Back in the days before Piggly Wiggly—the first modern supermarket—was opened on September 11, 1916, in Memphis, Tenn., customers did their shopping by handing out a list to a clerk in a grocery store. The clerk would then gather the items on the customer’s list and hand the shopping bag to the customer. This retail model worked and was standard until the self-service concept was introduced—an idea that drastically changed the face of the retail business.
Through Piggly Wiggly, Clarence Saunders—an American grocer who is considered to have invented self-service shopping—introduced systems such as checkout stands, item price tags, shopping carts, and uniformed attendants. Time has proven that this model has become the blueprint of America’s modern supermarket phenomenon. For decades, shoppers flocked to supermarkets and groceries, enticed by shelves of fresh produce and aisles well-stocked with merchandise. However, with the current rise of home grocery delivery services, all this is bound to change.
For decades, shoppers flocked to supermarkets and groceries, enticed by shelves of fresh produce and aisles well-stocked with merchandise. However, with the current rise of home grocery delivery services, all this is bound to change.
The Economy of Convenience and the Rise of Home Grocery Delivery Services
The growth in the convenience economy was the precursor to the rise of online grocery shopping and delivery service. With the convenience economy, consumers have greater power and control over their purchases. The ability to get affordable products and services, anytime, anywhere, and at the click of a button—these customer expectations have been fueling companies like Uber, Airbnb, and Amazon to thrive in this digital age.
Retailers such as Kroger, Publix, Wegmans, and other supermarket chains are recognizing the need to join the convenience economy game in order to serve their customers better.
As the need to play well in the expanding convenience economy intensifies, retailers have tapped on the omni-channel experience model to reach their customers more effectively. Whether the customer prefers to visit the store, order groceries over the phone or online, or use home grocery delivery services applications—customers can choose the purchase channel that works best for them.
Groceries at Your Doorstep
Grocery shopping can be a challenge, with busy lifestyles and schedules lined up one after another. A trip to a supermarket can be time-consuming. Shoppers go through tasks such as driving or commuting to the store, navigating the aisles, and lining up for the check-out counter. With the rise of home grocery delivery services, shoppers are not constrained to go through these. There are home grocery delivery services that customers can tap to restock their pantries.
- Amazon Prime Now offers a wide range of items at the convenience of your own home. With the acquisition of Whole Foods in the third quarter of 2017, Prime Now offers Amazon products plus daily home items and grocery essentials. Amazon Prime Now’s tagline is “Skip the Trip.” True to this promise, Amazon offers a wide range of items without leaving your home. Prime Now caters to more than 50 cities across the country. They deliver groceries in as little time as two hours.
- Instacart has collaborated with retail giants, such as Kroger’s, Safeway and Costco, and has partnered with local and smaller grocery chains. This move gives smaller grocery chains a chance to join the omni-channel strategy. Instacart’s decision on this is in line with their goal of reaching 80 percent of US households by the end of this year. Its $7.6B valuation is proof that this goal is seen as the way to compete against Amazon by its 300 grocery partners. Instacart funding twice in 2018 is a perfect example of the growth in the space and the impact of Amazon on the sector.
Instacart Founder and CEO, Apoorva Mehta believes that the only way for Instacart to succeed is to make the home grocery delivery services accessible to as many locations as possible.
- Shipt is an Internet-based delivery service founded by Bill Smith. They launched this service in 2014 and has since expanded its reach to 100 metropolitan areas. In December 2017, Target acquired the company for $550 million. Target is currently looking at using Shipt for same-day delivery of all their major product categories by the end of 2019.
- Google joins the grocery delivery services bandwagon through Google Express. Customers can shop from various online grocery stores including Walmart, Target, Costco, Home Depot, Walgreens, and more. Shopping requires no membership fees and orders are received in one to three days. Google Express also provides customer support via email, call or live chat for questions about orders.
- Ahold Delhaize Peapod is the company’s delivery and eCommerce platform. The company delivers from that company’s stores, as well as from its own Chicago-area warehouses, where it is based. The company operates in over 24 markets across the U.S. and has handled over 35M orders.
- Aside from the already cited online grocery shopping and delivery services, meal kits are also becoming a popular option among consumers.
Customer Experience (CX) and the Future of Retail
While there is a lot of hype around the convenience offered by online shopping, most shoppers still prefer doing their grocery shopping in on-site physical stores. (In 2017, e-commerce total retail sales yielded only 17 percent, with Amazon leading the race.) While experts predict that online grocery sales will reach about $100 billion by the year 2022, there is still a lot more work to do. Data and the internet of things (IoT) are some of the promising areas that the retail industry can look into.
With the use of data in retail, organizations are looking at understanding the spending patterns of consumers. This step will allow retail companies to predict consumer behavior. It will also help them offer products and services that will answer the needs of various consumers. In addition, through smart devices, companies can enter consumers’ homes. (In fact, there are appliances and devices in the market that can help you order supplies online.) Truthfully, the internet of things (IoT) is helping companies implement their customer experience strategies.
The Future of Online Grocery Shopping and Delivery Service
Bottom line is the future of online retail revolves around the consumer’s response. The response will be dependent on whether the product or service is relevant to the customer’s needs and if it answers a particular problem.
“Grocery is the largest category within U.S. retail and it is also one of the least penetrated online,” is how D1 Capital’s Daniel Sundheim put it in a statement. “The industry is at a tipping point and there will likely be a significant acceleration in the adoption of online ordering for grocery delivery over the next few years.”
Changes in the standard way shoppers buy their groceries are up in the air. Nonetheless, the innovations brought about by the business with names like Amazon Prime Now and Instacart have indeed contributed to the evolution of how shoppers do their personal grocery shopping. In truth, we can boldly surmise that what Clarence Saunders did for the American shoppers in 1916, home grocery delivery services will also do for modern American shoppers of today—impacting retailers and consumers alike.