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Supermarket chains sanguine about online shopping

By , - Last modified: September 4, 2018 at 7:24 AM
From left, Lou Scaduto III and Lou Scaduto Jr., owner of Super Foodtown in Ocean Township. Foodtown's online shopping service is called On the Go.
From left, Lou Scaduto III and Lou Scaduto Jr., owner of Super Foodtown in Ocean Township. Foodtown's online shopping service is called On the Go. - ()

If you relish old school brick-and-mortar shopping habits rather than snagging your goods online, you're not alone — especially when it comes to grocery shopping.

Of 1,033 participants surveyed in a new Gallup poll, 84 percent said they had never once bought groceries online, and only 4 percent said they made a weekly habit out of it.

Still, more grocery stores in New Jersey are choosing to offer the service, and many are optimistic about its future success.

When ShopRite started its ShopRite from Home program in 2002, it was one of the only online grocery programs in the state. Some ShopRite stores within parent Wakefern Food Corp. had found success with a fax-in personal shopping program. The bones of that program were the same as what’s available today: A customer orders online, a ShopRite employee picks out their goods and the customer comes and gets their order.

While Wakefern would not provide specific numbers, it did say the use of ShopRite from Home is on the rise.

“I can tell you, though, it grows year-over-year. We’ve seen significant growth in it since it started in 2002,” said Wakefern spokesperson Karen Meleta. “It’s in the double-digits.”

Other local grocery chains Kings Food Markets, Wegmans and Foodtown each identified online shopping growth as well, also without sharing numbers. Stop & Shop also offers online grocery through grocery delivery company Peapod. Both declined to comment.

Kings’ online grocery launched in October 2017 via Instacart, a same-day delivery service through which customers can buy from any store that has a partnership with the program. Wegmans has also partnered with Instacart, while Foodtown jumped on the Instacart bandwagon just last month.

 “The online numbers have grown and we still haven’t seen a ceiling,” said Karen Roche, senior director of marketing at Kings. “Last week was another record high. I anticipate it will continue to grow as the need for online grocery shopping is more apparent in our marketplace, where people are time-stretched or taking care of family members, as well as weather conditions.”

The most likely group to shop online for groceries at least once a month are parents of children under 18, of whom 14 percent will order at least monthly. They are twice as likely as adults without children, of whom 7 percent order in the same time frame.

The online grocery program at Foodtown, called On the Go, started slowly, said owner Lou Scaduto, but sales have ratcheted up rather quickly since the move to Instacart.

“I just started with Instacart three weeks ago and I’m amazed it’s taken off as quick as it has,” Scaduto said. “Quicker than the online business is doing. Online, it’s never really taken off to a great degree, but I’ve chosen to really push it since last April.”

Scaduto has been offering online grocery sales at his five Foodtown stores for a number of years. At his Ocean Township store, he offers home delivery up to a 5-mile radius. Since home delivery started around Memorial Day, online sales independent of Instacart have gotten a boost.

“It’s not something I’d say we’re hitting out of the park, but it’s got a nice little growth rate,” Scaduto said, adding he clocks about 100 online grocery orders a week, not including those through Instacart.

“It doesn’t sound like big numbers but I’m a very small company,” he said. “Our competition is there and we need to be with them. If it’s another convenience for the consumer to keep our brand out there, it’s worth it.”

On average, Scaduto said his online shoppers spend $145 per transaction.

“If that was the average sale in the supermarkets when they come in, life would be great,” he said. “If they’re going into that space [online], they’re saying, ‘I want to do this once. Let me maximize what I can get and go from there.’”

That could be because online grocery shoppers typically fall in a higher economic bracket, according to Gallup. Twelve percent of households earning $75,000 or more shop for groceries online at least monthly. Below that income, the number is 7 percent.

Much like efforts to improve the in-store experience, food retailers are actively seeking ways to upgrade their online grocery programs to attract more customers and keep the ones they have. ShopRite from Home users now have an app in addition to the website, and unlike when it first started, many stores offer delivery. ShopRite recently updated its platform to allow online shoppers to recommend products they want available, and customers can get as specific with their personal shoppers as they wish.

“People want their bananas to last a few days, so they’ll want some greener bananas and some more ripe bananas,” Meleta said. “Our personal shoppers are well-trained, and they do get to know their customers and personal preferences. People tend to shop in the same time slot each week, so that relationship is established.

“[The personal shoppers] often work within a department with the produce or meat manager to find out how to select cantaloupes and watermelons and bananas to make sure they’re getting what’s requested in terms of ripeness. Their dedication makes them expert shoppers.”

Taking man hours and transportation into account, online grocery programs present an added cost to food retailers. Kings, Wegmans and ShopRite declined to disclose figures, but Foodtown’s Scaduto said that irrespective of cost, it’s a necessary program to be competitive in today’s market.

“There’s obviously a cost to doing it from a perspective of the home delivery side, and I was kind of hesitant – I am a very small player in a vast sea of high-powered retailers from international to national powerhouses,” Scaduto said. “It took a lot for me to have to do it – to get the vehicle, the driver, to educate him, to educate the team. But if I’m gonna be a retailer in the grocery space, I have to do that.”

Overall, stores are focused on the potential for growth, and undeterred by the poll results.

“We’re not surprised at [the poll results,]” said Wegmans spokesperson Jo Natale. “Although we can’t speak to the accuracy of the poll, we know that there’s a lot of potential to grow online shopping. I can say that online shopping has more than met our projections.”

“It’s been worth it,” added Wakefern’s Meleta. “It serves a need for a number of our customers and we want to be able to service them.”

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Gabrielle Saulsbery

Gabrielle Saulsbery

Albany, N.Y. native Gabrielle Saulsbery is a staff writer for NJBIZ and the newest thing in New Jersey. You can contact her at gsaulsbery@njbiz.com.

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