TL;DR
Online grocery shopping in the United States has seen a significant 13% increase since pre-pandemic times, making it the largest source of growth for the food and beverage industry. Independent retailers can take advantage of this trend by catering to high-income millennial parents, offering convenience, and focusing on categories like premade meals, snacks, and hot drinks. While fresh foods and alcoholic beverages remain a challenge, independent retailers can still tap into the online grocery market with the right strategies.
The number of Americans grocery shopping online has increased by 13% since before the COVID-19 pandemic. This surge in online food and beverage retail sales, which includes options like in-store pickup, curbside delivery, and at-home delivery, reached a staggering $76 billion in 2022. The study predicts that online grocery will continue to be the primary driver of growth for the food and beverage industry in the United States.
To harness this growth, independent retailers can target their offerings towards high-income millennial parents with young children, who are frequent users of online grocery shopping. This demographic values time and convenience, making online grocery services an attractive option for their busy lifestyles. By understanding and catering to the needs of this group, independent retailers can capture a significant portion of the online grocery market.
While some challenges lie ahead, such as convincing younger generations of the value proposition of ready-to-pickup or delivered groceries, families with young children will likely remain the most active group using online grocery services. However, it’s worth noting that the declining rates of marriage and fertility could potentially hinder growth in this market. As the number of households with children is expected to decline, independent retailers should explore alternative strategies to reach and attract customers who do not have children.
When it comes to the categories that perform well in e-commerce, independent retailers should focus on offering premade meals and soups, dairy products, processed meat and seafood, and savory snacks. These are the top-selling categories in online grocery, as consumers gravitate towards convenience and simplicity. On the other hand, baked foods and fresh produce are less popular through online channels, as customers prefer to choose these items themselves. Therefore, retailers should consider offering more heavily processed and standardized varieties of baked foods and other categories without fresh substitutes.
The study highlights that beverages, especially alcoholic drinks, face more challenges in the online grocery market. Each state has its own laws regarding the sale and delivery of alcohol, making it difficult for this category to perform well online. Among alcoholic beverages, wine is the most popular online, accounting for 18% of total alcohol sales. On the other hand, hot drinks such as coffee and tea have seen success in both online and offline sales. Independent retailers can capitalize on this trend by offering an extensive selection of hot drinks that cater to different tastes and preferences.
To stand out in the online grocery market, independent retailers should also consider partnering with e-commerce platforms and delivery services. Four major players currently dominate the online grocery shopping category: Walmart, Instacart, Amazon, and Kroger. By collaborating with these platforms, independent retailers can expand their reach and tap into the existing customer base of these established players.
The growth of online grocery shopping presents a significant opportunity for independent retailers. By targeting high-income millennial parents, offering convenience, and focusing on popular categories like premade meals, snacks, and hot drinks, retailers can thrive in this evolving industry. While challenges exist, such as the sale of fresh foods and alcoholic beverages, strategic planning and partnerships can help independent retailers succeed in the online grocery market.
