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The Spoon

Daily news and analysis about the food tech revolution

online grocery shopping

Total Online Grocery Sales Down 6% in March, But Grocer’s Home Delivery Business Still Growing

According to a new report by market researcher Brick Meets Click, total US online grocery sales were down 6% in March versus 2021, dropping to $8.7 billion versus March 2021’s record sales of $9.3 billion.

Bricks to Click defines the online grocery market in three segments: Ship-to-Home, Pickup, and Delivery. Ship-to-Home, which includes grocery delivered via parcel carriers (UPS, FedEx, USPS), saw the biggest decline, dropping by 30% from $2.1 to $1.4 billion. Pickup, which includes curbside, in-store, lockers, and drive-thru pickups, was down by 11%, dropping from $4.3 to $3.8 billion.

But it wasn’t all bad news. Delivery – which includes both grocer first-party (Kroger, etc.) and third-party service provider (Instacart, Shipt, Doordash) delivery – was up year over year, going from $2.9 billion to $3.5 billion.

In its analysis, Brick to Click pointed to the emergence of fast-grocery delivery as one of the reasons for the category’s growth.

“Two factors continued to drive Delivery’s strong performance in March,” said David Bishop, partner at Brick Meets Click. “First, the aggressive expansion of third-party providers into grocery is enabling additional ways for people to shop online, and second, newer services focused on faster cycle times are appealing to a broader range of trip missions and usage occasions,” he added.

One of the things we wondered early on in the pandemic was how much behavior change, such as online grocery adoption, would stick over the long haul. From the looks of it, many consumers are continuing to use online grocery shopping as the country emerges from the pandemic, but look to be mixing home delivery with trips to the grocery store.

You can read the full release from Bricks Meets Click here.

Kroger “Soft Opens” First Ocado-Powered Automated Warehouse

Kroger has “soft opened” the first of its Ocado-powered automated Customer Fulfillment Centers in Monroe, Ohio, Kroger CEO Rodney McMullen said during an earnings call this week.

According to Dayton 24/7, the new facility is 335,000 square feet, costs $55 million and employs 400 people. The new warehouse will use totes on rails to help assemble orders for delivery, pickup and distribution.

The opening comes almost three years after Kroger announced it was upping its investment in and bringing Ocado’s automation technology here to the U.S. In that time, it selected a number of additional sites across the U.S. that will be home to more fulfillment centers.

Grocery e-commerce and the need for more robust fulfillment logistics has exploded over the past year, thanks to the pandemic. As such retailers of all stripes have been investing in more automation to accommodate online grocery shopping. Albertsons has expanded its use of robotic micro-fulfillment and started testing automated curbside pickup kiosks. And Walmart has partnered with three different technology provides to expand its use of automated order fulfillment.

As the Biden administration accelerates the availability of vaccines and the warm weather of spring and summer fast approaches, the question of how much consumer behavior has changed remains. While industry watchers expect there to be a short-term correction in the use of grocery e-commerce, there is a sense that after a year of lockdowns and social distancing, new habits have set in. Online grocery sales are projected to hit $250 billion and take up 21.5 percent of total grocery sales by 2025.

Kroger’s new Customer Fulfillment Center in Monroe is expected to have an official, grand opening launch soon.

SKS 2020 Day Three: Food Robots, Ghost Kitchens & a Tour of the Modernist Cuisine Kitchen

Yesterday at SKS was jam-packed with great insights and conversation.

Novameat printed meat for us, we learned Pat Brown believes cell-based meat will never be a thing, and Eat Just CEO Josh Tetrick outlined a four-phase plan to bring — you guessed it — cell-based meat to market. We also heard from Wired’s Joe Ray and ATK’s Lisa McManus on the proper way to use tech in the kitchen and headed into the labs, homes and headquarters of our Startup Showcase finalists to see what they’re building.

And we’re not done! Here’s what we have lined up for our final day of SKS 2020 Virtual:

Building Resiliency in Restaurants with Tech: We catch up with the leaders of Sweetgreen, Galley Solutions and Leanpath to hear how restaurants are using tech to build more resilient businesses during the pandemic.

The Online Grocery Explosion: Wall Street Journal’s Wilson Rothman talks to Shipt CEO Kelly Caruso about the changing nature of online grocery in 2020 and where it’s going in the future.

I, Restaurant: Chris Albrecht will sit down with the CEOs of Picnic, DishCraft and Bear Robotics to see how the adoption of robotics and automation is changing restaurants in the front and back of house.

The DoorDash Playbook: Brita Rosenheim will talk with DoorDash’s Tom Pickett about lessons learned and new opportunities in the food delivery market.

Ghost Kitchens Everywhere: Jenn Marston will talk with ghost kitchen and virtual restaurant experts about strategies for navigatng this red-hot market.

The OG in Molecular Gastronomy: We just added a early-day debut of my conversation with the guy who kicked off the molecular gastronomy revolution, Harold McGee, about his new book on smells and the state of cooking innovation. (Hint: he’s more excited about some other things going on in food innovation happening outside of the kitchen.)

Let’s Head Into the Modernist Kitchen: Speaking of molecular gastronomy, we’re getting a guided tour of the Modernist Cuisine by head chef Francisco Migoya.

Plus a whole lot more. (See schedule here.)

If you’d like to attend day three, you’re in luck! We’re offering a discounted day three ticket that gets you full access. See all the sessions, network with the community and more for just $99.

Survey: As Online Grocery Trends Up, Walmart Leads and E-Commerce is Here to Stay

Results of a new survey from Coresight Research (registration required) released today show that as grocery e-commerce continues to trend up, thanks to the pandemic, Walmart has overtaken Amazon as the leading retailer and online grocery shopping appears to be the new normal for many consumers.

Coresight has been conducting weekly surveys of US consumers since mid-March and today’s results are from a survey done on August 19th. In this latest survey, Coresight found that 60 percent of respondent had bought groceries online in the past 12 months, up from 52 percent back in March.

Coresight also found that Walmart became the leading retailer for online grocery shoppers, surpassing Amazon. In August 56 percent of the online grocery shoppers had bought from Walmart, up from 52 percent back in March. Amazon saw a decline in Coresight’s study, with 55 percent of online grocery shoppers indicating they bought from there, down from 63 percent in March.

Now that we are six months into this pandemic it seems like people are getting habituated into buying their groceries online. Coresight’s survey found that 36 percent of online grocery shoppers “plan to retain their current online purchasing frequency one the pandemic eases or ends.”

These findings aren’t too surprising. Other research firms have shown month-over-month record numbers of online grocery shopping since the pandemic hit the U.S.. But Coresight’s surveys help add to this body of research and round out the picture of how consumers are changing habits as the pandemic continues.

What is worth studying more is the Walmart v. Amazon rivalry. All grocery retailers struggled under the sudden crush of new customers when the pandemic first hit. Amazon, which saw its grocery business triple year-over-year thanks to COVID, actually had to implement a waitlist for new delivery customers. Coresight surmised from its data that Amazon grew its sales through bigger baskets from existing customers, while Walmart may have been able to attract more customers.

Anecdotally, this fits with my own grocery experience. As delivery windows were hard to come buy during that initial e-commerce wave, Walmart, with its massive network of real-world stores was still able to fulfill my online grocery orders through curbside pickup.

And as Coresight points out, I’m not alone in finding online grocery shopping to be the new normal. Grocers have ironed out many of the early issues that plagued grocery e-commerce and with six months of shopping for groceries online now under their belt, people may have had enough time to establish new food buying habits.

Earlier this year, Coresight predicted that the online grocery sector would grow by 40 percent in 2020 to hit $38 billion in sales. I wonder if they will have to adjust that number as this new data comes in. Additionally, the grocery landscape continues to change. Not only is Amazon adding real world supermarkets to its arsenal of shopping options, but Walmart is expected to launch its new Walmart+ delivery service soon (and has since added Instacart as a grocery delivery partner), and new third-party players like Uber and DoorDash are now getting into the grocery delivery space.

31 Percent of U.S. Households Used Online Grocery in the Past Month

Nothing like a catastrophic global pandemic to force people into new behaviors. According to a survey released yesterday by Brick Meets Click and ShopperKit, online grocery shopping is booming, with 31 percent of U.S. households (~39.5 million households) saying they have used either an online grocery delivery or pickup service in the past month. (h/t Grocery Dive).

The results of this survey, which was conducted from March 23 – 25 with 1,601 U.S. adults, is more than double the number Brick Meets Clicks found in its August survey that found 13 percent of U.S. households grocery shopping online.

Interestingly, 26 percent of those surveyed are doing online grocery shopping for the first time. For shoppers 60 years and older, that number of first time users jumps to 39 percent.

The COVID-19 pandemic, coupled with shelter in place orders and social distancing, is driving a lot of this sudden spike online grocery usage. The question is whether these e-commerce newbies will stick around once the outbreak recedes. Brick Meets Clicks actually dug into this and found:

When asked how likely they were to continue using a specific online grocery service after the COVID-19 crisis subsides or ends, 43% of the survey respondents indicated that they are either extremely or very likely to do so.

That many people saying they will probably stick with e-commerce makes me think that consumers are being extra forgiving with delayed delivery times and out of stock items at the major retailers in this time of mass hoarding.

The trickier part in getting all of the data going forward is the fact that this pandemic doesn’t have a hard end date. It will be amorphous and the extent to which social distancing measures are kept in place could depend greatly on where you live and your perceived threat.

Regardless, this outbreak is forcing people into all kinds of new behaviors, and now we have numbers to show that online grocery shopping is among them.

Thank You, Walmart and Safeway, for Keeping Us Fed. Now Fix Your Confusing and Misleading E-Commerce

Grocery stores have been a bright spot in this otherwise dark time of global pandemic. Store workers are braving an on-edge public and risking infection to stock shelves or come out to our homes to deliver groceries. I appreciate and thank them for all their hard work.

So it’s not on the front lines where grocery stores have an issue right now. Instead, it’s on the back end, in the way big grocery retailers manage and communicate about e-commerce orders, where the problems seem to be happening.

Like millions of others, my family has been self-isolating for a couple of weeks, which means more grocery shopping online. I’ve used Safeway for delivery and Walmart for curbside pickup. Both have problems with the way they relay information about out-of-stock items.

Before going off on too much of a rant, I should note that I’m extremely lucky. My wife and I are still employed, we are sufficiently stocked with food, and if need be, we can easily and safely go to an actual grocery store. But there are a lot of people in worse off situations, and those people need a consistent and reliable method for ordering groceries from home.

I also understand that we are in unprecedented times, and as such, people are stocking up/hoarding, so some items are just aren’t available. I have yet to find toilet paper anywhere online, and evidently everyone is baking loaves of sourdough, so there’s a run on flour.

The problems I’ve encountered with Safeway and Walmart is that those platforms accept and process my online order, leading me to believe all items are in stock and that I’ll get everything I need/want. Then, literally a couple hours before the scheduled pickup or delivery time, I get notifications telling me some items are out of stock and I won’t receive them.

In the case of the Safeway, it was a delivery order that had been placed a week and half prior. So during that time, I assumed my entire order would arrive and didn’t make any other plans to get groceries. Thankfully, the only things the store was out of were flour and yeast (to make bread, he admitted, sheepishly), and not more necessary staples like eggs or milk. But there was a gap of a week and a half in between the time I placed the order and the delivery date. At some point in there, Safeway should have communicated that items are out of stock so I could figure something else out.

The same thing happened with Walmart when I ordered food for curbside pickup. The system accepted my order the day before, leading me to believe everything was a-okay! Then the next day, shortly before I drove to the store for pickup I got an email from Walmart that basically said, “Just kidding! We’re out of a bunch of stuff you ordered.” Some of the items, like toilet paper, I kinda figured might disappear, but there were also things like fruits and vegetables in there that suddenly couldn’t be fulfilled. This was more baffling because Walmart is a logistics and supply chain monster. Why, then, was the online ordering so far off from reality in the 24-hour period between when I placed my order and when I picked it up?

Again, the reason for this whole rant is that as we are told to shelter in place and avoid crowds (especially if you’re older), e-commerce will become increasingly important, depending on how long this outbreak lasts. It’s critical that people can feel confident in the online orders they place. I’m fortunate in that I have the time and means to compensate if something goes awry. But there are lots of people who don’t, and lots of people who can’t go into the store because they have young kids, or are sick who will rely on online grocery shopping. If it’s too difficult to align store inventory with demand at a store, then retailers should improve and clarify messaging around orders so that people understand that what they receive may change, and if it does, give them ample time to either prepare for the outage or make substitutions.

For the most part, online grocery shopping is great! And I really do appreciate all the work Walmart and Safeway are putting in quickly to make it happen. We just need to make some changes to make sure we aren’t worse off in these worst of times.

We’re spending every day tracking the impact of COVID-19 on the world of food. Subscribe to our newsletter to get our analysis and hear stories from the front lines.

Study: Holidays Could Bring Boost to Online Grocery Shopping

A topic I’ve touched on a lot lately is that while online grocery shopping is currently a small sliver of the overall grocery shopping pie, it’s growing. According to a new survey from facilities management platform ServiceChannel (h/t Grocery Dive), the holidays could provide a shot in the arm for that online grocery delivery growth.

From ServiceChannels’ The State of Grocery Report, of the 1,505 consumers surveyed:

  • 63% of all respondents said they would be at least somewhat likely to order a fully prepared holiday meal from an online grocery delivery service if it were available, with Millennials and Gen X being the most interested.
  • 32% of those who already shop online say they’d be very likely to order a fully prepared holiday meal from a delivery service.

Shoppers who regularly buy groceries online will lean on digital options even more heavily in the 2019 season:

  • 50% of those who regularly shop online for groceries plan to order them online more than usual. Compared to other generations, more Millennials (47%) and Gen Xers (53%) plan to order groceries online more often than usual over the holiday season.

I, a GenXer, can’t imagine my GenXer wife ever agreeing to purchase fully prepared holiday meals online (though the idea is tempting). I’ll leave that one to millennials and GenZers. But the bigger, more key takeaway here is that people are looking for ways to alleviate the stresses associated with holiday meals and online grocery shopping has finally grown into a mechanism to help alleviate that stress.

Just look at recent moves from Amazon and Walmart to make online grocery shopping during the holidays easier. Amazon made two-hour grocery delivery free for Prime Members, and Walmart is rolling out its Delivery Unlimited service nationwide.

The question now is if grocery delivery will provide a great enough customer experience that people continue with it after the new year.

Takeoff Raises $25M for Robot-Driven Grocery Microfulfillment Centers

Takeoff Technologies, which builds automated microfulfillment centers for grocery retailers, announced today that it has raised a $25 million Series C round of funding led by Forrestal Capital. This brings the total amount raised by the company to $86 million dollars.

Takeoff builds small robot-driven fulfillment centers, typically located in the back of grocery stores. The system uses a series of totes and rails to assemble online grocery orders for pickup or delivery in as little as a half hour. The company has announced partnerships with Albertsons, Ahold Delhaize, Wakefern and Sedano’s, and with today’s funding, Takeoff says it will scale out across North America, Europe and Australia.

The company also announced version 2.0 of its microfulfillment centers, which will be rolled out in 2020. According the press release, version 2.0 will have a “smaller and cleaner” design to allow for easier installation and six percent faster order packing. The v2.0 will also feature autonomous mobile robots that transport grocery totes.

Automated fulfillment centers are a big area of investment for grocery retailers this year as companies look to streamline order processing. Rather than having humans wandering the store aisles fulfilling orders for other humans, robots can do the job more quickly and accurately. As mentioned, Albertsons and Ahold Delhaize are working on in-store solutions through Takeoff, while Walmart is piloting its own in-store microfulfillment center with Alert Innovation. Kroger is taking a different approach and is building out 20 robot-driven smart warehouses over the next two years.

A recent study by Brick Meets Click showed that while online grocery shopping is only 6 percent of overall grocery sales, they have actually grown 15 percent year-over-year. Microfulfillment centers like the ones Takeoff builds provide the infrastructure to meet demand when online grocery eventually goes mainstream — which isn’t that far off.

Kroger Looks to Build Next Robotic Warehouse in Dallas, Texas

Kroger wants to build its next Ocado-powered robotic smart warehouse in Dallas, TX. The plans aren’t finalized, and as the Dallas News reported:

The Cincinnati-based grocer will ask the Dallas City Council on Wednesday for $5.7 million: 10-year and five-year property and business personal property tax abatements totaling $3.7 million, and $2 million from 2012 bond money designated for economic development in southern Dallas, according to the city’s meeting agenda.

Kroger confirmed with the Dallas News that it is working with the Dallas city council on the approval process.

Kroger has plans to build 20 of these automated fulfillment centers, or “sheds” as the grocer calls them, and Dallas would be the fifth announced location, joining, Monroe, OH, Groveland, FL, Forest Park, GA and one unspecified in the Mid-Atlantic region.

These smart warehouses use technology from UK-based Ocado (in which Kroger is an investor) and combine robots and logistical software to automate fulfillment of online grocery orders. The automated system uses a series of totes on rails to shuttle around a grid system, picking up items and assembling them for orders.

Though the vast majority of Americans have still never bought their groceries online, the number of people who do is steadily growing, and retailers like Kroger are building out the infrastructure now for when it (eventually) becomes mainstream. Kroger, in particular is investing in an online ordering future, as my colleague, Jenn Marston wrote about Kroger’s Q1 earnings report in June:

[Kroger’s] digital sales grew 42 percent over the quarter, making delivery and/or pickup options available to 93 percent of Kroger’s customers. Online grocery delivery is now available at 2,126 Kroger locations and pickup at 1,685 locations. The company plans to have those options available to “everyone in America” by the end of this year…

But Kroger rivals aren’t sitting still. Walmart is testing robotic fulfillment, launching a grocery delivery subscription service and experimenting with in-home delivery. Albertsons and Ahold Delhaize are testing their own robotic fulfillment solutions, too. Given the competition, Kroger has to push its own innovation efforts. For example, just a few hours south of Dallas, down in Houston, Kroger is experimenting with self-driving delivery vehicles.

At some point, Kroger will connect the automated warehouses with the automated vehicles for round the clock delivery to get you the groceries you want when you want them.

Gallup: 81 Percent of Americans “Never” Order Groceries Online (But That’s Still Good News for Grocers)

A survey out from Gallup last week showed that the vast majority of Americans are not shopping for groceries online. According to Gallup, “Eighty-one percent of Americans say they never order groceries online, while 11% say they do so at least once a month.”

Gallup posited the following explanation for American hesitancy when it comes to online grocery shopping, writing:

The slow adoption of online food ordering could indicate that people enjoy picking their own groceries in person or that they don’t see sufficient savings of time or money to justify the switch. The delivery charges that go along with food delivery may be a factor in that.

That sounds pretty dire for the grocery industry, which is investing pretty heavily in online ordering and fulfillment mechanisms. But one of the good things about this stat is that we have a similar Gallup poll from almost exactly a year ago to compare it to. If you are looking for a silver lining, last year Gallup found that 84 percent never bought groceries online. So there’s been a three percent drop in the number of “nevers.”

Additionally, there’s more (relatively) good news to be found if you dig into the numbers a bit. Last year Gallup found that 14 percent of adults with children under 18 bought groceries online at least monthly. The 2019 survey found that 19 percent of those with children under 18 bought groceries online at least monthly. So if you’re playing the (very) long game, there are more families online grocery shopping, and they are raising a new generation that will grow up believing online shopping is the normal way to get groceries.

The Gallup stats should be taken as a piece of a bigger set of data around the evolution of grocery shopping. While it was small, Gallup did find an increase in the number of people who have at least tried online grocery shopping this year. In May, Coresight Research found that between 2018 and 2019, there was an increase of 35 million people who shopped for groceries online. And in July, a Field Agent survey found that 66 percent of its respondents expect to be buying their groceries online in the next five years.

Having said all that, in-store shopping is still the way to go when it comes to groceries for most Americans. Gallup’s 2019 found that 83 percent say that they shop at grocery stores at least once a week, which is why the biggest opportunity for grocers may be investing in curbside pickup (which many are already doing). Curbside pickup allows people to maintain their regular life schedules, and gives them an opportunity to inspect items at the store in case any need to be returned.

My guess would be this time next year, Gallup will show another year of incremental growth in online grocery shopping. But as big investments from Walmart, Kroger and Albertsons move out of testing and into real life, the adoption for online grocery shopping will accelerate soon after that.

Unocart’s App Unites Shopping Across Australian Grocery Stores to Find Savings

To understand Unocart, the Australian grocery shopping and delivery app, you first have to understand how grocery stores work in Australia.

As Tyler Spooner, Co-Founder of the Perth-based Unocart explained to me, grocery stores in Australia are clustered together in shopping center hubs. So instead of having outlets across town, there is typically one building that holds all the different stores under one roof: Woolworth’s, Coles, Aldi, and others are right next to each other. It’s because of these close quarters that Unocart is able to work.

When you shop through Unocart’s mobile app, you start by picking a grocery store and shop as you normally do. But let’s say you chose a particular brand of milk. If that milk was on sale at a different store, Unocart alerts you to the lower price and allows you to swap it out in your virtual cart. Once you place your full order, human Unocart shoppers go to the stores, fulfill your order and deliver it to you.

Now, if this were the United States, this would be crazy. Having human shoppers drive across town to pick up a few items at Safeway, and then a few more at Ralph’s and then a few more at Whole Foods just to save a buck or two would take way too long and be way too expensive. But because the grocery stores in Australia are grouped together, a Unocart shopper there only has to walk next door.

Users can shop for about 120,000 different items via Unocart right now. However, Unocart is not plugged into the inventory systems of these grocery stores. Instead, while they are out gathering orders, Unocart shoppers also use their mobile phones to scan items and send prices back to Unocart.

When asked how retailers feel about Unocart potentially stealing away some of their sales Spooner said “Grocer reactions are fine at the moment.”

Right now, Unocart does brand-specific comparisons, meaning that if you select Brand X Whole Milk, it will look only for prices on Brand X Milk. It won’t suggest Brand Y Whole Milk, which may be the cheapest option of all. That type of item-level understanding is on the roadmap for future versions of the app.

Unocart launched ten months ago, and the company has raised $700,000 AUSD (~ USD $500,000) in seed funding. Spooner says they have roughly 13,000 users in Perth, a couple thousand more in Sydney. The company plans to go national in Australia at the start of the new year. On average, Spooner said, Unocart shoppers save 30 percent on their groceries. Unocart charges a delivery fee and also takes 20 percent of the savings Unocart delivers. So if you save $20, Unocart will take $4.

It seems like the delivery fee plus Unocart’s cut would quickly eat away a good chunk of your savings. But then again, it may be worth it since you aren’t doing any of the shopping or price comparison.

Spooner said that Unocart currently does not currently monetize the data it gets (what items are purchased when and with what, etc.) that might be useful to CPG brands or retailers, but is looking at doing so. He also said that there are opportunities for Unocart to monetize product placement and promotion within the app.

It’s hard to see how something like Unocart would work here in the U.S., given how spread out our stores are here. There are apps like Basket, which crowdsources pricing but don’t offer delivery.

Guess I’ll just need The Spoon to buy me a ticket to Australia, you know, so I can better understand automatic comparison grocery shopping down under firsthand.