The Future of Grocery Shopping

The Future of Grocery Shopping

The COVID-19 pandemic has changed many aspects of consumer behavior and daily life. In 2020, many consumers were suddenly faced with more time at home.

  • Office workers and those with jobs that can be done from home began to work from home full-time.
  • Many schools and daycares closed, meaning that students and children were now spending their days at home.
  • Restaurants, cafeterias, and other foodservice operations closed to dine-in service in many areas.

With these changes, families across the U.S. were eating at home more often, cooking more, and sometimes feeding more people than usual throughout the day. As a result, grocery sales climbed, and foodservice sales tumbled accordingly.

More people than ever before were also deciding to order food and beverage items online to avoid grocery shopping in crowded stores, where they might be exposed to the COVID-19 virus. The online grocery market nearly tripled in 2020 due to expectations for contactless/safer transactions, and retailers were forced to adapt quickly by expanding online ordering options for pickup and delivery. In 2021, even as more consumers become vaccinated against COVID-19 and resume some pre-pandemic activities, the habit of online grocery ordering is sticking with many consumers.

Here are some changes to expect in the online grocery market going forward.

Faster Order Fulfillment

Large retailers including Amazon, Kroger, and Walmart are making massive investments in infrastructure to make order fulfillment and delivery more efficient. Before the pandemic, Amazon was making one-day shipping and even faster delivery possible for some items. The fast growth of Instacart was also making it possible for grocery shoppers to get their food and beverage items delivered the same day.

However, the pandemic has slowed down fulfillment speeds due to increased demand, worker shortages, and various supply chain issues. Scheduling a grocery order for pickup or delivery often requires planning, as time slots tend to be unavailable the same day in areas with high demand. Shipping has also been slower, especially at peak times in 2020 such as during the holidays. Slowdowns are continuing in 2021, and consumers have generally learned to expect delays during the pandemic.

This will change as online order fulfillment becomes more automated and demand stabilizes. Robots and artificial intelligence are increasingly being used in warehouses to make picking and packing orders faster. For instance, some of Amazon’s warehouses use robots to scan and label packages and move shelves toward employees, who are stationary when picking items.

Kroger opened its first Ocado-powered automated grocery warehouse in Ohio in March 2021 out of 20 planned fulfillment centers in the U.S. The first warehouse contains more than 1,000 robots that retrieve and sort products for orders made on or through the Kroger app. Packed orders are loaded into a temperature-controlled Kroger van for delivery, with machine learning used to optimize delivery routes. Human employees are still used to deliver orders and to help get orders ready in the warehouses, but the robots make the system much more efficient.

Lower Cost, Faster Delivery

How orders are delivered will also be changing in the future as retailers look to cut costs and make delivery more efficient. Walmart sees a future for drones and automated vehicles in grocery delivery to reduce delivery costs and to make delivery faster. In April 2021, Walmart invested in Cruise to test self-driving vehicles that may be used for last-mile delivery of groceries. In June, Walmart invested in DroneUp to launch drone deliveries from stores.

Amazon has also been investing in drone delivery. In September 2020, Amazon was granted an operating certificate in a small rural range to allow drone delivery. Amazon has revealed that the drones will carry up to five pounds and that they will be used to accomplish delivery in just 30 minutes.

As delivery gets less expensive for retailers, consumers can expect that these reduced costs will be passed down to them in the form of lower delivery and service fees for online grocery orders. For now, paid subscriptions are being used by companies to incentivize customers to order more groceries online. These subscriptions lower fees for each order, thus increasing online grocery sales by making each order relatively less expensive for customers. Instacart Express subscriptions provide lower service fees versus non-member pricing and $0 delivery fees on orders over $35. A Walmart+ membership offers free shipping with no order minimum, free delivery from a store, and discounts on prescription medications and fuel to encourage more online grocery orders.

Better Technology for an Improved Customer Experience

Improvements to the online grocery shopping experience will arrive as technology continues to get better. Artificial intelligence-powered voice ordering is becoming more popular among tech-savvy consumers, though it is still in its infancy. Smart home devices can be used to order groceries at some major retailers including Amazon and Walmart, but many consumers are wary of ordering by voice without seeing the items they are buying. As the technology progresses and becomes “smarter” about what a customer wants, people may purchase more of their usual items through voice dictation and trust voice technology to get orders right.

Virtual reality (VR) and augmented reality (AR) technologies are also being developed for use in grocery shopping. VR environments simulate a real-world experience virtually, such as a world seen in a video game. They can be viewed by a special headset or a screen on a television, computer, or phone. A demo of a Walmart VR Shopping Experience is available to view on Youtube and shows a user picking items on their list, checking prices and recipes, getting suggestions for wine pairings, and being notified by their smart refrigerator that they already have milk.

AR technology can interact with the real world and show a consumer important information. For instance, while shopping in a store, a smartphone app or other piece of technology could theoretically show a customer information about each item as they walked through the aisles. AR could also actively guide customers through a store to find items on their shopping list and show them available coupons and reviews for items they are looking at in person. AR technology can also show a user how an item they want to purchase online will look in their real-world space (e.g., the Amazon app’s AR View feature).

Although AR and VR features are currently in development for online grocery shopping, it will likely be years before this technology is commonly available for food and beverage groceries and adopted by consumers.

Where to Learn More

Additional analysis of the online grocery market can be found in the July 2021 Packaged Facts report The Future of Grocery: Online Grocery, Meal Kits, & Direct-to-Consumer Food.

About the blogger: Cara Rasch is a food and beverage analyst for Packaged Facts. She studies consumer and industry trends in this space and has a B.A. in economics from Allegheny College.