Reimagining Retail: Online Grocery-Buying Habits, and Can Uber and DoorDash Push Further Into Grocery? | Aug 16, 2023
Aug 16, 2023
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Analysts Sara Lebow and Blake Droesch, along with director of content Becky Shilling, discuss the changes in US grocery shopping habits and strategies for growth in the industry. They also debate whether Uber and DoorDash can successfully expand into the grocery market. The podcast explores the challenges of online grocery shopping, including selecting produce, and offers potential solutions. It also discusses the decline in the US online grocery market and the feasibility of Uber and DoorDash entering the industry. Challenges in offering grocery delivery are explored, along with strategies to avoid disrupting the in-store experience.
Existing digital grocery buyers in the US are spending more money on online purchases, shifting the industry narrative towards targeting heavy digital grocery users.
Categories such as food and beverage, health, personal care, and beauty are projected to experience the fastest growth in online grocery sales, highlighting opportunities for retailers to focus on these segments.
Deep dives
Growth of Digital Grocery Sales Outpaces Number of Buyers
According to forecasts, digital grocery sales in the US are expected to increase by close to 20%, while the number of digital grocery buyers will only see a 2% increase. This suggests that existing digital grocery buyers are spending more money on their online purchases. The industry narrative around digital grocery has shifted from focusing on new adopters during the pandemic to targeting heavy digital grocery users. As a result, retailers and delivery platforms are now competing for a larger share of the existing user base rather than focusing solely on acquiring new customers. Categories such as food and beverage, health, personal care, and beauty are projected to experience the fastest growth in online grocery sales.
Key Considerations for Growing Online Grocery Sales
To drive growth in digital grocery sales, it is important to understand the buying trends and habits of frequent digital grocery buyers. High-penetration categories such as snacks, coffee and tea, pantry items, baking goods, and condiments are already popular among digital grocery buyers. However, there is potential for growth in perishable items such as fruits, vegetables, frozen fruits, bread, and bakery products. Although these categories have a smaller base of digital grocery buyers, they are purchased more frequently due to their perishable nature. Retailers can use various strategies, such as offering photos of products at different ripeness levels and providing customizable delivery options, to address consumer concerns and encourage the purchase of perishable items online.
Competing for Growth in Digital Grocery
Walmart is positioned to be a leader in the digital grocery market due to its control over the entire fulfillment process, from gathering products in stores and warehouses to delivery. This allows them to ensure the quality of perishable items and capitalize on their large customer base and brick-and-mortar presence. Additionally, Walmart's strong click-and-collect offering contributes to its potential for future growth in digital grocery sales. Instacart also stands out as a strong competitor due to its existing customer base and partnerships with legacy grocers. While companies like DoorDash and Uber may face challenges in entering the digital grocery market, their large customer bases and potential for cost-saving through paid membership programs can help drive growth in this sector.
On today's episode, in our "Retail Me This, Retail Me That" segment, we discuss the changes in how US consumers buy groceries, strategies for building future growth in grocery, and who has the best shot at winning. Then in a newish segment, "Loyalty Point, Counter Point," we present arguments both in favor of and against Uber and DoorDash being able to push even further into grocery. Join our analyst Sara Lebow as she hosts analyst Blake Droesch and director of content Becky Shilling.