Hey Gang! Ending this week with a grocery industry interim report card (weren’t they called progress reports back in school). Nonetheless, the US grocery market hit 8.7 billion in February, presumably the third highest mark since January 2021. Looking good Right?

“Delivery sales came in at $3.2 billion… New service providers, a broader range of retailers selling grocery-related products online, and services targeting faster cycle times contributed to delivery’s strong sales growth” says Bricks Meets Clicks David Bishop. But with all this talk of delivery, “more shoppers still prefer pickup for a range of reasons that will benefit the service model going forward”.

If you posit this with a great blog from Woolbright Founder and President Duane Stiller a few weeks back on Florida being at peak retail and the contraction expected moving forward, you can see cause and effect on display. Delivery and buy online pickup in store (BOPIS) are remaining “sticky” behaviors.  It’s only a matter of time before the variety of automated storage and retrieval (ASRS) technologies find their way into the supply chain and turn grocery more experiential (aka smaller)

With all these new channels in play, small is the new big. This puts traditional grocers (and retailers for that matter) and their large stores in the path of disruption. Evolving all stores to changing customer shopping patterns can be quite expensive and that is the paradox of betting on current market leaders. 

We have always expected the disruption will come and be caused by a market player that emerges into the market and connects a variety of channels not yet connected, including fresh prepared, meal kits, delivered (ghost kitchens) and other innovative offerings. This new smaller footprint “convenience” may leave the traditional grocery model behind (more locations, more embedded in communities).

It’s what makes Amazon Fresh’s strategy more confusing. Their bricks and mortar grocery stores seem traditional, with some delivery and walkout technology window dressing. They look big and not particularly disruptive. Coupled with the recent announcement of Amazon exiting all their other retail storefronts recently (GO not included), might their new grocery store initiative be a bit of a risker developer investment than they seem? We shall see…

#futureshop #grocerydesign #disruption #Itsallgrocerytome #lookslikeaduck #dontletitgodark

February online grocery sales get lift from same-day services (supermarketnews.com)