The last three months feels like a lifetime of progression for online grocery. At the beginning of the year, 26% of Americans were using online grocery weekly1. Since then the COVID-19 pandemic has applied differential pressure to the grocery industry, as consumers have flocked to brick and mortar for pantry staples and waded into online grocery options at an unprecedented rate. As of early April, 42% of Americans were using online grocery at least once a week2.
There is no doubt that scores are flocking to use grocery delivery and pickup as a low contact option and years of ecommerce evolution has been compressed into weeks, but questions remain on how that growth will play out and who will capitalize. What percent of the US population is online grocery available to? What retailers are best positioned today, how has that changed in the last few years? And how can brands help power the convenience and utility of online grocery?
A rapid evolution in coverage
Basketful’s analysis of online grocery coverage in the spring of 2018 revealed that online grocery was available to over 92% of US households at that point. Walmart was the clear clubhouse leader, followed by Instacart’s myriad of retailer offerings, the Kroger family of banners, relative newcomer Shipt, AmazonFresh, and Peapod. Curbside and in-store pickup largely powered Walmart and Kroger’s coverage, while Instacart and Shipt were concentrated on delivery capabilities.
Changes in the retailer leaderboard
A lot has changed in two years as Instacart and Shipt have expanded their partnerships, and retailers have continued to invest in their own pickup and delivery infrastructure. As of April, full distribution online grocery now covers 98% of the US population via 250+ retailers that we track. While click and collect still makes up the vast majority of online options, full distribution grocery delivery now extends to at least 86% of the US population. While some retailers like Amazon Fresh and Kroger use regional distribution centers to fulfill some or all of their online grocery, the vast majority of online grocery is powered by the existing infrastructure and inventory of 15,000+ local full distribution grocery stores.
Walmart’s network reaches a staggering 96% of the population alone. Nearly 3,300 of their locations support grocery pickup options, while over 55% now offer delivery as well.
Instacart remains as the 2nd biggest player with 84% of population in reach, powered by 5,100 locations. Shipt’s network of full distribution grocery is nearly 6,200 stores strong now—doubling it’s reach to 67% of consumers in just two years. Target’s investment in Shipt also unlocked delivery capability for their existing network of stores, giving it reach to 62% of the population.
Kroger’s family of banners has over 2,600 digital storefronts now, extending it’s coverage to 46% of consumers. Kroger appears to be the most diversified in their online storefront approach, with 48% of them owned and operated, 33% with Shipt, and 19% with Instacart. They have also made substantial progress enabling delivery, with that capability now available at 53% of locations.
Amazon remains a formidable player, with multiple avenues of fulfillment being experimented with. Micro-fulfillment centers, new brick & mortar quick serve locations, and it’s network of full distribution Whole Foods stores serve as it’s backbone for online pickup and delivery. Amazon Fresh is now present in 32 metro areas, encompassing at least 27% of the population.
Peapod, one the pioneers of online grocery, has declined to 14% consumer reach amidst February news that it is refocusing it’s business on the northeast and retracting from it’s midwest markets.
Numerous Local Options
The total number of retailers in a local area has also proven to be an important indicator of online grocery coverage, and a bellwether of increased adoption. 87% of smart phone carrying grocery shoppers shop at more than one grocery store, while 37% shop at 3 or more. Allowing consumers the flexibility to shop multiple banners is a key point of convenience.
As of April, 90% of the US population is now served by two or more online grocers. 82% are served by 3 or more.
The digital path to cart for Brands & Retailers just got wider
With grocery pickup and delivery access now reaching a significant majority of Americans, the utility and convenience has now reached mainstream availability. Adding fuel to the fire is the most recent wave of online shoppers and restrictions on restaurants as a result of COVID-19. It is now clear that the digital share of the overall grocery experience is reaching a tipping point as consumers look to their smartphone or tablet for recipe discovery, list making, and checkout.
How Basketful can help
Brands and content providers have a window to connect food inspiration to cart in a way that they haven’t had in the past. With restaurant access diminished and households looking for new and creative food solutions, the opportunity for new customer growth is ripe. Contact us to learn more about how Basketful can power your richer path to cart.
1Basketful December 2019 National Survey of Smart Phone using Grocery Shoppers
2RBC Research Survey, April 2020