We write a lot about automation in the grocery industry. Kroger is building out robot-driven smart warehouses and self-driving delivery. Albertsons is testing out micro-fulfillment centers. Walmart is trying out, well, all of the above. If you’ve ever wondered why retailers are investing so much in logistics and fulfillment, the answer is summed up nicely in the following blog post from data analytics firm Second Measure (h/t TechCrunch):
Most Americans regularly shop at just one or two grocery stores, so it’s not surprising that most online grocery shoppers also stick with their favorite service. This is in contrast to the meal delivery industry, where diners frequently hop between apps to get the broadest selection of restaurants.
With the exception of Instacart, no grocery delivery company shared more than 9 percent of another company’s customers in the second quarter of 2019.
Second Measure even provided this handy chart to illustrate how for grocers, maintaining loyalty is the name of the game.
Second Measure also found that 12 percent of grocery shoppers have tried online grocery shopping, and that number is up from 9 percent from June 2018. These results echo other recent market surveys showing that the number of online grocery shoppers is growing.
If grocery shoppers are loyal, and more of them will be shopping for their groceries online, then retailers who want to retain their customers over the coming years need to invest now in logistical systems to fulfill those orders. Hence automated warehouses and micro-fulfillment centers in the backs of stores. As those processes are automated, they can be tied into other investments grocers are making around delivery and curbside pickup. The faster a grocer can get you your order in a manner that fits your schedule (delivery or pickup), the more likely they can keep your business.
Walmart seems to be off to a good start. Second Measure also found that Walmart has already taken a big lead in online grocery shopping. As of June of this year, the mega retailer had 62 percent more online grocery customers than its closest competitor, Instacart.
It’s said that dominance perpetuates itself, in the case of Walmart and online grocery shopping, that certainly seems to be shaping up to be the case.