KANSAS CITY, MO. — Industry innovations and consumer acceptance of new technology are surging because of the coronavirus (COVID-19). One area that has seen dramatic changes is online, with one market researcher saying the pandemic has pushed e-commerce five years into the future.
The sales figures experienced by retailers such as Walmart Inc., Target Corp. and Amazon.com Inc. during the year tell a dramatic story. Walmart e-commerce sales shot up 97% during the second quarter of fiscal 2020 as shoppers shifted away from visiting stores to delivery and click-and-collect. Target Corp.’s second-quarter results were equally remarkable. Digital comparable store sales spiked nearly 200% during the quarter. Breaking down digital sales by channel mix, same-day services experienced 279% comp growth, drive-up grew 734%, and sales fulfilled by the retailer’s Shipt service were up more than 350%.
Amazon’s performance was as equally impressive as Target and Walmart. The company said at the end of July that quarterly online grocery sales had jumped 200% year-over-year and that demand was still “super high.” Management attributed the growth to Prime members who are shopping more often.
Food companies also are testing their own direct-to-consumer (DTC) e-commerce options. Nestle SA, Unilever PLC, PepsiCo Inc., Perdue Farms, Impossible Foods, Beyond Meat and many other food and beverage companies are experimenting with DTC models.
PepsiCo Inc. launched PantryShop.com and Snacks.com during the year, two DTC e-commerce platforms that feature the company’s portfolio of products.
On PantryShop.com consumers may buy bundles of products organized around a daypart or activity. The Rise & Shine bundle, for example, includes Tropicana Juices, Quaker Instant Oatmeal and Life cereal. The Workout & Recovery bundle includes Gatorade Whey Protein bars, Muscle Milk protein shakes and Propel electrolyte water. Bundles come in standard and family sizes, and prices range between $29.95 and $49.95 per pack.
At Snacks.com consumers may curate a package from the company range of snack brands.
“We’ve seen incredibly strong demand for our snacks during this time, and Snacks.com offers consumers another way to purchase the products they love, delivered right to their door,” said Michael Lindsey, chief transformation and strategy officer for Frito-Lay North America. “Snacks.com provides our incredibly loyal Frito-Lay shoppers with beloved products like Lay’s Classic potato chips, Doritos Cool Ranch flavored tortilla chips and Flamin’ Hot Cheetos so they can quickly and conveniently fill their pantries.”
The new initiative is in response to consumers using online ordering more in the wake of the COVID-19 outbreak, according to the company.
Beyond Meat’s DTC platform features a variety of plant-based meat alternatives along with new bulk packs, mixed product bundles, limited-time offers, trial packs and more, the company said.
And while much of the focus during the year has been on retail e-commerce, digital trends in the foodservice sector are evolving as well as operators have sought growth opportunities. App-based ordering, delivery options and the emergence of ghost kitchens, “restaurants” without physical footprints are all growing.
US Foods Holding Corp. developed a ghost kitchen program for foodservice operators interested in creating a new revenue stream. The US Foods program is designed to streamline the development process by identifying menu opportunities, including food costing, providing marketing support and guiding operators through the decision-making process. Due to COVID-19, 75% of restaurant operators consider off-premises dining to be their best opportunity, according to US Foods.
Panera Bread Co. is using digital technology to make it easier for consumers to order through Google Search, Google Maps and Google Assistant. The integration with Google’s platforms expands Panera’s off-premises capabilities and accessibility to meet customers where they are.
Accelerated digital growth
The volume of e-commerce transactions in the United States for the second quarter of calendar 2020 was remarkable. Sales during the period were estimated at $211.5 billion, up 32% when compared with the first quarter of 2020 and up 45% when compared with the same period during 2019, according to the Census Bureau of the Department of Commerce.
E-commerce made up 16% of total retail sales of $1.3 trillion during the period. For context, during the first quarter of 2020 e-commerce was 12% of total retail sales and 11% of retail sales during the second quarter of 2019.
“We’ve probably leapt five years ahead into the future in a very short period of time,” said David Portalatin, vice president and industry adviser for The NPD Group, Inc., in the Trends and Innovations virtual event hosted by Food Business News in August. “Many of the things that we were talking about before have really intensified and come into focus. The future really is now in terms of how we go to market differently both in stores and in e-commerce, truly the omnichannel concept of the future.”
Before COVID-19, 19% of Americans purchased edible groceries online in the past three months, according to The NPD Group, Port Washington, NY. The percentage more than doubled to 40% by May.
Older consumers are the fastest-growing adopters of e-commerce this year.
“This is not just existing techno-savvy, young, affluent, e-commerce consumers who have doubled down on their e-commerce activity,” he said. “This is truly a broadening of the face of consumers that are using e-commerce.”
Older consumers have found benefits in e-commerce such as a contactless means of acquiring necessary goods.
“Now is that going to change just because the pandemic goes away?” Portalatin said. “I don’t think so. I think as people, when we grow, when we stretch, we build up our muscles, we gain new capabilities. We’re going to continue to use those capabilities.”
He expects the resurgence in at-home eating, which increased to 80% of eating occasions in the United States, to remain popular even after the global pandemic fades. People are making investments in in-home meal preparation by buying items like pasta machines, breadmakers, sandwich presses, pizza ovens and soda machines.
Brick-and-mortar stores could evolve in the COVID-19 era. Certain sections of the store could become fully dedicated to expediting online orders. Some grocery stores even could transform into “dark stores” and be fully dedicated to online orders. He compared “dark stores” to “ghost kitchens” that solely exist to prepare restaurant meals for delivery. Cooking technique demonstrations or wine pairings also could take place in brick-and-mortar stores.
“We have an opportunity to change what exactly happens within the four walls of that brick-and mortar store,” Portalatin said.