GROCERY STORES IN THE ERA OF ONLINE SHOPPING

Food shoppers in the U.S. are gradually deciding to purchase their groceries online.  As a result, supermarkets are rethinking both their operations and the layouts of their stores.

For example, a California grocery chain, Smart & Final, Inc. has, for years, placed snacks and other impulse purchases near the doors, in the check-out areas.  Recently, the company has replaced those with freezer units that serve as pick-up points for customers ordering online and coming into the store only to retrieve their merchandise.  The company’s CEO reports that online sales are becoming a “meaningful piece” of their business.  Other U.S. supermarkets are racing to add online options such as home delivery (Sprouts has been touting that service) and curbside pickup.  These processes are requiring that fundamental changes in operations be undertaken – from staffing and supply networks to the way in which the parking lots and store layouts are organized.  It’s said to be the biggest challenge for supermarkets since the introduction of bar codes to the stores’ products.  To date, e-commerce represents only 5% of U.S. grocery sales, but food and beverage sales are growing far faster online than in the supermarkets.  When Walmart purchased Jet.com in 2016 and Amazon, Whole Foods in 2017, the world shifted for grocery retailers who began remodeling their stores and designing new locations to better accommodate online ordering.  Some supermarkets are reserving parking space for customers picking up online orders.  And for delivery pick-up services, such as Instacart, stores are creating separate entrances for the grocery pickup personnel or designating special checkout counters for those services.  Walmart is spending millions of dollars to create digital ordering technologies, implement home-delivery systems and build thousands of store pick-up points for online orders.  Kroeger, the largest supermarket chain in the U.S., has designated 19,000 workers to run an estimated 1,400 pick-up sites for online orders.  And, in the meantime, snack brands are trying to figure out how to boost impulse shopping of their items when customers don’t go through check-out lines.  Hershey Company is paying for promotions and better retailer-search results to encourage online shoppers to add its candies and snacks to their online baskets.  Other challenges yet to be faced are when the store’s online crew clogs the aisles for in-store customers, while collecting orders for pick-up.  And grocers and food makers are looking at upgrading their supply systems to keep from running out of merchandise in the stores as online orders surge.  Makes one tempted to try the online experience –  I’d certainly be willing to give up the instore shopping experience!

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