Over 20% of Grocery Retail is likely to move online by 2026 according to a recent Supermarket News article. That’s big news, but equally big is that the vast majority of online grocery shoppers prefer click-and-collect over home delivery.
Seventy-six percent of respondents said they favor in-store (44%) and curbside (31%) pickup, compared with 24% preferring delivery. Consumers don’t like to pay for home delivery, would rather pick-up.
Problem is, grocery retailers’ profitability for even these click-and-collect orders is small, 9% gross margin, on average.
I’m Getting to the Foxes Bit…
For retailers, there is naturally an increasing discomfort with using third-party platforms, like Instacart (A Fox). In another study Supermarket News cited, over 80% of grocery retailers believe using 3rd party companies will sever their relationship with their customers. They are concerned that third-party platforms will insert themselves into the relationship and become the de-facto e-commerce brand. Uh, yes!
Same goes for DoorDash, Uber Eats, and GrubHub which are all vying to be your ‘local restaurant’ for… ‘everything’.
That was the ENORMOUS… did I mention, CATASTROPHIC…mistake Borders, Circuit City and Toys R Us made, over a decade ago; giving their e-commerce to Amazon to fulfill. Talk about letting the fox in to watch the hen-house ☹!!!
It seems like grocery retailers are going to need to figure out how to offer online, click-and-collect more elegantly and profitably; Micro-fulfillment centers attached to stores that automate pulling online orders quickly may be a solution but are a significant capital outlay (read more about micro fulfillment centers, here). But these types of solutions may be ‘table-stakes’ (minimum industry requirements) going forward, though.