Grocery delivery trucks are a common sight on the streets of New York, Boston, San Francisco and Washington. Companies like Peapod have saved countless hours for busy professionals who just can’t squeeze in a trip to the store to pick up milk and eggs.
But a bold prediction from a food industry analyst is raising questions about the future of online grocery sales. Kurt Jetta, chief executive of TABS Analytics, says the sector’s moment is over.
“TABS Analytics is making the call: online grocery is failing,” Jetta declared at a recent webinar.
The declaration has startled people in the delivery business, and caused some outcry. But Jetta says he based the finding on a survey of 1,000 consumers in the company’s fourth annual food and beverage study.
Of that group, only 4.5 percent purchased groceries regularly online, and TABS says online ordering has yet to break 5 percent in the four years of its study.
Moreover, 69 percent of those surveyed have never bought groceries online, and just 15 percent become repeat online grocery buyers once they’ve given it a try.
That loyalty rate should be five times higher, Jetta said during his presentation, given that 70 percent of consumers have a favorite grocery store. He told food companies and grocers, “Stop investing in online grocery until you can figure out why there is such a high level of dissatisfaction with the format.”
The company says Amazon.com AMZN +1.10%, which is expanding its Amazon Fresh delivery service in major markets, was the only top retailer to see an increase in online grocery delivery during the past year.
To be sure, TABS Analytics is going against conventional wisdom and market activity. Online grocery seems to be drawing new entrants almost every week.
In Detroit, the app called Shipt is arranging grocery deliveries from Meijer grocery stores in the area. Participants pay an annual $99 fee, including $25 in groceries, or $14 a month to try it out. The Detroit Free Press says the company is looking to hire 200 more drivers. Shipt already delivers for grocery stores in 29 other markets — it add its 30th, Corpus Christi, Texas, on Tuesday.