Special Feature
Part of a ZDNet Special Feature: Coronavirus: Business and technology in a pandemic

A sector soars: Online grocery shopping numbers are officially crazy

The growth we're seeing was supposed to happen over four years, not two weeks.

Online grocery shopping is the new norm
10:18

One industry, at least, is coming through the pandemic-induced quarantines and stay-at-home lockdowns with renewed momentum and almost staggering growth: Online shopping.

Consider that in the days leading up to Covid-19 pandemic, a simpler era we'll likely start referring to with some designation like BC-19, the online share of grocery sales in the U.S. was close to 5%. Optimists in the sector predicted, with no degree of certainty, that online grocery sales could peak at 6% by the end of this year, which would have represented staggering, headline-creating growth. 

What's happened since then? 

Apptopia found that downloads for Instacart, Walmart Grocery, and Shipt saw surges of 218%,160%, and 124% respectively, comparing average daily downloads in February to mid-March. Instacart reported grocery orders were 10 times higher than usual—20 times higher in places like California and New York. And average daily traffic to Walmart's online grocery site reached 1.1 million between March 1 and March 20, according to SimilarWeb—a 55% increase on average daily visitor numbers during the previous two months. 

Combined, the surge in online grocery demand has led to penetration of 9% currently and could reach 12% by years' end. In other words, on the other end of this crisis more one in ten people will have become habituated to buying their groceries online.

The staggering findings are part of a new report by Fabric, an on-demand fulfillment company that utilizes robots and so-called micro-fulfillment centers

Among Fabric's findings, 52% of U.S. consumers have shopped for groceries online recently because of the Covid-19 pandemic and 20% are first-time shoppers. And this may be the tip of the ice burg. As senior hours have given way to more stringent social distancing as the reality of COVID-19 infections and deaths begins to sink in, "70% of consumers said they're more likely to continue shopping online for groceries because of Covid-19. Of those who have never ordered groceries online before, 51% plan to do so in the near future because of Covid-19."

Predictably the amount spent in online grocery sales has nearly doubled as online share of sales has spiked.

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The big questions is how durable these numbers are. Above, directly from the Fabric report, you can see various published projections. It's certain there will be some rollback of online share as we come of the crisis and some semblance of normalcy returns, but much of the customer base could be retained. 

Industry respondents to the Fabric survey suggest widespread optimism when it comes to customer retention.

Significantly, our respondents reported that they expect to keep up over 50% of their online shopping increase even after the pandemic ends. In other words, as life returns to a new normal and Americans venture out of their homes and back into brick-and-mortar grocery stores, still more than half of the grocery spend they channeled online during the Covid-19 crisis will stay online.

What does this mean for the grocery sector? No one is predicting that brick-and-mortar grocery stores are going anywhere anytime soon. For reasons both logistical and behavioral, physical grocery stores are far more resilient than other types of businesses being cannibalized by ecommerce.

But the landscape is changing far faster than anybody would have predicted, and a significant chunk of the business is now moving to online ordering. Stores are scrambling to catch up to the sudden surge, with some big players like Walmart and Kroger already ahead of the game thanks to smart strategies over the last few years. 

The race for retention and sustained growth, though, will happen over the next five years. Grocers who want to stay in the fight will have to arm themselves with smart partnerships and sustainable technology strategies to accommodate the shift.