As a result of the rapid changes generated by the COVID-19 era, online grocery growth continued to set new record sales in May. A recent survey conducted by Bricks Meets Click and Mercatus found that online grocery sales increased 24% in May over the previous month to reach $6.6 Billion, which represents a whopping 450% increase over August last year.
They also found that the total number of online orders increased 18% month over month, driven by the expanded capacity and investment of retailers to support online orders. Companies like ALDI, who announced a new curbside pickup service at 600 of their stores, or recent partnerships between DoorDash and some of the major c-store chains such as 7-Eleven, Casey’s and Circle K, represent a few examples of the market rush to climb into the e-commerce wagon.
But despite all this growth, delivering on this new demand of online food shopping still has its shortcomings. Issues with delivery availability and out of stocks are still abound, and the fulfillment processes of online orders are complex and expensive.
According to a survey conducted for Bloomberg by CivicScience, over one-third of shoppers say they’ll decrease their use of web groceries or stop ordering food online altogether when shelter-in-place restrictions ease in their area, particularly on fresh food items. This is consistent with another survey conducted by Acosta, which found that 68% of shoppers said they are extremely or very likely to return to their previous shopping habits once the pandemic is over.
So, what else can retailers do to retain and even increase their online fresh sales? No one has the answer yet, but thankfully we have some examples of leading companies that are going beyond the basics and investing in key capabilities that could make the difference in retaining and delighting their customers.
Albertsons announced it has teamed up with Nuance to leverage its virtual assistant to deliver real-time digital support to customers doing their grocery shopping online. The AI-powered application assists customers through their shopping experience by providing answers to customer inquiries such as how the delivery service works, item availability, and online order tracking status. This has likely contributed to the 374% surge in sales they experienced in April.
Food Lion now enables customers to use digital coupons and redeem Shop & Earn MVP rewards when ordering online for store pickup or home delivery. This includes fresh produce, meat, and seafood, as well as deli and bakery items. Similarly, significant improvements in product availability and assortment variety permitted Costco to report a record 108% increase in online grocery sales in May, including significant gross margin improvements in fresh food items.
We can conclude from these examples that the appropriate execution and integration of ordering, fulfillment, and delivery process, combined with an easy-to-use customer interface, are helping these retailers deliver results way above the market. This will increase their chances of retaining customers and their loyalty once the pandemic subsides and consumer behavior changes once again.
Global Head of Retail Solutions, ADC
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