We have a theory that consumer purchasing behavior in the food category is evolving more rapidly than most people thought. While it’s certainly not a complete surprise, few people envisioned the growth of online grocery sales in the U.S. reaching an estimated $17.5 billion annually in 2018. That’s four times the amount purchased only six years ago.
What’s more, the Food Marketing Institute estimates online grocery sales will reach $100 billion by 2025. Think about that for a moment. That’s 20% of the total grocery retail market. And that’s only part of the equation. Online meal kit delivery services have continued to expand since their introduction in 2012 and are now the fast-growing niche market. Revenue is expected to grow to more than $10 billion U.S. dollars in 2020. Sales totaled $1 billion in 2015.
That’s more than an unexplained spike in sales. These trends reflect a pattern of steady, sustained growth. And that pattern tells us all food brands should be planning accordingly.
When you look at food purchases as a whole, there have historically been three major categories: in-store grocery shopping, going out to restaurants and carryout/delivery. Today, as the numbers indicate, two new categories have emerged: online grocery shopping and packaged meal kits.
How do you explain their rise in popularity? Part of every food brand’s planning process is understanding the consumer mindset. These days, as we try to keep up with the speed of life, we search for ways to use our time more efficiently. And for a lot of people, traditional grocery shopping just isn’t how they want to spend a Saturday morning. I’ve heard my wife share her perspective on the topic more than once. This is how she describes the process.
I drive to the grocery.
I select the items from the shelves and place them in the cart.
I remove the items from the cart and place them on the checkout belt.
I put the items back in the cart and walk to my car.
I take them from the cart, put them in my car and drive home.
I take them from my car and carry them into the kitchen.
And, finally, I distribute them among my cabinets, pantry and refrigerator.
(Clearly, she’s given this some thought.) As a result, we’re now subscribers to Hello Fresh. At three meals a week, we’re not exactly all-in, but we have reduced the amount of time spent in the aisles of a grocery store.
What should brands do to get in on this new dynamic? The answer probably varies among brands. For example, perishable food brands may have a higher hill to climb than nonperishables. But there are basics all brands can consider.
Make sure your products are available through retailers that offer online ordering for home delivery or curbside pickup. If they’re not, you’re missing a lot of potential sales.
Develop online-order messaging that encourages consumers to include your brand. We’re conditioned to tell audiences to look for brands on the shelves. We need to start asking consumers to look for brands on their screen.
A long-term strategy is to partner with meal kit brands to include your products in theirs.
To discuss this topic and others that impact your brand, contact:
Sharon Stemen
sstemen@hartinc.com
Manager, New Business Development
419.893.9600 Ext. 161
