The rise of grocery delivery

Grocery delivery is bringing more choice and convenience to the sector, but making it work effectively and meeting evolving customer demands can be challenging.

The rise of grocery delivery

Over the past decade, grocery delivery has become increasingly popular in the United States. With the rise of ecommerce and advances in technology, more and more Americans view online and delivery options as convenient and time-saving for their grocery needs. The pandemic accelerated such trends, forcing even slow adopters to embrace ecommerce.

The result was a dramatic surge in online sales and grocery delivery. Options such as home delivery and curbside pickup became new channels people didn’t know they wanted until they were available. Necessity may have driven customers there in the first place, but convenience has kept them there. In a world in which customers value convenience and choice, companies will need to understand the full range of customer preferences and develop the capacity to meet them.

 The rise of grocery delivery

According to Statista, revenue from grocery delivery around the world is expected to rise to $159bn, but that’s nothing compared to what is likely to come. Over the next four years, its experts project expect revenue to almost double to $289bn.

Convenience is one of the key factors driving the growth of grocery delivery in the US. With busy schedules and long work hours, many Americans simply don't have the time to go to the grocery store. Online grocery shopping and delivery services allow them to shop for groceries from the comfort of their homes or offices and have them delivered directly to their doorsteps.

Another factor contributing to the popularity of grocery delivery is the increasing availability of same-day or next-day delivery options. Companies like Amazon, Instacart, and Walmart have invested heavily in new logistics networks to offer faster, easier and more convenient delivery.

Recent public health issues have also highlighted the importance of contactless delivery options. Many grocery delivery services now offer contactless delivery, where the delivery driver leaves the groceries outside the customer's door to minimize contact and reduce health risks.

Grocery delivery services also offer a wider selection of products than traditional brick-and-mortar stores. Online retailers can offer a larger variety of products because they don't have to worry about shelf space or inventory management in the same way that physical stores do.

The growing availability of grocery delivery is changing the way customers shop online. With more choices at their disposal, behavior is changing. A 2021 survey carried out by Saatchi and Saatchi identified three trends retailers could keep an eye on:

  • Spear shopping: Targeted shopping for specific items covering a variety of different retailers. This includes niche and specialist retailers who might otherwise have been overlooked.
  • Net shopping: Bulk purchases and repeat orders of everyday products that are regularly used such as washing powder or toilet roll.
  • TrawlerImpulse shopping: Taking impulse buying ionto the online world with customers suddenly makingtending to make unplanned impulse purchases while browsing the web. Such purchases rely on fast, seamless, and frictionless payment processes.

Customer habits, therefore, are changing. Adopting a range of grocery delivery services can put retailers in line to benefit from all of these trends. To do that, though, they need to offer as many different ways to deliver or pick up as possible.

 Consumer preferences

Grocery delivery means much more than just home delivery. It comes in many different forms including:

  • Home delivery: Traditional supermarkets have been offering home delivery for years. Orders can be made online and delivery slots pre-ordered. This can be expensive for the grocery store as they have to select the products and deliver the order. However, they do allow customers to plan ahead and avoid a time-consuming shopping trip. For example, NCR’s Freshop solution can accelerate picking processes that previously took a great deal of time. This advanced, API based cloud platform has been built by software experts with years of experience in retail. It is one of the first platforms to truly bridge the gap between online and in-store buying experiences
  • Curbside pick-up: Orders are made online and customers visit the store to pick them up from the curb. Click and collect was the perfect pandemic option as it allowed people to avoid entering the store and reduce the risk of infection. It has remained popular after the pandemic as it provides people with a faster and more convenient purchasing option than entering the store.
  • Next or same-day delivery: Traditional delivery can take time with delivery slots having to be booked up in advance. As uptake surged during the pandemic, customers struggled to arrange delivery within an acceptable time frame. To offer greater convenience next day and same-day delivery services have sprung offering the same convenience people have come to expect from Amazon in its day-to-day products. Their rise has been facilitated by developments in technology and logistical networks that bring a level of convenience to this field that would have been almost unthinkable some time ago. Young shoppers in particular have embraced this option for its speed, flexibility, and convenience.
  • Farm delivery: For those customers looking for higher quality, premium, and natural produce, farm delivery services offer a chance to bypass the grocery retailer and go directly to the source. It also offers farmers a new, direct form of income that reduces their reliance on large superstores. Services such as EarthMatterz give customers to order fresh produce straight from farms for delivery or pick up. Sservices such as theseis aim to make fresh produce available to everyone and cater to the growing desire for fresh, healthy food, with the continuing need for convenience.
  • Meal kit delivery services: Meal kit delivery services provide pre-portioned ingredients and recipes to customers' doorsteps, making it easy to prepare healthy and delicious meals at home. Meal kit delivery services are a great option for those who want to try new recipes and expand their culinary skills, or as a way of giving older customers who live alone a quick and easy nutritious meal.

Each of these options come with their own advantages and disadvantages for the retailer and the customer. Home delivery offers convenience, but at a cost. Retailers will have to invest in additional infrastructure and staff to meet demand. Some of those costs may have to be passed on to the consumer who will have to decide whether they are willing to pay extra for the added convenience.

Curbside pick-up, meanwhile, comes without the need for shipping making it faster and more cost-effective. It’s a true omnichannel experience allowing customers to order online and pick up in-store. It is more inclusive, providing an option for those with mobility issues who might have difficulty navigating the store, as well as a healthy socially distanced option.

The downside of curbside pick-up can be increased customer expectations who will assume their order will be ready when they arrive. Depending on the external layout of the stores it can also cause traffic congestion around the entrance.

Same or next-day delivery options offer a good mix of speed and convenience. However, these are highly demanding and logistically difficult to set up. Grocers will need to choose an effective partner to manage the delivery effectively.

Each option, therefore, will appeal to different customers and will have its different advantages or disadvantages. The ability of retailers to offer them will also depend on the capacity at their disposal. For example, Northgate Market, a Hispanic supermarket based in California wanted to offer the option of curbside pickup. However, they lacked the capacity for online ordering.

The process of setting this up would normally have been extremely time-consuming and expensive. However, by working with NCR, they added Freshop, a smooth and sophisticated online shopping experience that provides their customers with a smooth and reliable omnichannel shopping experience interaction.

Services such as this offer an example of how retailers can quickly and efficiently add online and delivery functionalities. By drawing on the expertise and ready-made solutions provided by third-party specialists, such as NCR, grocery retailers can open up new channels and opportunities for revenue growth.