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The Spoon

Daily news and analysis about the food tech revolution

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Survey: Online Grocery Sales Drop 14 Percent in February to $8B

Online grocery sales fell to $8 billion in February, dropping 14 percent from January’s $9.3 billion, according to new data released today from the latest Brick Meets Click/Mercatus Grocery Shopping Survey.

Brick Meets Click said the biggest factor in February’s decline was that fewer households bought groceries online. Monthly active users fell to 60.1 million in February, a 12 percent decrease from the 69.7 million in January. A lot of that drop off came from people over 60 years old, which could be a result of increased vaccinations in that age group. As more people get vaccinated, there will be more confidence in going out and into stores in-person.

In addition to fewer households placing orders, there were also just fewer orders in general. Online grocery shoppers averaged 2.7 orders in February, down 6 percent compared with 2.8 orders in January. However, Brick Meets Click said that most of this decline was in the ship-to-home segment. The combined delivery and pickup segment was only down 4 percent from January to February.

One bit of good news is that there was a four percent increase in average order value in February. Online grocery shopping households spent an average of $82 in February on orders received via delivery or pickup (that’s 55 percent more than orders placed for ship-to-home service).

Speaking of delivery and pickup, that segment nabbed $6.1 billion in February, gobbling up more than three-quarters of the total online grocery market for the month. Within that, curbside pickup accounted for nearly half of all online grocery sales in February.

Brick Meets Click’s latest data comes on the heels of a blockbuster quarter for online grocery related funding. Grocery-related startups around the world have been pulling in millions for faster delivery, e-commerce transition and market expansion. Is all this new money for naught as vaccines continue to roll out, freeing up people to leave their homes to shop in-person?

Not necessarily. Industry analysts have been expecting this type of market correction since last year. However, online grocery is projected to grow and eventually reach $250 billion, taking up 21.5 percent of total grocery sales by 2025.

The more immediate question for investors and even retailers pouring money into e-commerce solutions is whether to focus on delivery or curbside pickup. The data from February shows a preference for pickup, but we’ve seen retailers like Walmart and Albertsons devote more resources to both automated curbside pickup and faster delivery.

Brick Meets Click’s data for the next few months will certainly be fascinating to watch, not just from an industry perspective, but also a sociological one. After a year of lockdowns, what new grocery shopping habits will remain permanent, and what will that mean for innovation at retail overall?

AgFunder: Record-breaking $31B Invested in Agrifood Tech in 2020

Ag tech VC firm, AgFunder, released its annual report on agrifood tech funding today. Companies in this sector raised $26 billion in 2020, a 15.5 percent increase over 2019. If that wasn’t enough, AgFunder actually expects that already record-breaking figure to bump up to $30.5 billion as more deals done in 2020 are revealed.

The AgFunder 2021 Agrifoodtech Investing Report breaks the agrifood tech sector into “upstream” companies, which are closer to the farm, and “downstream” companies, which are closer to the consumer. AgFunder said that for the first time on record, upstream companies outraised downstream companies in 2020. Those upstream companies pulled in $15.8 billion across 1,950 deals, while downstream companies raising $14.3 billion across 1,142 deals.

AgFunder also found that alt-protein/novel ingredient/functional food companies raised $2.3 billion across 26 deals, and that e-grocery was the most funded downstream category, raising $5.1 billion across 119 deals. AgFunder noted that the agrifood tech sector is maturing, with startups at both growth and late stage raising larger deals than ever before.

“This is no longer seen as a niche, experimental and risky sector, highlighted by the increase in the median size of growth stage and late stages deals,” Louisa Burwood-Taylor, head of media & research at AgFunder, said in today’s press announcement. “Investors piled in despite Covid; the first wave of innovators in each category are now mature and able to raise huge rounds with many household names such as Impossible Foods; and the second wave of innovators is now raising much larger rounds than the first wave did at the same stage.”

What’s interesting about that statement is that AgFunder positions this growth in agrifoodtech as being in spite of the pandemic. While the pandemic has inflicted enormous economic difficulties around the world, it also seems like there was increased investment because of the pandemic. Downstream technologies in particular benefited as restaurants and grocers all accelerated adoption of systems that reduced human-to-human interaction and helped meet the rising demand for e-commerce to get our food.

AgFunder’s report reinforces earlier data showing the increased investment in food tech in 2020. Pitchbook said that a little more than $12 billion was invested in food tech companies last year. There is probably some definitional and scope differences between the two reports, but the broader point stands. Food tech companies raised a ton of money last year, and with the pandemic still very much a part of our lives, the breakneck pace of investment will continue in 2021.

U.S. Online Grocery Sales Hit $9.3 Billion in January

Total grocery e-commerce sales in the U.S. hit $9.3 billion this past January, with nearly 70 million households placing an average of 2.8 orders across delivery, pickup and ship-to-home categories, according to a new Brick Meets Click/Mercatus Grocery Shopping Survey.

January’s $9.3 billion in sales is up 15 percent over November 2020, and Brick Meets Click credits a large part of this growth to a 16 percent increase in the number of households that buy groceries online.

Among the survey’s findings:

  • Seventy-seven percent of all online grocery spending went to delivery and pickup.
  • Seventy-eight percent of households engaged with a delivery or pickup service (up from 64 percent in November).
  • Ship-to-home usage rate dropped from 56 percent to 46 percent during the same period.
  • Despite growth in other areas, the overall usage rate in January fell short of the record 76.7 million households that shopped online in April 2020 (at the height of the pandemic’s first wave).

Pickup and delivery’s share of orders grew roughly six percent from November, accounting for 66 percent of all online orders completed during January 2021.

While online grocery saw a lot of gains over the past few months, the overall satisfaction metric (the likelihood of using a specific service again) with online grocery dropped to 56 percent, down 32 percentage point from the record high ratings level in November. Pickup had the biggest drop, losing 35 percentage points.

“Even though many grocers remain capacity constrained – especially with pickup – others are growing market share as they staff up or expand pickup to a larger store base,” David Bishop, partner, Brick Meets Click said in today’s press announcement. “While throwing more labor at the issue isn’t ideal, this, along with improving assembling productivities via enhanced pick and pack practices, is vital to remaining competitive in the near term and not inadvertently giving your customer a reason to shop elsewhere.”

As a grocery industry watcher, it’s always fun when these types of market numbers come out to see if and how people are adopting online grocery. But these numbers are also important because grocer retailers are currently investing a lot of money in systems and infrastructure to fulfill online grocery orders. Ahold Delhaize and Walmart recently announced expanded automated fulfillment centers for their stores, and Kroger will start opening its automated customer fulfillment centers this year.

As vaccines arrive and the pandemic recedes (knocks on wood), the question will be how much people’s habits have changed thanks to COVID, and for how many online grocery shopping will become the new normal.

Report: Foot Traffic to Major QSRs Down by 50 Percent from Start of Year

It’s probably not much of a shocker to learn that far fewer people are venturing inside quick service restaurants (QSRs) these days. There is, after all, a global pandemic that continues to rage across the U.S. But Yahoo Finance posted a story over the weekend with actual data showing just how precipitous the drop in foot traffic has been for a number of major QSR brands.

According to location intelligence service Gravy Analytics, as of December 8, foot traffic to Burger King, Popeyes, KFC, Pizza Hut, Taco Bell, Domino’s, Papa Johns and Starbucks fell 50 percent compared to February 2020. Furthermore, Gravy Analytics reports that foot traffic to Chick-Fil-A, McDonald’s, Wendy’s, Dunkin and Chipotle dropped more than 40 percent compared with pre-pandemic levels.

Obviously the key word here is “pandemic,” which forced big changes to restaurants of all sizes here in the U.S. Early on in the pandemic, restaurants in various parts of the country were forced to close dine-in operations entirely. Though many have reopened, most dining rooms still operate under reduced seating capacity and other restrictions as states continue fighting the virus. [I REWROTE THIS GRAF FOR CLARITY]

Given that fewer people could physically stand and sit inside a restaurant, it makes sense to see the kind of drop in foot traffic that Gravy Analytics reported. And as we learn more about COVID, especially how it travels farther and faster inside restaurants than previously thought, these types of limitations are likely to stay in place until the vaccines are widely available. The question now is, even when the vaccine arrives, will people still want to dine in, or equally as important, will QSRs want them to?

In response to the pandemic, QSRs have been aggressively pivoting away from dine in and more towards drive-thrus and delivery. In the back half of this year, McDonald’s, KFC and Burger King have all announced various plans for future store designs to emphasize pickup and drive-thru operations rather than dine in options. At the same time, the rise of delivery services like DoorDash and Uber Eats means that hungry consumers don’t even need to leave their couch if they want a Big Mac or a Whopper.

With 2020 almost in the rearview mirror (thankfully), and the aforementioned vaccine on its way, hopefully the numbers we see from QSRs and all restaurants will be a lot better.

Survey: Online Grocery Falls in August, Though Majority Will Continue E-Shopping

What goes up must come down, especially, in this case, when people feel safe enough to go out. New survey data from Brick Meets Click/Mercatus shows that U.S. grocery delivery and pickup sales for August dropped to $5.7 billion, down from June’s record high of $7.2 billion.

This pullback in online grocery isn’t a huge surprise. Between March and June of this year, online grocery shopping had seen one record month after another, but that growth was artificially inflated, fueled by the pandemic.

According to Brick Meets Click, the fall in online grocery dollars correlates with increased ease about COVID-19, with 38 percent of U.S. households expressing high levels of concern about the virus in August versus the high of 47 percent in April.

“There is a common belief that the rapid and dramatic surge in sales caused by COVID-19, starting in mid-March, would recede at some point as stay-at-home orders and in-store shopping restrictions like occupancy limits, shortened hours and one-way aisles were relaxed,” David Bishop, a partner at Brick Meets Click, said in a press release announcing the August results. “While the August results reflect a retrenchment of sorts, the market appears positioned to begin a new growth cycle with a large base of committed shoppers.”

This larger base is actually good news for those investing in online grocery services. Brick Meets Click said that roughly 37.5 million, or 29 percent of all U.S. households, are monthly active users of grocery delivery and pickup. That’s an increase of 133 percent over August of 2019, when that number was just 16.1 million.

August wasn’t without its own record setting, however. Brick Meets Click found that spending per order hit a record $95 in August, up 32 over a year ago. Active shoppers placed 1.6 orders per month versus 1.0 orders during the same time last year.

Additionally, more people are developing new online grocery shopping habits. According to the survey, 75 percent of customers said they are “extremely or very likely” to online grocery shop through their retailer again within the next 30 days. This desire to continue shopping online, said Brick Meets Click, was likely because of improved online shopping experiences.

Considering that people have been living under pandemic conditions for half a year (!) now, new habits have definitely set in. One thing to look for is the change in the weather. Now that people have experienced online grocery shopping, will they return to it when the weather outside is frightful (and delivery and pickup can be so delightful)?

Online Grocery Sales Climbed to $7.2 Billion in June

U.S. grocery e-commerce sales continued to break records as they hit $7.2 billion in June, up 9 percent from May (which saw $6.6 billion in sales), according to a new Brick Meets Click/Mercatus Grocery survey announced today.

The survey, conducted between June 24 – 25, also found that 45.6 million households used delivery and curbside pickup for a larger portion of their grocery needs, and order frequency grew to 1.9 orders per month, up from 1.7 in May.

Online grocery shopping has had a big year, spurred on by the COVID-19 pandemic and people sheltering in place. I was particularly interested to see what the June numbers would bring, as many states relaxed their lockdowns restrictions. However, despite re-openings, the coronavirus still loomed large over people’s shopping in June. From the Brick Meet Clicks press announcement:

In June, 44% of all households reported high levels of concern about someone in their household contracting COVID-19, up two percentage points from the previous month. The increase was almost entirely driven by a 9% increase among shoppers in the over-60 age segment since May.

Brick Meets Click noted that retailers of all sizes have been aggressive in expanding capacity to meet the demand for all this increased e-commerce. Anecdotally speaking, I’ve seen this play out where I live, as grocery stores big and small have both launched new online ordering platforms and carved out more space in the parking lot to fulfill pickup orders.

Will record-setting grocery e-commerce continue into the summer? There’s a good chance it will as the pandemic shows no signs of slowing down and restaurants are forced to shut down again. With three full months of pandemic quarantining in place, new habits have definitely formed. And all the confusion around opening/closing/partial opening, people could just force people to throw their hands in the air and stick with online grocery shopping for the rest of the year.

Online Grocery Sales Hit $5.3 Billion in April, Up 37 Percent from March

April was a record-setting month for U.S. online grocery sales, which reached $5.3 billion, according to new research released by Brick Meets Click and Symphony RetailAI earlier this week (tip of the hat to Grocery Dive). This represents a 37 percent growth over March, which was its own record month with $4.0 billion in sales.

The Brick Meet Click survey found that over the last 30 days, 40 million people shopped for groceries online (up from 39.5 million in March), with the total number of orders hitting 62.5 million in April (up from 46.9 million in March), and a slight increase in spending per order at $85 in April (up from $82 in March). Consider, for comparison, that a Gallup survey in August of last year showed that only 11 percent of respondents shopped for groceries online once a month.

All of this record-setting action, of course, is driven by the COVID-19 pandemic and shelter-in-place orders enacted across the country starting in March. This isolation and social distancing spurred droves of people online to shop for groceries to be either picked up curbside or delivered.

Among the motivating factors for grocery e-commerce was fear. Brick Meets Click found that 47 percent of households surveyed had a “high level” of concerns about catching the novel coronavirus. This echoes a recent survey from C+R Research that found 60 percent of respondents were “fearful” of actually shopping at the grocery store.

These record months of online grocery shopping have put a tremendous strain on the grocer retail infrastructure. Amazon, Walmart, Kroger Instacart and others have all ramped up hiring and added additional measures to try and keep up with the sudden uptick in demand.

But despite two record months in a row, there are bigger, more existential troubling signs on the horizon. In addition to all the boomtown data Brick Meets Click found, its survey also gave us a sobering glimpse at the economic hardship data that lags behind the big sales numbers: 39 percent of surveyed households indicated that their monthly income has dropped 25 percent or more since January and February of this year. Less household money, sadly, means less spent at the grocery store.

Though grocery stores have remained opened during this pandemic, some states are starting to ease their shelter-in-place restrictions. We look forward to seeing Brick Meets Click’s May scorecard to see if and how online grocery shopping behavior has changed.

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.

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.

Study: Online Shopping Now More Than 6 Percent of U.S. Grocery Spending

Another study shows that while online shopping remains a small percentage of overall grocery shopping in the U.S., it is growing. According to analysis released yesterday by Brick Meets Clicks, in 2019 online grocery sales have grown 15 percent year-over-year and now represent 6.3 percent of total grocery-related spending by US households (h/t Food Dive).

In the press release announcing its findings, Brick Meets Click attributed the growth to the following factors:

  • Household penetration, based on past-month shopping activity, has risen more than five percentage points over the last year to nearly 25% of all US households. This gain is largely the result of aggressive expansion of home delivery and pickup services available at brick-and-mortar stores, which collectively are now accessible to 90% of all the households in the US — up from 81% in 2018.
  • Average order values, encompassing ship-to-home, home delivery, and pickup orders, have climbed over 6% to $70 in 2019. When only analyzing home delivery and pickup orders across various retail trade channels, the average order value grew 13% to just over $100.
  • Online purchase frequency for groceries remains relatively unchanged versus last year, averaging two orders during the past month for active online grocery customers. Ship-to-home orders account for 50% of all online grocery orders while pickup captures 28% and home delivery 22%, respectively.

 

One study doesn’t make a trend, but the results are in line with other recent market research. A Gallup survey released in August showed that 81 percent of Americans never buy groceries online. But the number of “nevers” was less than the 84 percent Gallup found in 2018. And in May, Coresight Research found that 35 million more people shopped for groceries online between 2018 and 2019.

While not exactly swift, online grocery shopping is a movement that will accelerate over the next couple of years as retailers build out the infrastructure to facilitate it.

Just yesterday, Walmart announced that it was expanding its $98/year Delivery Unlimited service to more than 50 percent of the U.S. by the end of this year. Also yesterday, Kroger officially announced that Dallas would be the location for its fifth robot-powered smart warehouse for faster grocery fulfillment. The company has plans to build out 20 such facilities across the country over the next two years. And just a couple of weeks ago, Target announced its curbside pickup service is now available in all 50 states.

As these services and facilities continue to expand, online shopping will become more economical and convenient. Expect to see continued adoption and those online shopping percentages grow by bigger leaps and bounds.

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.

New Data Show Increased Consumer Interest in Online Grocery Shopping

All of the investments grocery retailers are making into robotic fulfillment, curbside pickup and even self-driving delivery hinge on the idea that shoppers will migrate from their habitual shopping in-store to shopping online. That can be a big ask when talking about a product that people often want to look at and touch before buying.

But the good news for the grocer retailers investing in those technologies is that according to two recent market studies, people are getting more comfortable with and ordering more groceries online.

Yesterday, Grocery Dive reported on a Field Agent survey of 3,342 shoppers. In the survey, 66 percent of respondents said they expect to be buying their groceries online in the next five years. Right now, 97 percent of primary grocery shoppers do so in-store, according to Field Agent, but 52 percent do buy some groceries online and 21 percent are open to the possibility.

The Field Agent survey came a day after NPD Group released its own stats around online grocery grocery. From a press announcement on its findings, NPD wrote:

The percentage of U.S. consumers, ages 18 and above, who shopped online for groceries within a 30-day period, whether for delivery or pick-up in store, increased from 17 percent in the quarter ending November 2018 to 20 percent, or about 51 million consumers, in the quarter ending February 2019…

Both of these stats reinforce a study from Coresight last month that found 36.8 percent of U.S. consumers bought groceries online over the past year, which was a jump up from 23.1 percent in the firm’s 2018 survey. That represents an increase of roughly 35 million more consumers buying groceries online.

With consumer trends showing an increase in online grocery shopping, it looks like the investment retailers are making now in faster fulfillment and logistics should pay off down the road. But in addition to looking at how people will buy their groceries, both Field Agent and NPD Group also looked at where they want to receive them.

The Field Agent survey showed that 38 percent of respondents use curbside pickup, double the 16 percent that use delivery. NPD found that of those shoppers ordering groceries online, 16 percent choose delivery and 11 percent choose to BOPUS (buy online pickup in store — ed. note: cute moniker!).

How consumers pick up grocery will be something to definitely keep an eye on as it could determine where groceries put their investment dollars. Should they explore more self-driving delivery vehicles like Kroger, or focus more on automated curbside pickup like Walmart?