID-19 has amplified the ongoing digital disruption in the grocery industry. The penetration of e-commerce in the grocery space has lagged behind most other retail sectors. However, the pandemic shook up this status quo by fueling a rapid collapse of consumer uptake barriers and a dramatic acceleration in online grocery growth,” according to Weinswig. “Moving forward, we expect to see higher levels of competition in the online grocery market among small and midsize players, following on from intensified efforts amid the pandemic,” she added. “We expect to see these players pull in consumers carrying out big-basket, full-assortment grocery shops and maintaining pressure on the market leaders Amazon and Walmart.”