October 4, 2017
Looks like online grocery shopping is here to stay. Predictions for a major upswing in online grocery sales…from 2% today, to as high as 20% in the next decade or so… is triggering major grocery store chains to increase their online efforts.
“Traditional chains are positioning themselves to capture a significant majority of online grocery sales over the next decade or so,” said Joe McKeska, President of Elkhorn Real Estate Partners, during a panel discussion at Marquette University’s annual commercial real estate conference.
“The ready assumption is that Amazon or other e-commerce players will take the lead, but this assessment may fail to weigh the significant progress U.S. chains have already made in developing their e-commerce capabilities, including bringing click-and-collect to their stores.”
McKeska says click-and-collect programs, which allow shoppers to order products online and then pick them up at the store, tend to be relatively affordable investments for traditional grocers. “This is not the same thing as retailers having to spend significant capital to build a competitive e-commerce platform from scratch, or having to rely heavily on uneconomical home delivery services for the majority of their e-commerce sales,” he said. “In other words, traditional grocers have begun to identify ways to leverage their brick-and-mortar stores. They are rolling out more rational e-commerce business models as a bulwark against Amazon and other online companies.”
McKeska cited the impressive progress at both Walmart and Kroger, in particular, in rolling out click-and-collect programs. “Walmart announced earlier this month that it rolled out click-and-collect to its 1,000th store. That is out of roughly 4,200 stores, if you factor in Walmart’s Supercenter and Neighborhood Market formats.” For its part, Kroger aims to bring click-and-collect capability to its 1,000th store, out of approximately 2,800 in total, by the end of this year.