• Same-day grocery delivery offerings from major retailers grew by 500% in 2018, according to a new report from grocery e-commerce startup CommonSense Robotics. The report, based on an analysis of retailer data, also says that click and collect locations among major grocers grew by 230% in 2018, and that the service is now available at 45% of Walmart stores, 58% of Kroger stores and 30% of Ahold Delhaize stores.
  • Findings show that consumers prefer same-day delivery over in-store pickup by a 4:1 margin, but most retailers have focused their resources on click and collect, according to polling by CommonSense and other research firms. CommonSense says Target is the only brick-and-mortar retailer making same-day grocery delivery its primary focus.
  • Major retailers invested more than $28 billion in grocery e-commerce last year, CommonSense found, and the company predicts that growth in grocery e-commerce will continue to gain momentum. CommonSense estimates that year-over-year online grocery growth from 2017 to 2018 was about 35%, which brings 2018 online grocery sales to an estimated $24 billion — about 3% of the total grocery market. The report says that online grocery penetration is on track to reach 10% within five years, and could even reach 15% to 20%.

As shoppers become more accustomed to having e-commerce as a grocery shopping option, both click and collect and same-day delivery can fulfill different needs. Grocery delivery is attractive to consumers for several reasons, primarily because it either saves a shopper from having to make a trip or makes it possible for shoppers without vehicles to place a large grocery order without the hassle of transporting it. Click and collect, on the other hand, makes sense for people who are already active and out, but look to cut down on the time they spend in store.

Using its own survey findings, as well as research from Nielsen and MoffatNathanson, the CommonSense report says that shoppers have a much stronger preference for grocery delivery than they do for store pickup. According to research from Nielsen and the Food Marketing Institute, about 69% of shoppers prefer delivery, however the reason could be that delivery services have been around longer than click and collect models. Nielsen also says that click and collect is gaining steam, with millennials preferring the option over delivery. While existing findings show that consumers prefer delivery, ongoing research will be needed to evaluate consumer preferences as both options become more sophisticated and accessible.

The rapid rise in grocery delivery can be traced back to Instacart, according to CommonSense. Instacart’s partnerships with more than 300 U.S. grocers has made grocery delivery widely available, and the company doesn’t show signs of slowing down — especially with its recently reduced fees. The presence of Instacart is also fueling healthy competition in the industry as many retailers try to design their own grocery delivery services, which is contributing to further expansion.

Recent research from Brick Meets Click supports the CommonSense report when it comes to consumer preference for delivery or in-store pickup. Brick Meets Click reports that nearly three-quarters of shoppers would choose delivery over pickup, if given the choice, however the firm believes that click and collect will continue to play a large role in grocery e-commerce because of the significant benefits it offers to both retailers and shoppers.

For one, pickup utilizes existing store space and ends up costing the customer less money, while delivery often includes a fee. Click and collect also offers shoppers the flexibility to go into the store if they need to supplement their purchase, pick up a prescription or need to get something they can’t order online. Finally, click and collect offers the benefit of personal connection and customer service for shoppers.

Retailers across the U.S. are investing in both grocery delivery and in-store pickup. Walmart is making strides in both services, with click and collect available at more than 2,000 locations and plans to double grocery delivery capabilities this year. Ahold Delhaize is betting on the growth of Peapod to increase its e-commerce business and has begun integrating e-commerce capabilities into brick-and-mortar stores such as its new Giant Heirloom market. Instacart is also entering the click and collect business, helping many of its partners expand their capabilities, and Amazon is making in-store pickup easier for Whole Foods shoppers with Prime Now. Through Shipt, Target now offers same-day grocery delivery in 250 markets, with expansion plans this year.

CommonSense would argue that retailers should keep their focus on expanding same-day delivery capabilities, especially as fees and last-mile costs drop and demand grows, while Brick Meets Click seems to suggest that click and collect is the smarter investment. Ultimately, the investment will come down to which service generates more revenue (and costs less) for retailers and keeps customers coming back.

Source: Grocery Dive