In grocery retail, all eyes are on the prize of capturing the online grocery shopper. The Food Marketing Institute estimates online grocery sales will reach some $100 billion by 2025, or about 20% of the grocery retail market, though today only about 2% to 4.3% of industry sales originate online.

Target, Kroger, Vons/Safeway, Ahold-Delhaize (Giant and Stop & Shop), Foodtown, Harris Teeter, Trader Joe’s, H-E-B, Costco, Walmart and Sam’s Club are answering the call, as are services like Instacart, Peapod, FreshDirect, Google Express and Yummy.com.

Of course, Amazon is way out in front with an estimated 18% share of the online grocery market at the end of 2017, with full integration of its Whole Foods arm (acquired end of August 2017) pending. Most recently Amazon introduced free two-hour grocery delivery from Whole Foods for its Prime members in some trial markets and plans to expand to San Francisco, Atlanta and Los Angeles. In the first quarter 2018, One Click Retail estimates Amazon’s grocery sales grew by $200 million, nearly a 50% YoY increase.

Yet while no one disputes that online grocery is a growth market and will take more share away from brick-and-mortar retail, the biggest opportunity today (96-98%) and tomorrow (80%) remains in the physical store.

With everyone working overtime to get the last-mile delivery logistics working, they are overlooking the bigger opportunity right in their store aisles–make the in-store grocery shopping experience better.

Most Americans still like to shop in-store for groceries

A new study by Morning Consult reveals that a majority of American consumers are resisting the siren call for online shopping convenience in favor of the in-store shopping experience. Further, they are resistant to changing their habits anytime soon. Some 65% of consumers say they have no interest in buying food or beverages online, even when their options improve.

In the survey conducted in May 2018 among 2,200 American consumers, Morning Consult found that only one-third had ever purchased food or beverage products online. Early-adopters of online grocery shopping were men (38% have purchased groceries online), millennials (37%), GenXers (39%), urbanites (36%), middle-income ($50,000-$100,000 at 38%) and high-income shoppers ($100,000+ at 45%).

As for the few consumers who have clicked for their groceries, a majority (56%) have only done so a few times per year. Only 16% of those surveyed purchase packaged food or beverage online every week, with men (23%) and consumers aged 45-54 years (28%) more likely to be regular online shoppers.

“Among those consumers who have never purchased food and beverage products online, most (65%) say it’s because of a general preference for in-store shopping, as opposed to something specific like cost, convenience, or options available,” said Morning Consult cofounder Michael Ramlet. He goes on to note that fewer millennials (54%) have a general preference for in-store shopping, but that is still a majority of millennials.

Surprisingly, middle-income shoppers are way out in front of the high-income shoppers in weekly online grocery purchases, 20% to 10% among those with incomes over $100,000. By contrast 74% of affluents shop in physical stores weekly for groceries.

Delving deeper into the affluents’ feelings about online grocery shopping, the study finds that 59% of them have no interest in buying food and beverage products online, as compared with 21% who simply haven’t done so yet and 21% who are holding out until the available options improve. Since the typical affluent household spends about 75% more on food than average, these are the grocery store shoppers who really matter. They remain loyal to shopping in person.

Fish where the fishes are

As much as Amazon, Walmart, Kroger and all the rest hope that they can capture the loyalty of shoppers by providing at-home grocery delivery, the future for growth in the grocery business is and will remain for the foreseeable future in the store.

The fact is consumer habits are hard to break and their feelings even harder to change. Why not make their habits and feelings work for grocery retailers rather than trying to change them? Enhancing the in-store shopping experience is the bigger opportunity retailers are overlooking in their race to home delivery of online orders.

And just given the differences between the way people shop online versus in-store, grocery stores have a much greater chance to entice shoppers to add more products to their carts that aren’t already on their shopping list. Shoppers spend upwards of $5,400 more annually on impulse purchases, according to study done by Slickdeals.net, with over 70% of consumers saying food is the category they are most likely to splurge on when shopping. Impulse purchases for a sensory-stimulating products like food are much harder to resist in-store than online.

By trying to push more grocery sales online, retailers are depriving themselves of the opportunity to entice shoppers to spend more in-store through attractive displays, strategic merchandising, helpful and friendly personnel and mouth-watering sight, smell and taste experiences that can only be found in-store. Just go to any Wegmans to see how exciting and fun grocery shopping can be. This is where grocery stores can really clean up.

Source: Forbes