Grocery delivery, once a luxury, is becoming a mainstay of American life
S E E D E D C O N T E N T
Grocery delivery was once seen as a luxury service for a niche group of wealthy suburban shoppers who could afford the convenience of having a few bags of produce and pasta left on their doorstep. But a year and a half after stay-at-home orders kept much of the country working from home, grocery delivery has exploded into mainstream shopping — and it's likely here to stay, according to industry analysts.
"Most grocers didn't view delivery that seriously pre-pandemic," said James Cook, director of retail research with the global commercial real estate and professional services firm Jones Lang LaSalle. "But the demand for online grocery skyrocketed and that includes both delivery and click and collect."
Restaurants were gutted by the pandemic. Walk-ins and reservations fell by 100 percent between April 2019 and April 2020 as the coronavirus swept across the country, according to OpenTable online reservation service. By the end of August 2020, more than 32,100 restaurants had closed, with roughly 61 percent of them permanently shutting their doors, according to a September 2020 local economic impact report from Yelp.
At the same time, cooking at home underwent a cultural renaissance. People made their own sourdough bread, experimented with "fluffy" or Dalgona coffee, canned their own vegetables and cooked carrots seasoned to taste like bacon. This helped people stuck at home to break up the monotony of pandemic life — but also drove online delivery to more than triple its market share of overall grocery sales compared to 2019, according to a June 2021 report from grocery market research firm Brick Meets Click.
"Despite the fact that people are now returning to restaurants, sales at grocers are holding at higher levels than before the pandemic. It's not a zero sum game," said Sara Wyeth, a lead retail and restaurant analyst with S&P Global Ratings.
Walmart U.S. e-commerce sales grew 69 percent between 2019 and 2020, according to the company's annual report. Its new Walmart+ loyalty program includes free delivery, which is designed to drive more online sales, Walmart CEO Doug McMillon said in a February earnings call. Kroger's delivery business grew by 150 percent in 2020 compared to the year before, according to the company's annual report. It brought in more than $10 billion in overall online grocery sales, which includes delivery and pickup. By the end of 2023, Kroger expects to double the size of its digital business compared to 2020.
"We continue to expect those broader trends to hold in place," said William McMullen, CEO of Kroger, in a June earnings call. "Everything that we can see, the customers continue to like to shop online."
But the cost of grocery delivery for grocers — and for consumers — can be pricey. Grocery stores were not designed to fulfill online orders, said Mickey Chadha, a vice president in Moody's retail team. Pickers are paid hourly to walk up and down aisles gathering items for online orders, a process that can be costly to a grocery company, he said.
Grocery stores were designed for individual shoppers, not pickers filling dozens of orders an hour. While supermarkets retrofitted their spaces during the pandemic to meet new demand, there's little space left to expand the service without any major outlay.
But it would be far more costly to scrap online delivery than to lose a few dollars on an order, Chadha said.
"You can't look at it as separate, because you're losing the big picture," he said. "If you don't offer [online ordering] somebody else will and you will lose the sale."
Companies such as Kroger and Safeway have added a $9.95 delivery fee on certain online orders to help cover this loss. Safeway FreshPass subscribers get free delivery on orders over $30. Kroger orders over $35 are also free. Amazon Whole Foods orders were free for all shoppers with a Prime membership, but Amazon recently notified customers that it will begin charging a $9.95 delivery fee on online deliveries beginning Aug. 30 in several areas, including Boston, Chicago and Portland, Maine.
"Mass market grocery is a high-volume, low-margin industry, and the complexities of serving online have long meant it is an unprofitable channel for many grocers, who have tended to overlay more and more cost onto their store businesses to meet e-commerce demand," Lawrence Hene, chief product officer at online grocery facilitator Ocado Solutions, told NBC News in an emailed statement. "With the market growth in the past 18 months, this is no longer a viable long-term strategy for grocers online."
"We don't look at the digital customers as better or richer. They're just more engaged."
In April, Kroger partnered with Ocado to launch the country's first fully automated grocery fulfillment center in Monroe, Ohio, designed to prepare a 50-item order in just five minutes. More than 1,000 robots speed around the 375,000-square foot facility picking grocery items. Most of the deliveries are packed into a Kroger delivery van to be dropped off the next day at homes anywhere within a 90-mile radius of the facility. Between 2022 and 2023, the company expects to open up to six more U.S. fulfillment centers, it said in March.
This type of automation cuts down on labor costs and drives additional sales, Yael Cosset, Kroger's chief information officer, told investors in March. Online shoppers visit stores and online sites 1.5 times more frequently and spend more than twice as much as store-only customers, she said.
"We don't look at the digital customers as better or richer," she said. "They're just more engaged, more loyal, more committed to Kroger because they get more of that value, whether it's through the convenience, the access to offers, the values or a set of our services."
Kathryn Turner, who lives in Raleigh, North Carolina, told NBC News she has transitioned from an occasional to regular online grocery shopper. Before the pandemic, she said she would order sparkling water or food for lunch with Amazon Prime Now to be delivered to her office, where she works as an accountant at a property management company. But now she almost exclusively picks up her online orders using a Kroger curbside service.
"I try to limit contact with other humans as much as possible," said Turner, who spends about $500 a month on groceries between herself and her girlfriend. "I'm vaccinated but I don't know what the rest of the world is doing."
While her grocery tab has ticked up in part because she's not visiting stores to see clearance items or sales that aren't available online, she said it's worth it.
"I have too much anxiety to go into the grocery store, or I don't want to spend all that time to look around shelves," Turner said.
I stopped getting my groceries delivered when I came back to the hospital full time. It made me quite lazy. It's a little bit of exercise and I save money now. I noticed some things on delivery cost more - than when you buy it in store.
I just tried it for the first time last night just to see how it works.
Delivery scheduled by shopper for before 6 PM, i texted at 6:25 to ask if there was a problem. No response until 6:51 saying the delivery was rescheduled for 8:30 which didn't work since we were going to be gone at that time. With perishable food in the order, i cancelled it.
Won't be using Instacart again.
I have been using Shipt for myself and my mother's home for several years and the service has been good. They go to Kroger, Meijer, Target and maybe others.
The cost for some items are higher than in store and then there is a tip added if you want to, but I find the convenience of it helpful for me.
Since King Soopers (Kroger) is just a few miles away, I go to the store just about every day...gets me out the house. And I don't care for others handling my food.
We have been doing it since April of last year. Not long ago we got some one else's chicken salad - 6 tubs of chicken salad. I had a few sandwiches...
when I had ankle surgery 3 years ago, my daughter had amazon delivering my groceries to me a few times. I loved it. sometimes they'd screw up the order, my daughter would get on their website and poof, screw ups removed from the bill and I keep the shit. some of those screw ups were real good. I liked how they would use frozen bottled water to keep the perishables cool in insulated bags. my front door was 6 feet from my couch then and I never heard one of those delivery people ever.
While we were in lockdown, although my wife could have shopped once a day, we did take advantage of grocery delivery sometimes. I was impressed with the quality of the produce that was delivered - in earlier days I preferred to pick out the best fruit and veggies I could find, but I've since deferred to my wife, who grew up on a farm and knows her fruit and veggies much better than I do. She can wander through a wild field for half an hour and come back with enough edible greens for a meal for the two of us.
I will probably never try it. I like to pick my produce myself. Also, I live 2 miles from the nearest Walmart...why would I pay nearly 10 bucks for delivery when it won't cost me that much gas to go get it myself
My late husband loved to go Friday grocery shopping. But during the heat of the summer I would use delivery for non perishable items and just shop in person for the perishables. He had MS and high heat conditions could have sent him into an episode. Right now, my only home delivery is from Chewey for cat food and litter as I ride a scooter now. I also have a friend who brings me flats of water when needed.
I have accounts with both Chewy and Kitty Poo because it's more convenient and I never worry about running low on food
Same here. I have never heard of Kitty Poo so I am going to look it up. I am looking for a product I saw on YT...Kitty Crack (super potent cat nip).
Kitty Poo is a great litter system. Everything you needs comes in a box (not the scooper tho)
You have to set up the litter "box" but it's easy once you get the hang of it. Scoop the poop, mix the urine in with the litter and change once a month. They set you up with the amount of boxes you need and you can have it auto shipped as often as you want. Then once you've emptied the used litter the boxes are recylable
Here, restaurants have been delivering without any extra charge for as long as I remember, and I don't think the groceries and supermarkets were adding an extra charge for delivery, unless it was a small token amount that we didn't notice.
Husband and I go to Winco and Trader Joes early, like 7-8 am on a weekday since we are retired. We enjoy grocery shopping and like "touching" what we are getting. Besides husband likes to wander off and put random things in the cart.
I haven't used delivery for our food but get Redbarn dog food delivered for shelter dogs since it is not in stores near us.
You should check out Chewie. Their prices are usually lower.
Are you a food fondler? Why? There is a pandemic...
With produce I put one of the plastic bags over my hand. That way I can feel the produce to see if it's firm without contaminating it.
Today a guy handled every package of ground beef in the store yet he did not buy any of it. Do not get me started on the banana lady...
I have used a grocery delivery service a few times when I nearly fell and wrenched my already bad back, and walking was very limited for a good while during the healing process. Most of the time the service was good, but, there were a few snafus now and then, like delivering my order to the wrong address, missing items I got charged for, and things like that. When I contacted them about the mix ups they were very quick to resolve the problem by replacing my missing order or refunding the missing items. Most of the produce items they chose were good quality. And if one of the items I ordered was not available I could give them an alternative to get instead. And all their employees were vaccinated for the COVID virus. And they all wore masks when making the delivery.
There were fees of course, but, at the time they were worth it. There is a small market here in the complex where I am and if I need something right away I can buy it there, which saves me the drive to the grocery store.
Having the delivery service to lean on while I recuperated was well worth the cost.