Wednesday, October 28, 2020

Grocery Shopping Deep Dive

Who ever thought we would be analyzing our grocery shopping behavior? Up until 2020 I am sure most people never thought twice about their grocery shopping habits. It is something that is so routine, you know what grocery store to shop at, what you will buy, about how much it will cost, etc. But in true 2020 fashion, grocery shopping has significantly changed. Just in the past eight months we have seen consumers start panic buying (aka buying up as much toilet paper as possible), spending more on groceries, shopping less frequently, and buying online. While some of these behaviors are just temporary trends, many are here to stay.

Buying Online = New Normal

As Covid persists, consumers are moving their grocery shopping online in order to stay safe from the pandemic. The amount of online grocery shoppers is leveling out compared to the huge spike we saw in Mid-March/April, so thankfully we no longer have to wait weeks to receive our groceries. But, that is not because the amount of online buyers has decreased. About 60 percent of shoppers are still going online for their groceries, which is 12 percent higher than pre-pandemic numbers. For comparison, about 63 percent of shoppers were ordering online in April. Consumers have now moved into their new normal of grocery shopping, which means grocery stores need to figure out how they can continue to support online orders.

Instacart

Instacart is a mobile app for online grocery shopping. Users can place their order through the app, and then a shopper will go out and get your groceries then deliver them to your front door. Instacart’s valuation has more than doubled since the beginning of the year, as Covid has led to a huge surge in demand. This has made Instacart one of the most valuable private companies in the US.

Walmart+

Walmart has been working hard to up their online ordering game with the anticipated launch of Walmart+. Walmart+ will be Walmart’s very own membership program designed to compete with Amazon Prime. With Walmart+ you can get access to same-day grocery delivery, delivery of general merchandise, exclusive access to deals and promotions, and discounts on Walmart gas. Walmart’s sales have seen a spike this year, but their eCommerce business is still lagging. Hopefully with Walmart+ they become more competitive.

How Much Is Too Much to Spend on Groceries?

This has been a key question ever since March. How much signals that you are panicking and overbuying vs. reasonably stocking up so you don’t have to go to the store every couple of days. Needless to say, consumers have been spending a lot more on groceries than they have in the past. Even as we have now adjusted to life in a pandemic, grocery spending is still up, especially when it comes to online orders. There are a variety of reasons that grocery spending is up, including wanting to go to the store less, scarcity of some foods, and the decrease in eating out.

In addition to a change in spending habits, there also has been a change in payment habits. There has been a rise in contactless payment, like Apple Pay or Google Pay. These payments use an NFC tag that allows consumers to simply tap their phone or credit card to a card reader to make a payment. There is no need to touch anything. Pre-pandemic this accounted for a small percentage of transactions, but now 19 percent of consumers reported to have made a contactless payment in just May alone. Plus, 94 percent of retailers predict this trend to continue for the next 18 months. This falls in lines with other grocery stores, retailers, and restaurants attempts at going contactless with the use of QR codes.

If we have learned anything this year, it’s that even the simplest consumer behaviors, like grocery shopping can change at the drop of a hat and we need to be able to adapt. We are seeing grocers, along with restaurants and retailers do just that as they are moving business online and taking advantage of mobile.