Dive Brief:
- Most U.S. consumers are loyal to their local grocery stores and feel they are better than online options, according to a Reuters/Ipsos poll cited by CNBC. Seventy-five percent of online shoppers said they rarely or never buy groceries online. Even among shoppers who buy online at least weekly, nearly 60% claim they never buy groceries online, or do so only a couple times each year.
- Close to 60% of respondents also said that their local groceries beat online sellers on price, selection, quality and convenience.
- Despite consumer love for local food stores, Kroger’s shares have fallen 40% from this year’s high over concerns that Amazon’s Whole Foods deal would draw shoppers away from traditional markets.
Dive Insight:
These findings are welcome news for brick-and-mortar grocery stores, which have been anxiously watching Amazon's changes to Whole Foods since its initial purchase. Some retailers, like Kroger, have seen shares nosedive after the mega-deal, but this study serves as a reminder that the sky may not be falling after all.
Local markets should respond by further promoting the price, selection, quality and convenience their stores offer. Retailers should make the freshness of their produce departments a top priority. Many consumers have been reluctant to make the switch to online grocery because they like to see and touch their produce before they buy it, as well as handpick items from the meat counter. Shoppers are also concerned that online grocery orders will go bad in transit, or while sitting on their front steps after being delivered.
Brick-and-mortar stores can develop this consumer love for in-store produce sections through experiential value-adds, such as signage displaying from where fruits and vegetables are sourced and recipes in which they can be used. Training a few employees to be fresh offering experts could also maximize the neighborhood grocery feel so many shoppers love.
On the flip side, Amazon and other omnichannel grocers can use this study as a sort of "to do" list. FreshDirect, an online market, uses a star system to give customers an idea of the condition of their produce. Five stars is "never better," often used for items in peak season, three stars is "good" and one star is "below average." In addition, if a shopper doesn’t think the avocados received are up to snuff, he or she can just call or email FreshDirect to have the charge reversed. Still, many consumers will likely just see it as easier to pick the avocados out themselves.
Ultimately, it seems that Amazon’s Whole Foods acquisition will not have the immediate impact on local markets that some analysts expected. In a recent interview with Food Dive, Ahold Delhaize CEO Dick Boer said, “I think it’s a little bit of an overreaction. Grocery stores have been there for a long period of time ... and they have a role to play. The store itself will be an element of abundance and price and choice. I think that is difficult to do online in food.”
A word of caution before local grocery chains start to celebrate: Amazon didn’t become the powerhouse it is today overnight. Twenty years ago, when the company was just an online upstart selling books, consumers may have had similar adoration for their local bookseller. Purchasing habits do evolve. It’s up to brick-and-mortar stores to give consumers a reason to keep coming back.