What Future for Grocery Shopping?

The Covid-19 situation has caused a lot of people to try online shopping for things they had previously bought in physical stores.  Groceries, in particular, were something that most people preferred to buy in person, usually buying online only for specialty products that were hard or inconvenient to find locally.  But with the lockdowns, a lot of people have started using the various online shopping platforms.  These seem to fall into three primary categories:

–Systems such as Giant Peapod (recently rebranded as just Giant Food), which are operated by a grocery chain or an individual store.  Some systems will deliver directly from a warehouse, bypassing their brick-and-mortar store locations.  And sometimes an option is offered to preorder electronically, with in-store or curbside pickup at the store.

–Systems such as Instacart, which are more or less vendor-agnostic: these systems will allow you to place orders for any of several stores in your area, after which one of their shoppers will collect your order from the vendor’s regular store.

–Systems (Boxed is an example) which are have no store presence; they are only for online ordering and home delivery, but do the delivery from their own facilities…many kinds of products, obviously, are susceptible to this model only if shipped express with dry ice or similar packaging (expensive) or if the vendor has local facilities in the same area as the customer.

The relative success of these approaches will have great implications not only for the futures of the various merchants and system providers, but also for the commercial real-estate market.  Systems that use the existing stores for fulfillment, such as Instacart, are beneficial to the survival and thriving of strip malls and other commercial space where grocery stores are typically located; systems focused on warehouse delivery are beneficial to the industrial property market but not so for retail properties.

Your thoughts and experiences?

20 thoughts on “What Future for Grocery Shopping?”

  1. Delivery slots for any online service have always been too distant. There are three supermarkets within a short walking distance of my house, and even with the additional hassle of a queue, masks etc. it’s still far less bother to buy groceries in person.
    Pretty much everything else I buy is more easily found online, though.

  2. Varies a lot from area to area, I’m sure–Instacart was showing 1 week out or worse delivery times a month or so ago, but now is down to usually same-day.

  3. Fry’s in Tucson had Instacart and I tried it. No good, although that was early in the hysteria. I have tried Costco and that was no good either. Tried to send my daughter Costco diapers in California and gave up[. Amazon is still the best.

  4. A bit off topic but sort of on topic. My wife has used the Target drive up and absolutely loves it. She pulls up, they load the junk into her car and she drives away. She absolutely loves this and won’t go back to strolling through the store, at least if she knows what she wants/needs. This is great with me as well, as typically a bunch of crap “jumps in the cart” as she strolls around. I suspect groceries and other stores will suffer from a lack of impulse purchases because of this.

  5. In principal, delivery from a warehouse should offer better info to the customer as to what’s in stock and what isn’t. Delivery from stores *by* the same company should be able to access the inventory system, ideally in real time, but even then it can’t compensate for items that have been picked up & put in a cart by a regular customer but not checked out yet.

    Instacart apparently gets inventory data from the retailers on varying schedules, some daily and some with multiple updates during the day. They also attempt to provide out-of-stock information by assuming that if one of their shoppers can’t find something in a given store, it is out of stock, and then marking it as out of stock for customers for some period of time, which they estimate (somehow).

    A big advantage that from-the-warehouse delivery should have is that real estate cost per unit of product should be a lot less from a warehouse than from a store that needs to be in a high-traffic area and also arranged for customer convenience.

  6. I am partially disabled and the disability is standing up and/or walking for any distance or length of time, so grocery shopping in-store is difficult. I have used grocery delivery from Instacart or Shipt since 2017. I use WalMart pickup for non-perishable items because I could unload at my convenience. All three of those services almost collapsed during late March and early April. There was one shopper with Shipt who delivered only 2 items out of the 17 I’d ordered who was in tears because she was worried about me not having anything to eat — and I was worried about her because she was working so hard.

    Shipt is my preference because Instacart has close to zero customer service — and that was my experience way before the Covid crisis. Shipt is also less expensive for stores (Publix in my area) that both shop.

    I can now get a delivery from Target, Publix, or Kroger in 2-3 hours, so I don’t find delivery slots to be a problem. WalMart pickup slots were always next day at best.

    If I could, I’d prefer to choose my own produce and meat. I am fortunate to have offspring close who still prefer shopping in person who keep me supplied. In exchange, I offer freezer and refrigerator space when they find a bargain. My garage has become a “social distancing” exchange point for all sorts of things.

    I tried Amazon Pantry several years ago and found it inconvenient, expensive, and the goods not fresh. I also used Blue Apron for several months and it was fun — but not something I’d do long-term. The expense wasn’t too bad, but the schedule was.

    One new thing (or old thing my parents used to do) that I’m trying is buying a side of beef from a local producer. The verdict’s not in on that yet.

    So, I see grocery shopping continuing the way it was already headed — delivery from local grocery stores that still cater to mostly in-store shoppers. YMMV, as I’m fortunate to live in an area that offers many options.

  7. As there are 2 grocery stores within a mile and 6 within 2-3 miles of where I live, going to the grocery store is easy peasy for me. Delivery options do not currently seem necessary for me. When I become less mobile, delivery options will seem more desirable.

    I don’t see my ordering and picking up at the store, as I like to peruse the aisles. Just have to make sure I buy sensible, not on impulse.

  8. @Gringo — I find it so easy to delete from online cart, so hardly ever have to worry about impulse buys. It’s not foolproof, as there’s always the “On Sale” link and the “BOGOs”

  9. We sampled a local market this week – produce from a distributor making a two-hour long appearance at a local church. Offered the option of pre-ordering for pickup from their truck, or going through a line, selecting what looked good among what they had. The produce that we bought was quite satisfactory; the fruit, especially, was fresher than fresh. I suspect that buying it this way made it about a week fresher than waiting at the grocery store.
    We’re also experimenting with an enterprise called Imperfect Foods.
    My sister gets this in California; basically, it’s perishable overstocks and produce at a marked-down price. We’re supposed to get a box early this week. We’ll see how it goes.

  10. I trust no one else to pick out my produce and meat. Bruised fruit is money thrown out and butchers are quite good at hiding the fat on the bottom of the package especially during sales.

  11. I’ve noticed a shift in our shopping. My wife likes Fry’s which is almost 20% cheaper than Safeway, about 1/2 miles vs 8 miles for Fry’s. In the early days of the hysteria, Fry’s was out of everything. So, I shopped more at Safeway. We get most meat and paper goods at Costco. That has not changed. Now, we are going back to Fry’s more but Safeway still gets a lot of our shopping. It seemed the more expensive the store, the better stocked it was.

  12. There are also the people for whom grocery shopping is practically a sacrament; these people could be seen, pre-covid, in their native habitat at Whole Foods and such places. I don’t think they are going to be satisfied by on-line shopping.

    But I could be wrong. I’ve was surprised by the alacrity with which a lot of people, especially women, have even pre-covid abandoned most in-person shopping for online.

  13. The biggest problem with Instacart or anything similar is that it won’t scale. If it’s cheap now it’s because their in the Uber phase of spending VC money to buy business. They are picking orders one or two at a time and delivering them the same way. I don’t know what their cost of labor is but they’ll probably have to multiply that by at least two to the customer to even break even. I’d be really surprised if they can manage less than a half man hour per order. If their charging less than $20 for an order less than $100, they’re losing money.

    Then there’s the problem that for frozen/perishable you have to be very sure that somebody will be there to take delivery. Amazon thought they had it solved, you would just give them the keys to your house and let them deliver it when they got around to it. I don’t think it caught on or will. There aren’t enough hours in a weekend. Delivery at night is possible but still a problem of few available hours.

    Delivery from a warehouse might scale a little better except they are organized to deliver whole pallets or at least full cases. As it is, only about half the merchandise in a supermarket comes from the central warehouse. The rest comes from jobbers that are supplied by different distributors and warehouses. You’d probably have to set up a warehouse specifically to supply individual orders.

    Curb side right now is “free” as far as I know. Obviously, at some time, either the customer will have to pick up the tab or prices will have to rise enough to compensate. This will allow competitors to undercut. Considering how many groceries seem to have plenty of business when I consider them highway robbery, I may not be the best judge of how much price elasticity there is in the market. I think it probably will last the longest most places.

  14. We used the Home Chef meal kit delivery for several years pre-COVID. Since it’s just the two of us and guests are a special occasion meal, the biggest advantages to it were not having to buy 8-16-32 oz to get the 1/4 cup you needed for a recipe and not having to eat the same thing for four days straight. Convenience was also a factor, especially in planning and pre-cooking preparation since we both work. We could eat cheaper meals by buying ingredients but the HC meal cost was comparable to a restaurant meal which would have been our go-to on days we were both too beat to want to cook. We dropped Home Chef when my wife switched (for a time) to a diet meal plan. We haven’t gone back to it. We’re doing a combination of pick-up or direct shopping at our local Kroger, with occasional forays to other stores. We find the pick-up works best if you’re getting dry goods and fairly recognizable meats, fruits, and vegetables. Anything a bit out of the ordinary, or where substitution occurs is a bit of a crap shoot. I’m not entirely sure why we haven’t gone back to Home Chef other than inertia.

  15. MCS…”Delivery from a warehouse might scale a little better except they are organized to deliver whole pallets or at least full cases. As it is, only about half the merchandise in a supermarket comes from the central warehouse. The rest comes from jobbers that are supplied by different distributors and warehouses. You’d probably have to set up a warehouse specifically to supply individual orders.”

    I believe that is what Giant is doing,,,special warehouse for individual orders.

    The problem of people needing to be home for frozen & perishable has been moot during the Covid-19 crisis, someone is always home, but will become important again, hopefully soon.

  16. Kroger/Albertson’s here is doing something similar with branded delivery trucks.

    It will eventually come down the whether enough people are willing to pay enough to avoid going to the store, just like always. Then it will be up to somebody to find a way to do it profitably, just like always.

    Uber started with the idea that they were just arraigning rides between people that needed them and people with cars. By now everyone except the suckers, otherwise known as VC’s and share holders, realizes that they are just another taxi/livery service. Likewise, they discovered that there were plenty of people willing to accept little money for nearly no effort. When they started to apply standards, the price went up. They still can’t square the circle between what people are willing to pay and what drivers are willing to accept. All of the delivery service “aps” are somewhere on that path.

    When I’m at work, I know just what my time costs. It takes a pretty dire situation to make me take the time to go out to get something rather than making an order to wait a day or two and spend whatever for shipping, though I still avoid paying overnight as much as humanly possible.

    I simply don’t apply the same equation to grocery shopping and since I’m still going to work every day, all the problems of arraigning delivery apply. I could do curb side but probably wouldn’t save much time, I just don’t use that many groceries. The only other things I’ve bought in person for months was some lumber that couldn’t be shipped and was way too small an amount for delivery.

    I used to enjoy wandering through some stores just looking for things I didn’t know I needed when I felt like leaving the house. That seems to be past now, maybe it will return, but most of the stores that I enjoyed are gone. I don’t know where the nearest book store is.

  17. Local dairies used to deliver milk. What caused that to go away was not increasing cost, but increasingly having no-one at home. The milk would be stolen or, on a hot day, go bad before it could be collected – if no one was home to take it into the house. Same thing happens now, with Amazon (and other delivery) packages stolen off the front step.
    There are modern solutions, though, with the right h/w and s/w you could remotely unlock your front door for a delivery. One could have a refrigerator/freezer just inside the door for milk (or frozen) delivery, OR with the right design, a fridge outside your front door with a remote lock and camera that you could open remotely. (This is, btw, one of the first ideas for the IoT that I think makes sense – having an appliance hooked up to the internet really is no advantage for most things. A smart fridge that tells me I haven’t bought Yak’s Milk Candy* in over a year? When I shouldn’t have bought it in the first place?)
    I tried store pickup – not bad at first, but the problem of items I was charged for missing from the order became more common. Resolution with the local store was painful, so I dropped it.

    *Fabulous Furry Freak Brothers reference, iirc.

  18. Ns,

    If you’ve been paying attention, you’d know that the HW/SW is the equivalent of leaving your house unlocked with a billboard posted advertising the fact. Even if it worked as advertised, take a quick walk through your house and pick up everything laying around that has some value. Bet you come up with more than you can carry. It should also include things like utility bills and mail. You could go whole hog and install a camera system and hope that whoever designed it got security right this time so you’re only sharing with the company providing the “cloud” and not the whole internet.

  19. I remember Helm’s Bakeries delivering bread in Los Angeles. That was not perishable but the economics must have gone away. Milk delivery went way back to WWII. That was an era when women did not drive and stores did not have parking. Groceries were delivered usually by teens who had a van and depended on tips. Fresh produce was rare in those days.

  20. Yes, MCS, it is not currently secure (an understatement, some of the ‘security’ companies have had data breaches exposing their customers data). I mentioned it because it is possible, not because I thought it secure at the present time, and the idea that something like milk delivery could become a thing again is fascinating. With more people working from home, who knows what will be tried next?

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