The Wall Street Journal this morning uses yesterday's news about Amazon planning to open convenience stores and grocery pickup depots around the country to speculate about how it could impact the traditional supermarket business.
"The new Amazon stores will compete with grocery stores on their own turf, and come as traditional retailers, including Wal-Mart, are rapidly expanding their online grocery services, particularly curbside delivery services known as 'click and collect,' aimed at attracting busy grocery shoppers in the Midwest," the Journal writes.
"Supermarkets battered by a rough patch in food retail are hoping curbside delivery will help them not only keep market share as more shoppers turn to e-commerce, but also coax shoppers into their stores to buy additional items when they collect orders. Other retailers are offering one-hour delivery and eye-catching apps to attract millennials and shoppers looking for convenience."
While "part of Amazon’s move and its subsequent expansion into the field was made possible by the reluctance of some big companies to invest heavily in notoriously profit-starved grocery-delivery services ... brick-and-mortar grocers are now having some success by offering a wider array of shopping formats for different customers. Technological improvements and warehouse investments, meanwhile, are making deliveries of produce fresher and more tailored, such as the ability to select bananas according to their degree of ripeness."
CBS News reports, incidentally, that Walmart said this week that it plans to offer curbside grocery pickup in 600 US locations by the end of October.
There remains some debate about the impact of online grocery. "Online sales remain a fraction of total supermarket sales," the Journal writes. "Among traditional food and beverage stores, e-commerce accounted for $1 billion in sales in 2014, or 0.16% of the $670 billion market, according to U.S. Commerce Department figures. But big e-commerce vendors, such as Amazon Fresh and other online mass merchants, racked up more than $6.3 billion in food and beverage sales in 2014, up 20% from 2013, the federal figures show."
"The new Amazon stores will compete with grocery stores on their own turf, and come as traditional retailers, including Wal-Mart, are rapidly expanding their online grocery services, particularly curbside delivery services known as 'click and collect,' aimed at attracting busy grocery shoppers in the Midwest," the Journal writes.
"Supermarkets battered by a rough patch in food retail are hoping curbside delivery will help them not only keep market share as more shoppers turn to e-commerce, but also coax shoppers into their stores to buy additional items when they collect orders. Other retailers are offering one-hour delivery and eye-catching apps to attract millennials and shoppers looking for convenience."
While "part of Amazon’s move and its subsequent expansion into the field was made possible by the reluctance of some big companies to invest heavily in notoriously profit-starved grocery-delivery services ... brick-and-mortar grocers are now having some success by offering a wider array of shopping formats for different customers. Technological improvements and warehouse investments, meanwhile, are making deliveries of produce fresher and more tailored, such as the ability to select bananas according to their degree of ripeness."
CBS News reports, incidentally, that Walmart said this week that it plans to offer curbside grocery pickup in 600 US locations by the end of October.
There remains some debate about the impact of online grocery. "Online sales remain a fraction of total supermarket sales," the Journal writes. "Among traditional food and beverage stores, e-commerce accounted for $1 billion in sales in 2014, or 0.16% of the $670 billion market, according to U.S. Commerce Department figures. But big e-commerce vendors, such as Amazon Fresh and other online mass merchants, racked up more than $6.3 billion in food and beverage sales in 2014, up 20% from 2013, the federal figures show."
- KC's View:
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I don't think there is any question that most retailers are going to have to find some sort of on-ramp to the e-commerce business. Some will do delivery, others click-and-collect, and these things will represent various percentages of their businesses. It won't be the same thing for all companies, just as e-commerce will have varying degrees of appeal to different customers.
But all of the moves being made by companies like Walmart, Kroger and Amazon are going to have an impact on the decisions being made by other companies. They're going to raise the bar on consumer expectations, and that'll affect the nature of competition ... and while I have no idea how big e-grocery will get, it seems inevitable that it is going to get a lot bigger and more pervasive.
