Traditional grocers are making a push in the online segment to drive growth

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In the United States, shoppers have continued to remain engaged with grocery e-commerce platforms. More and more consumers are buying groceries online ever since the global pandemic outbreak. Furthermore, many shoppers who started purchasing groceries online over the last two years are expected to continue to do so in the next year. With this ongoing shift towards online grocery shopping, traditional grocers are making a push in the e-commerce sector to drive growth. For instance,

• Kroger, one of the leading pure-play grocers in the United States, has made several strategic moves to further boost its presence in the competitive online grocery segment. Notably, the firm entered into a strategic collaboration with French meal planning startup Jow. This partnership is part of the firm’s strategy to further drive growth through online shopping personalization and recommendations. The strategic partnership will allow online shoppers to specify their dietary preferences and restrictions. Furthermore, they can share any other relevant information regarding meal planning and receive relevant recipes in recommendations.
• In September 2022, the firm also announced a line of weekly recipes in collaboration with Rachael Bay, a television celebrity. This collaboration is part of the firm’s strategy to drive the visibility of Home Chef, the subsidiary of Kroger which offers meal kits and prepared meals. Notably, Home Chef has been performing well recently, as the rise in prices has forced consumers to seek out budget-friendly alternatives in the United States. The collaboration with Rachael Bay is expected to run over a period of six months, thereby presenting Kroger with an opportunity to drive the visibility of its meal solution to the masses.

In an effort to improve its presence and growth in the online segment, Kroger is expected to further make more such strategic moves from the short to medium-term perspective. While traditional grocers, such as Kroger, as projected to keep pushing in the online segment, competition among online grocers is also intensifying for market share in the United States. For instance,

• In September 2022, Instacart, one of the leading online grocery platforms in the United States, announced that the firm acquired Rosie Application Inc., an online grocery startup focused on local retailers and wholesalers. With Rosie having a network of 300 grocers across 40 states, Instacart will further strengthen its position in the online grocery segment through this acquisition. Notably, the acquisition of Rosie is the second for Instacart in September 2022. The firm also acquired Eversight Inc., a pricing and promotions platform.

Another player in the B2C food delivery market, DoorDash, seems to be making a big push in the online grocery segment. The firm is expanding beyond its restaurant offerings with a series of partnerships with grocery chains. For instance,

• In September 2022, DoorDash announced that the firm had entered into a strategic alliance with Sprouts Farmers Market, one of the leading retailers of fresh, natural, and organic foods in the country. Along with Sprouts Farmers Market, the firm also forged alliances with regional food retailer Giant Eagle and mid-Atlantic grocery chain Weis Markets.

Over the last year, DoorDash has recorded strong growth in its grocery delivery segment. According to the firm, it has recorded a growth of 130% in consumers that have used the platform to place orders from the grocery store in the United States.

Amid the growing competition in the space, grocery retailers are also making a big investment to boost their online operations. Walmart, for instance, is investing in its own fulfillment centers so that it can be less reliant on online delivery providers going forward. Notably, Walmart is investing US$800 million in a new fulfillment center which is expected to open in 2023. This facility will fulfill online orders throughout Oklahoma and Texas.

Kroger, on the other hand, also opened a new grocery e-commerce fulfillment center in Dallas, Texas in July 2022. The US$55 million facility will allow the grocery retailer to fulfill orders in six minutes. Furthermore, Instacart is expanding curbside fulfillment partnerships with grocers in the United States.

While inflation is fueling the strong growth in e-commerce grocery sales in the United States, the long-term growth of the industry will be sustained by grocery shoppers spending more of their grocery budget online. With food and beverages being the fast-growing e-commerce category, PayNXT360 expects the competition to further intensify in the space over the next three to four years, as more and more traditional grocers continue to make a push in the online segment from the short to medium-term perspective. 

To know more and gain a deeper understanding of the B2C Ecommerce market in the United States, click here.